Agenda packet — Murrieta City Council, April 1, 2025 (part 4 of 4)

D. MAXIMUM SPECIAL TAX

1. Developed Property

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

The Maximum Special Tax for each Assessor’s Parcel of Multifamily Property and Non - Residential Property shall be the applicable Assigned Special Tax described in Table 1 of Section D.

a. Assigned Special Tax

Each Fiscal Year, each Assessor’s Parcel of Single Family Residential Property, Multifamily Property or Non -Residential Property shall be subject to an Assigned Special Tax. The Docusign Envelope ID: 6310337A-4AAE-4EE5-9CF9-495F72EA9F59 958

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Assigned Special Tax for Fiscal Year 2025 -2026 applicable to an Assessor's Pa rcel of Developed Property shall be determined pursuant to Table 1 below.

TABLE 1

ASSIGNED SPECIAL TAX FOR DEVELOPED PROPERTY
FISCAL YEAR 2025-2026

Land Use Category
Taxable
Unit
Building Square
Footage
Assigned
Special Tax
Per Taxable
Unit

1. Single Family Residential
Property RU Less than 1,350 sq. ft $3,086.76

2. Single Family Residential
Property RU
1,350 sq. ft to 1,500 sq.
ft $3,247.45

3. Single Family Residential
Property RU
1,501 sq. ft to 1,650 sq.
ft $3,408.15

4. Single Family Residential
Property RU
1,651 sq. ft to 1,800 sq.
ft $3,700.00

5. Single Family Residential
Property RU
1,801 sq. ft to 1,950 sq.
ft $3,825.09

6. Single Family Residential
Property RU
1,951 sq. ft to 2,100 sq.
ft $3,920.63

7. Single Family Residential
Property RU
2,101 sq. ft to 2,250 sq.
ft $3,990.12

8. Single Family Residential
Property RU
2,251 sq. ft to 2,400 sq.
ft $4,537.35

9. Single Family Residential
Property RU
Greater than 2,400 sq.
ft $4,772.00

10. Multifamily Property Acre N/A $69,954.00

11. Non-Residential Property Acre N/A $69,954.00
On each July 1, commencing July 1, 2026, the Assigned Special Tax rate for Developed Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

b. Multiple Land Use Categories

In some instances an Assessor’s Parcel of Developed Property may contain more than one Land Use Category. The Maximum Special Tax levied on an Assessor’s Parcel shall be the sum of the Maximum Special Tax for each Taxable Unit for all Land Use Categories located on the Assessor’s Parcel. The CFD Administrator’s allocation to each type of property shall be final.

c. Backup Special Tax

The Backup Special Tax for an Assessor’s Parcel within a Final Map classified as Single Family Residential Property shall be $3,712 per Residential Unit.

Notwithstanding the foregoing, if all or any portion of the applicable Final Maps and/or condominium plan contained within the boundaries of CFD No. 2025 -3 is subsequently Docusign Envelope ID: 6310337A-4AAE-4EE5-9CF9-495F72EA9F59 959

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changed or modified, then the Backu p Special Tax for Single Family Residential Property or Approved Property in such Final Map or condominium plan area that is changed or modified shall be recalculated as follows:

1. Determine the total Backup Special Taxes anticipated to apply to the chang ed or modified Final Map or condominium plan area prior to the change or modification.

2. The result of paragraph 1 above shall be divided by the total number of Residential Units constructed and/or anticipated to be constructed within such changed or modified Final Map or condominium plan area, as reasonably determined by the CFD Administrator.

The result of paragraph 2 is the Backup Special Tax per Residential Unit , which shall be applicable to the Assessor’s Parcels of Single Family Residential Prop erty or Approved Property in such changed or modified Final Map or condominium plan area contained within the boundaries of CFD No. 2025-3.

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

On each July 1, commencing July 1, 2026, the Backup Special Tax rate shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

2. Approved Property

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

The Maximum Special Tax for each Assessor’s Parcel of Approved Property not expected to be classified as Single Family Residential Property shall be $69,954 per Acre.

On each July 1, commencing July 1, 2026, the Maximum Special Tax rate for Approved Property shall be increased by two percent (2.00%) of the a mount in effect in the prior Fiscal Year.

3. Undeveloped Property and Provisional Undeveloped Property

The Maximum Special Tax for each Assessor’s Parcel of Undeveloped Property and Provisional Undeveloped Property shall be $69,954 per Acre.

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On each July 1, commencing July 1, 2026, the Maximum Special Tax rate for Undeveloped Property and Provisional Undeveloped Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX

Commencing Fiscal Year 2025-2026 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes on all Taxable Property in accordance with the following steps:

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

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

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

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

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

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

F. EXEMPTIONS

The City shall classify Assessor’s Parcels as Exempt Property, in the following order of priority, (i) Assessor’s Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by the State of California, Federal or other local governments, including school districts, (ii) Assessor’s Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Asse ssor’s Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in Docusign Envelope ID: 6310337A-4AAE-4EE5-9CF9-495F72EA9F59 961

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use by a homeowners' association, (iv) Assessor’s Parcels with public or utility easements making impractical their utilization for other than the purpose s set forth in the easement, (v) Assessor’s Parcels which are privately owned and are encumbered by or restricted solely for public uses or (vi) Assessor’s Parcels restricted to other types of public uses determined by the City Council, provided that no su ch classification would reduce the total Acreage of all Taxable Property to less than 21.52 Acres.

Notwithstanding the above, the City Council shall not classify an Assessor’s Parcel as Exempt Property if such classification would reduce the total Acreage of all Taxable Property to less than 21.52 Acres. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 21.52 Acres will be classified as Provisional Und eveloped Property, and will be subject to the Special Tax pursuant to Step Five in Section E.

G. PREPAYMENT OF SPECIAL TAX

The following additional definitions apply to this Section G:
“CFD Facilities” means $22,500,000 expressed in 2025 dollars, which shall increase by the Construction Inflation Index on July 1, 2026, and on each July 1 thereafter, or such lower amount (i) determined by the City Council as sufficient to provide the facilities under the authorized bonding program for CFD No. 2025 -3, or ( ii) determined by the City Council concurrently with a covenant that it will not issue any more Bonds to finance additional facilities to be supported by Special Tax levied under this Rate and Method of Apportionment.

“Construction Fund” means an account specifically identified in the Indenture or functionally equivalent to hold funds, which are available for expenditure to acquire or construct facilities eligible to be financed by CFD No. 2025-3.

“Construction Inflation Index” means the greater of (i) 2% and (ii) the annual percentage change in the Engineering News -Record Building Cost Index for the city of Los Angeles, measured as of the Calendar Year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Constructio n Inflation Index shall be another index as determined by the City that is reasonably comparable to the Engineering News -Record Building Cost Index for the City of Los Angeles.

“Future Facilities Costs” means the CFD Facilities minus (i) amounts deposited in the Construction Fund, (ii) amounts deposited in any escrow accounts funded by the Outstanding Bonds and anticipated to fund public facilities costs, and (iii) public facility costs funded by interest earnings on the Construction Fund actually earned p rior to the date of prepayment, but in no event shall such amount be less than zero.

“Outstanding Bonds” means all previously issued Bonds issued and secured by the levy of Special Tax which will remain outstanding after the first interest and/or principa l payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Tax.

1. Prepayment in Full
The Special Tax obligation may be prepaid and permanently satisfied for (i) Asses sor’s Parcels of Developed Property, (ii) Assessor’s Parcels of Approved Property or Undeveloped Property Docusign Envelope ID: 6310337A-4AAE-4EE5-9CF9-495F72EA9F59 962

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

Prepayment must be made not less than 60 days prior to the redemption date for any Bonds to be redeemed with the proceeds of such prepaid Special Taxes.

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

Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
Equals: Prepayment Amount

The Prepayment Amount shall be determined as of the proposed prepayment date as follows:

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

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

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

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

Docusign Envelope ID: 6310337A-4AAE-4EE5-9CF9-495F72EA9F59 963

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

6. Determine the Future Facilities Costs.

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

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

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

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

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

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

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

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

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

The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds.

In such event, the increment above $5,000 or an integral multiple thereof will be retained in the Docusign Envelope ID: 6310337A-4AAE-4EE5-9CF9-495F72EA9F59 964

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appropriate fund established under the Indenture to be used with the next redemption from other Special Tax prepayments of Outstanding Bonds or to make debt service payments.

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

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

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

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

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

PP = Partial Prepayment Amount
PE = the Prepayment Amount calculated according to Section G.1 F = the percent by which the owner of the Assessor’s Parcel(s) is partially prepaying the Special Tax obligation
A = the Administrative Fees and Expenses determined pursuant to Section G.1 The owner of an Assessor’s Parcel who desires to partially prepay the Special Tax obligation for the Assessor’s Parcel shall notify t he CFD Administrator of (i) such owner’s intent to partially prepay the Special Tax obligation, (ii) the percentage of the Special Tax obligation such owner wishes to prepay, and (iii) the company or agency that will be acting as the escrow agent, if any.

Within 5 days of receipt of such notice, the CFD Administrator shall notify such property owner of the amount of the non -refundable deposit determined to cover the cost to be incurred by the CFD in calculating the Partial Prepayment Amount. Within 15 bus iness days of receipt of such non-refundable deposit, the CFD Administrator shall notify such owner of the amount of the Partial Prepayment Amount for the Assessor’s Parcel. A Partial Prepayment Amount must be made not less than 60 days prior to the redem ption date for the Outstanding Bonds to be redeemed with the proceeds of the Partial Prepayment Amount.

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

H. TERMINATION OF SPECIAL TAX

For each Fiscal Year that any Bonds are outstanding , the Special Tax shall be levied on all Assessor’s Parcels subject to the Special Tax pursuant to Section E. The Special Tax shall cease not later than the 2066-2067 Fiscal Year, however, Special Taxes will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all the required interest and principal payments on the CFD No. 2025 -3 Bonds have been paid; (ii) all authorized facilities of CFD No. 2025 -3 have been acquired and all reimbursements to the developer have been paid, (iii) no delinquent Special Taxes remain uncollected and (iv) all other obligations of CFD No. 2025-3 have been satisfied.

I. MANNER OF COLLECTION

The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2025-3 may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor’s Parcels as permitted by the Act.

J. APPEALS OF SPECIAL TAXES

Any taxpayer may file a written appeal of the Special Taxes levied on his/her Assessor’s Parcel(s) with the CFD Administrator, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall grant a credit to eliminate or reduce future Special Taxes on the appellant’s Assessor’s Parcel(s). No refunds of previously paid Special Taxes shall be made unless approved by the CFD Administrator.

The CFD Administrator shall interpret this Rate and Method of Apportionment and make determinations relative to the annual levy and adm inistration of the Special Taxes and any taxpayer who appeals, as herein specified.

K. INTERPRETATION
Interpretations may be made by the Council by ordinance or resolution for purposes of clarifying any vagueness or ambiguity in this Rate and Method of Apportionment.

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Draft of March 6, 2025

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RESOLUTION NO. 25-4824

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MURRIETA, CALIFORNIA, ESTABLISHING COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE) OF THE CITY OF MURRIETA, AUTHORIZING

THE LEVY OF A SPECIAL TAX THEREIN, CALLING AN ELECTION AND

APPROVING AND AUTHORIZING CERTAIN ACTIONS RELATED THERETO WHEREAS, the City Council (the “City Council”) of the City of Murrieta (the “City”) has heretofore adopted Resolutio n No. 25-4807 stating its intention to form Community Facilities District No. 2025-3 (Discovery Village) of the City of Murrieta (“Community Facilities District No. 2025-3” or the “District”) pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Act”); and
WHEREAS, a copy of Resolution No. 25-4807 setting forth a description of the proposed boundaries of Community Facilities District No. 2025-3, the facilities and incidental expenses to be financed by the District and the rate and method of apportionment of the special tax proposed to be levied within the District is on file with the City Clerk; and WHEREAS, notice was published and mailed to all landowners of the land proposed to be included within the District as required by law relative to the intention of this City Council to form proposed Community Facilities District No. 2025-3 and to levy a special ta x (the “Special Tax”) and to incur bonded indebtedness in one or more series in the maximum aggregate principal amount of $27,500,000 therein to finance the facilities and incidental expenses described in Resolution No. 25-4807; and
WHEREAS, on April 1, 20 25, this City Council conducted a noticed public hearing as required by law relative to the proposed formation of Community Facilities District No. 2025-3, the levy of the Special Tax therein and the issuance of bonded indebtedness by the District; and WHEREAS, at the April 1, 2025 , public hearing there was filed with this City Council a report containing a description of the facilities necessary to meet the needs of the District and an estimate of the cost of such facilities as required by Section 53321.5 of the Act (the “Engineer’s Report”); and
WHEREAS, at the April 1, 2025 , public hearing all persons desiring to be heard on all matters pertaining to the formation of Community Facilities District No. 2025-3, the levy of the Special Tax and the issuance of bonded indebtedness were heard and full and fair hearings were held; and
WHEREAS, following the public hearing, this City Council has determined to authorize the formation of the District to finance the types of facilities (the “Facilities”) and the incid ental expenses (the “Incidental Expenses”) set forth in Exhibit A hereto, which are described in more detail in the Engineer’s Report; and
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WHEREAS, at the public hearing evidence was presented to this City Council on the matters before it, and the proposed Special Tax to be levied within the District was not precluded by a majority protest of the type described in Section 53324 of the Act, and this City Council at the conclusion of the hearing was fully advised as to all matters relating to the formation of the District, the levy of the Special Tax and the issuance of bonded indebtedness therein; and
WHEREAS, this City Council has determined, based o n a Certificate of Registrar of Voters of the County of Riverside on file in the office of the City Clerk, that no registered voters have been residing in the proposed boundaries of Community Facilities District No. 2025-3 for each of the 90 days prior to April 1, 2025, and that the qualified electors in Community Facilities District No. 2025-3 are the landowners within the District; and WHEREAS, on the basis of all of the foregoing, this City Council has determined to proceed with the establishment of Comm unity Facilities District No. 2025-3 and to call an election therein to authorize (i) the levy of Special Tax pursuant to the rate and method of apportionment of the special t ax, as set forth in Attachment C to Resolution No. 25-4807 (the “Rate and Method”), (ii) the issuance of bonds to finance the Facilities and Incidental Expenses, and (iii) the establishment of an appropriations limit for Community Facilities District No. 2025-3; and
WHEREAS, in order to facilitate the funding of the Facilities, the leg islative body of the District desires to enter into a n Acquisition Agreement ( the “ Acquisition Agreement ”) with Discovery Village LLC, a Delaware limited liability company (the “Developer”) and the form of the Acquisition Agreement is on file with the City Clerk; and WHEREAS, in connection with the proposed formation of the District, the City proposes to enter into a Joint Community Facilities Agreement (the “ Water District JCFA”) with Eastern Municipal Water District (the “Water Di strict”) and the Developer, relating to certain facilities proposed to be financed by the District and owned and operated by the Water District and the form of the Water District JCFA is on file with the City Clerk;

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF MURRIETA AS FOLLOWS:

Section 1. The above recitals are true and correct.

Section 2. A community facilities district to be designated “Community Facilities District No. 2025-3 (Discovery Village) of the City of Murrieta” is hereby established pursuant to the Act. The City Council hereby finds and determines that all prior proceedings taken with respect to the establishment of the District were valid and in conformity with the requirements of law, including the Act. This finding is made in accordance w ith the provisions of Section 53325.1(b) of the Act.
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Section 3. The boundaries of Community Facilities District No. 2025-3 are established as shown on the map designated “ Proposed Boundary Map Community Facilities District No. 2025-3 (Discovery Village) of the City o f Murrieta, County of Riverside, State of California”, which map is on file in the office of the City Clerk and was recorded pursuant to Sections 3111 and 3113 of the Streets and Highways Code in the County Book of Maps of Assessment and Community Faciliti es Districts in the Assessor -County Clerk-Recorder’s office of the County of Riverside in Book No. 95 Page No. 30 on February 20, 2025 as Instrument No. 2025-0050554.

Section 4. The types of Facilities and Incidental Expenses authorized to be provided for Community F acilities District No. 2025-3 are those set forth in Exhibit A attached hereto.

The estimated cost of the Facilities and Incidental Expenses to be financed is set forth in the Engineer’s Report, which estimates may change as the Facilities are designed an d bid for construction and acquisition, as applicable.

The City is authorized by the Act to contribute revenue to, or to construct or acquire the Facilities, all in accordance with the Act. The City Council finds and determines that the proposed Facilities are necessary to meet the increased demand that will be placed upon local agencies and public infrastructure as a result of new development within the District and that the Facilities to be financed, including those to be financed pursuant to the Water District JCFA to be entered into with the Water District, benefit residents of the City and the future residents of the District.

Section 5. Except where funds are otherwise available, it is the intention of this City Council, subject to the approval of the eligible voters of the District, to levy annually a Special Tax at the rates set forth in the Rate and Method on all non-exempt property within the District sufficient to pay for (i) the Facilities, (ii) the principal and interest and other periodic costs on the bonds proposed to be issued to finance the Facilities and Incidental Expenses, including the establishment and replenishment of rese rve funds, any remarketing, credit enhancement and liquidity facility fees and other expenses of the type permitted by Section 53345.3 of the Act; and (iii) the Incidental Expenses. The District expects to incur, and in certain cases has already incurred, Incidental Expenses in connection with the creation of the District, the issuance of bonds, the levying and collecting of the Special Tax, the completion and inspection of the Facilities and the annual administration of the bonds and the District. The Ra te and Method is described in detail in Attachment C to Resolution No. 25-4807 and incorporated herein by this reference, and the City Council hereby finds that the Rate and Method contains sufficient detail to allow each landowner within the District to e stimate the maximum amount that may be levied against each parcel. As described in greater detail in the Engineer’s Report, which is incorporated by reference herein, the Special Tax is based on the expected demand that each parcel of real property within Community Facilities District No. 2025-3 will place on the Facilities and on the benefit that each parcel will derive from the right to access the Facilities and, accordingly, is hereby determined to be reasonable. The Special Tax shall be levied on each assessor’s parcel in accordance with the Rate and Method provided, however, that the Special Tax shall not be levied after Fiscal Year 2065-66. The Special Tax is apportioned to each parcel on the foregoing bases pursuant to Section 53325.3 of the Act an d such Special Tax is not on or based upon the ownership of real property or the assessed value of real property.

If Special Taxes of the District are levied against any parcel used for private residential purposes, (i) the maximum Special Tax rate shall be specified as a dollar amount which shall be calculated and established not later than the date on which the parcel is first subject to the Special Tax because of its use for private residential purposes and shall not be increased over 970

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time except as auth orized under the Rate and Method, (ii) the Special Tax shall not be levied after Fiscal Year 2065-66, and (iii) under no circumstances will the Special Tax levied against any such parcel used for private residential uses be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within the District by more than ten percent above the amount that would have be en levied in that fiscal year had there never been any such delinquencies or defaults.

The City Manager of the City of Murrieta, will be responsible for preparing annually, or authorizing a designee to prepare, a current roll of special tax levy obligation s by assessor’s parcel number and will be responsible for estimating future special tax levies pursuant to Section 53340.2 of the Act.

Section 6. In the event that a portion of the property within Community Facilities District No. 2025-3 shall become for any reason exempt, wholly or partially, from the levy of the Special Tax specified in the Rate and Method, or in the event of delinquencies in the payment of Special Taxes levied, the City Council shall, on behalf of Community Facilities District No. 2025- 3, increase the levy to the extent necessary and permitted by law and these proceedings (including the maximum special tax set forth in the Rate and Method) upon the remaining property within Community Facilities District No. 2025-3 which is not exempt or delinquent i n order to yield the required debt service payments on any outstanding bonds of the District, or to prevent the District from defaulting on any of its other obligations or liabilities; provided, however, under no circumstances will the Special Tax levied against any parcel used for private residential uses be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within the District by more than ten percent above the amount that would have been levied in t hat fiscal year had there never been any such delinquencies or defaults. The amount of the Special Tax will be set in accordance with the Rate and Method. The obligation to pay Special Taxes may be prepaid only as set forth in Section G of the Rate and Method.

Section 7. Upon recordation of a notice of special tax lien pursuant to Section 3114.5 of the Streets and Highways Code, a continuing lien to secure each levy of the Special Tax shall attach to all non-exempt real property in the District and this lien shall continue in force and effect until the Special Tax obligation is prepaid and permanently satisfied and the lien canceled in accordance with law or until collection of the Special Tax by the District ceases.

Section 8. Consistent with Section 53325.6 of the Act, the Ci ty Council finds and determines that the land within Community Facilities District No. 2025-3, if any, devoted primarily to agricultural, timber, or livestock uses and being used for the commercial production of agricultural, timber or livestock products i s contiguous to other land within Community Facilities District No. 2025-3 and will be benefited by the Facilities proposed to be provided within Community Facilities District No. 2025-3.

Section 9. It is hereby further determined that there is no ad valorem property tax currently being levied on property within proposed Community Facilities District No. 2025-3 for the exclusive purpose of paying the principal of or interest on bonds or other indebtedness incurred to finance the construction of capital facilit ies which provide the same services to the territory of Community Facilities District No. 2025-3 as are proposed to be provided by the Facilities to be financed by Community Facilities District No. 2025-3.

Section 10. Written protests against the establishment of the District have not been filed by one-half or more of the registered voters within the boundaries of the District or by the 971

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property owners of one -half (1/2) or more of the area of land within the District. The City Council hereby finds that the proposed Sp ecial Tax has not been precluded by a majority protest pursuant to Section 53324 of the Act.

Section 11. An election is hereby called for Community Facilities District No. 2025-3 on the propositions of levying the Special Tax on the property within Community Facilitie s District No. 2025-3 and establishing an appropriations limit for the District pursuant to Section 53325.7 of the Act and shall be consolidated with the election on the proposition of incurring bonded indebtedness, pursuant to Sections 53351 and 53353.5 of the Act. The language of the propositions to be placed on the ballot is attached hereto as Exhibit B.

Section 12. The date of the election for Community Facilities District No. 2025-3 on the propositions of incurring the bonded indebtedness, authorizing the levy of the Special Tax and establishing an appropriations limit for the District shall be April 1, 2025, or such later date as is consented to by the City Clerk or Deputy City Clerk (referred to herein as the “City Clerk”) of the City of Murrieta; provided that, if the election is to take place sooner than 90 days after April 1, 2025, then the unanimous written consent of each qualified elector within the District to such election date must be obtained. The polls shall be open for said election immediately following the close of the public hearing on April 1, 2025 . The election shall be conducted by the City Clerk. Except as otherwise provided by the Act, the election shall be conducted in accordance with the provisions of law regulating elections of the City of Murrieta insofar as such provisions are determined by the City Clerk to be applicable. The City Clerk is authorized to conduct the election following the adoption of this resolution, and all ballots shall be received by, and the City Clerk shall close t he election by, 11:00 p.m. on the election day; provided the election shall be closed at such earlier time as all qualified electors have voted as provided in Section 53326(d) of the Act. Pursuant to Section 53326 of the Act, the ballots for the special election shall be distributed in person, or by mail with return postage prepaid, to the qualified electors within Community Facilities District No. 2025-3. The City Clerk has secured a certificate from the Registrar of Voters of the County of Riverside cer tifying that there were no registered voters within the District. Accordingly, since there were fewer than 12 registered voters within the District for each of the 90 days preceding April 1, 2025, the qualified electors shall be the landowners within the District and each landowner, or the authorized representative thereof, shall have one vote for each acre or portion thereof that such landowner owns within Community Facilities District No. 2025-3, as provided in Section 53326 of the Act. Each landowner within the District has executed and delivered a waiver of certain election law requirements and consented to the holding of the election on April 1, 2025, which waiver is on file with the City Clerk.

Section 13. The preparation of the Engineer’s Report is hereby ratified. The Engineer’s Report, as submitted, is hereby approved and was made a part of the record of the public hearing regarding the formation of Community Facilities District No. 2025-3. The Engineer’s Report is ordered to be kept on file with the transcript of these proceedings and open for public inspection.

Section 14. The District may accept advances of funds or work -in-kind from any source, including, but not limited to, private persons or private ent ities, for any authorized purpose, including, but not limited to, paying any cost incurred in creating Community Facilities District No. 2025 -3. The District may enter into an agreement with the person or entity advancing the funds or work -in-kind, to rep ay all or a portion of the funds advanced, or to reimburse the person or entity for the value, or cost, whichever is less, of the work -in-kind, as determined by the City Council, with or without interest. 972

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Section 15. The form of the Acquisition Agreement on file with the City Clerk is approved as to form, and each of the Mayor, the City Manager, the Assistant City Manager, or their written designees, are authorized to execute the Acquisition Agreement in substantially the form on file with the City Clerk, together with such changes as are approved by the officer executing the same, with the approval of such changes to be conclusively evidenced by the execution and delivery thereof.

Section 16. The form of the Water District JCFA on file with the City Clerk is approved as to form, and each of each of the Mayor , the City Manager, the Assistant City Manager, or their written designees, are authorized to execute the Water District JCFA in substantially the form on file with the City Clerk, together with such changes as are approved by the officer executing the same, with the approval of such changes to be conclusively evidenced by the execution and delivery thereof.

Section 17. This Resolution shall be effective upon its adoption.

PASSED AND ADOPTED by the City Council at a regular meeting held on the ____day of __________, 2025.

CITY COUNCIL OF THE CITY OF MURRIETA

By:_______________________________
Cindy Warren
Mayor of the City of Murrieta
ATTEST:
________________________________
Cristal McDonald
City Clerk of the City of Murrieta

973

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STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE )ss.

CITY OF MURRIETA )
I, Cristal McDonald, City Clerk of the City of Murrieta, do hereby certify that the foregoing Resolution No. 25-4824 was duly adopted by the City Council of the City of Murrieta at a regular meeting held on the _____ day of ______, 2025, by the following votes:

AYES:

NOES:

ABSENT:

CRISTAL MCDONALD, CITY CLERK

974

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EXHIBIT A

TYPES OF FACILITIES TO BE FINANCED BY
COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE)

OF THE CITY OF MURRIETA
The proposed types of public facilities and expenses to be financed by the District include:

The construction, purchase, modification, expansion, rehabilitation and/or improvement of (i) storm drainage, library, park, law enforcement, fire, streets and bridges, traffic, administration and community center facilities, and other public faci lities of the City, including the foregoing public facilities which are included in the City’s fee programs with respect to such facilities and authorized to be financed under the Act (the “City Facilities”) and (ii) water and sewer facilities including the acquisition of capacity in the sewer system and/or water system of the Eastern Municipal Water District which are included in Eastern Municipal Water District’s water and sewer capacity and connection fee programs (the “Water District Facilities” and, together with the City Facilities, the “Facilities”) , and all appurtenances and appurtenant work in connection with the foregoing Facilities, including the cost of engineering, planning, designing, materials testing, coordination, construction staking, const ruction management and supervision for such Facilities, and to finance the incidental expenses to be incurred, including:
a. The cost of engineering, planning and designing the Facilities; b. All costs, including costs of the property owner petitioning to form the District, associated with the creation of the District, the issuance of the bonds, the determination of the amount of special taxes to be levied and costs otherwise incurred in order to carry out the authorized purposes of the District; and
c. Any other expenses incidental to the construction, acquisition, modification, rehabilitation, completion and inspection of the Facilities.

Capitalized terms used and not defined herein shall have the meaning set forth in the Rate and Method of Apportionment of Special Taxes for the District.

975

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EXHIBIT B

BALLOT PROPOSITIONS
COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE)

OF THE CITY OF MURRIETA

SPECIAL TAX AND SPECIAL BOND ELECTION
April 1, 2025

PROPOSITION A: Shall Community Facilities District
No. 2025-3 (Discovery Village) of the City of Murrieta (the “District”) incur an indebtedness and issue bonds in one or more series in the maximum aggregate principal
amount of $ 27,500,000, with interest at a rate or rates not to exceed the maximum interest rate permitted by
law, to finance the Facilities and the Incidental Expenses described in Resolution No. 25-4807 of the City Council of the City of Murrieta?
PROPOSITION B: Shall a special tax with a rate and
method of apportionment as provided in Resolution No.
25-4807 of the City Council of the City of Murrieta be
levied to pay for the Facilities, Incidental Expenses and other purposes described in Resolution No. 25-4807,
including the payment of the principal of and interest on bonds issued to finance the Facilities and Incidental
Expenses?

YES______
NO_______

PROPOSITION C: For each year commencing with
Fiscal Year 2025-26, shall the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIII B of the California Constitution, for the District be an amount equal to $10,000,000?

YES______
NO_______

976
Stradling Yocca Carlson & Rauth
Draft of March 6, 2025

4926-0528-9251v3/022972-0049
RESOLUTION NO. 25-4825

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MURRIETA,

CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE) OF THE CITY OF

MURRIETA DETERMINING THE NECESSITY TO INCUR BONDED
INDEBTEDNESS IN AN AMOUNT NOT TO EXCEED $ 27,500,000 WITHIN COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE) OF

THE CITY OF MURRIETA AND CALLING AN ELECTION THEREIN
WHEREAS, on February 4, 2025 , the City Council of the City of Murrieta (the “City Council”) adopted Resolution No. 25-4807 stating its intention to form Community Facilities District No. 2025-3 (Discovery Village) of the City of Murrieta (“Community Facilities District No. 2025-3” or the “District”) pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (the “Act”); and
WHEREAS, on February 4, 2025, the City Council also adopted Resolution No. 25-4808 stating its intention to incur bonded indebtedness in the maximum aggregate principal amount of $27,500,000 within proposed Community Facilities District No. 2025-3 to finance (1) the purchase, construction, modification, expansion, improvement or rehabilitation of public facilities identified in Exhibit B to Resolution No. 25-4807, and (2) the incidental expenses to be incurred in financing such public facilities and services and forming and administering the Distric t, as identified in Exhibit B to Resolution No. 25-4807; and
WHEREAS, notice was published as required by law relative to the intention of the City Council to form proposed Community Facilities District No. 2025-3 and to incur bonded indebtedness in the maximum aggregate principal amount of $27,500,000 within the boundaries of proposed Community Facilities District No. 2025-3; and WHEREAS, on April 1, 2025 , this City Council conducted a noticed public hearing to determine whether it should proceed with the formation of Community Facilities District No. 2025-3, issue bonds to pay for the facilities and incidental expenses described in Resolution No. 25-4807 and authorize the rate and method of apportionment of a special tax to be levied within Community Facilities District No. 2025-3 for the purposes described in Resolution No. 25- 4807; and
WHEREAS, at said hearing all persons desiring to be heard on all matters pertaining to the formation of Community Facilities District No. 2025-3, the levy of a special tax and the issuance of bonds to pay for the cost of the propose d facilities and incidental expenses were heard and a full and fair hearing was held; and
WHEREAS, the City Council subsequent to such hearing adopted Resolution No. _____ establishing Community Facilities District No. 2025-3 (the “Resolution of Formation”) and authorizing the financing of the public facilities (the “Facilities”) and the incidental expenses (the “Incidental Expenses”) described in Exhibit A thereto; and WHEREAS, the City Council desires to make the necessary f indings to incur bonded indebtedness within the District, to declare the purpose for said debt, and to authorize the submittal of a proposition to issue bonded indebtedness to the voters of the District, being the landowners within the proposed District, all as authorized and required by law; 977
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NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF MURRIETA AS FOLLOWS:

Section 1. It is necessary to incur bonded indebtedness in one or more series in a maximum aggregate principal amount of $27,500,000 within Community Facilities District No. 2025-3.

Section 2. The indebtedness is to be incurred for the purpose of financing the costs of purchasing, constructing, modifying, expanding, improving, or rehabilitating the Facilities and financing the Incidental Expenses, as described in the Resolution of Formation, and carrying out the powers and purposes of Community Facilities District No. 2025-3, including, but not limited to, financing the costs of selling the bonds, establishing and replenishing bond reserve funds and paying remarketing, credit enhancement and liquidity facility fees and other expenses of the type authorized by Section 53345.3 of the Act.

Section 3. The whole of the property within Community Facilities District No. 2025-3, other than property exempted from the special ta x pursuant to the provisions of the rate and method of apportionment attached to Resolution No. 25-4807 as Exhibit C, shall pay for the bonded indebtedness pursuant to the levy of the special tax authorized by the Resolution of Formation.

Section 4. The maximum term of the bonds to be issued shall in no event exceed 35 years or such longer term as is then permitted by law.

Section 5. The bonds shall bear interest at the rate or rates not to exceed the maximum interest rate permitted by law, payable annually or semiannually, or in part annually and in part semiannually, except the first interest payment may be for a period of less than six months, with the actual rate or rates and times of payment to be determined at the time or times of sale thereof.

Section 6. The bonds may bear a variabl e or fixed interest rate, provided that such variable rate or fixed rate shall not exceed the maximum rate permitted by Section 53531 of the Act, or any other applicable provision of law limiting the maximum interest rate on the bonds.

Section 7. Pursuant to Section 53351 of the Act, a special election is hereby called for Community Facilities District No. 2025-3 on the proposition of incurring the bonded indebtedness. The proposition relative to incurring bonded indebtedness in the maximum aggregate principal amount of $ 27,500,000 shall be in the form of Proposition A set forth in Exhibit A hereto. In accordance with Sections 53351(h) and 53353.5 of the Act, the election shall be consolidated with the special election called on the proposition of levying a special t ax within the District as described in the Resolution of Formation, which proposition shall be in the form of Proposi tion B set forth in Exhibit A, and on the proposition of establishing an appropriations limit for the District, which proposition shall be in the form of Proposi tion C set forth in Exhibit A.
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Section 8. The date of the special election for Community Facilities District No. 2025-3 on the propositi ons of incurring the bonded indebtedness, authorizing the levy of the special tax and setting an appropriations limit shall be April 1, 2025 , or such later date as is consented to by the City Clerk, or a Deputy City Clerk of the City (referred to herein as the “City Clerk”); provided that, if the election is to take place sooner than 90 days after April 1, 2025 , then the unanimous written consent of each qualified elector within the District to such election date must be obtained. The polls shall be open f or said election immediately following the public hearing on April 1, 2025. The election shall be conducted by the City Clerk. Except as otherwise provided by the Act, the election shall be conducted in accordance with the provisions of law regulating el ections of the City of Murrieta insofar as such provisions are determined by the City Clerk to be applicable. The City Clerk is authorized to conduct the election following the adoption of the Resolution of Formation, and this resolution and all ballots s hall be received by and the City Clerk shall close the election by 11:00 p.m. on the election day; provided the election shall be closed at such earlier time as all qualified electors have voted as provided in Section 53326(d) of the Act. Pursuant to Sect ion 53326 of the Act, the ballots for the special election shall be distributed in person, or by mail with return postage prepaid, to the qualified electors within Community Facilities District No. 2025-3. The City Clerk has secured a certificate of the R egistrar of Voters of the County of Riverside certifying that there were no registered voters within the District. Accordingly, since there were fewer than 12 registered voters within the District for each of the 90 days preceding April 1, 2025, the qualified electors shall be the landowners within the District and each landowner, or the authorized representative thereof, shall have one vote for each acre or portion thereof that such landowner owns within Community Facilities District No. 2025-3, as provid ed in Section 53326 of the Act. Each landowner within the District has executed and delivered a waiver of certain election law requirements and consenting to the holding of the election on April 1, 2025, which waiver is on file with the City Clerk.

Section 9. This Resolution shall be effective upon its adoption.

PASSED AND ADOPTED by the City Council at a regular meeting held on the ____ day of _______, 2025.

CITY COUNCIL OF THE CITY OF MURRIETA

By:_______________________________
Cindy Warren
Mayor of the City of Murrieta
ATTEST:
________________________________
Cristal McDonald
City Clerk of the City of Murrieta

979
4 4926-0528-9251v3/022972-0049

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE )ss.

CITY OF MURRIETA )
I, Cristal McDonald, City Clerk of the City of Murrieta, do hereby certify that the foregoing Resolution No. 25-4825 was duly adopted by the City Council of the City of Murrieta at a regular meeting held on the ____ day of _____________, 2025, by the following votes:

AYES:

NOES:

ABSENT:

CRISTAL MCDONALD, CITY CLERK

980

4926-0528-9251v3/022972-0049

EXHIBIT A

BALLOT PROPOSITIONS
COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE)

OF THE CITY OF MURRIETA

SPECIAL TAX AND SPECIAL BOND ELECTION
April 1, 2025

YES______
NO_______

PROPOSITION C: For each year commencing with
Fiscal Year 2025 -26, shall the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIII B of the California Constitution, for the District be an amount equal to $10,000,000?

YES______
NO_______

981
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Draft of March 6, 2025

4938-0663-0179v3/022972-0049
RESOLUTION NO. 25-4826

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MURRIETA,

CALIFORNIA, ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE) OF

THE CITY OF MURRIETA CERTIFYING ELECTION RESULTS
WHEREAS, the City Council of the City of Murrieta called and duly held an election on April 1, 2025 within the boundaries of Community Facilities District No. 2025-3 (Discovery Village) of the City of Murrieta (“Community Facilities District No. 2025-3” or the “District”) pursuant to Resolution Nos. _____ and _____ for the purpose of presenting to the qualified electors within the District Propositions A, B and C, attached hereto as Exhibit A; and WHEREAS, there has been presented to this City Council a certificate of the City Clerk or Deputy City Clerk (referred to herein as the “City Clerk”) canvassing the results of the election, a copy of which is attached hereto as Exhibit B;

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF MURRIETA AS FOLLOWS:

Section 1. Each of the above recitals is true and correct and is adopted by the legislative body of the District.

Section 2. Propositions A, B, and C presented to the qualified electors of the Dis trict on April 1, 2025, were approved by more than two -thirds of the votes cast at said election and Propositions A, B, and C each has carried. The City Council, acting as the legislative body of the District, is hereby authorized to levy on the land with in the District the special tax described in Proposition B for the purposes described therein and to take the necessary steps to levy the special tax authorized by Proposition B and to issue bonds in one or more series in the maximum aggregate principal amount of $27,500,000 specified in Proposition A.

Section 3. The City Clerk is hereby directed to record in the Assessor -County Clerk- Recorder’s office of the County of Riverside within fifteen days of the date hereof a notice of special tax lien with respect to the Di strict which Bond Counsel to the District shall prepare in the form required by Streets and Highways Code Section 3114.5.

Section 4. This Resolution shall be effective upon its adoption. 982
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PASSED AND ADOPTED by the City Council at a regular meeting held on the ____ day of _______, 2025.

CITY COUNCIL OF THE CITY OF MURRIETA

By:_______________________________
Cindy Warren
Mayor of the City of Murrieta
ATTEST:
________________________________
Cristal McDonald
City Clerk of the City of Murrieta

983
3 4938-0663-0179v3/022972-0049

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE )ss.

CITY OF MURRIETA )
I, Cristal McDonald, City Clerk of the City of Murrieta, do hereby certify that the foregoing Resolution No. 25-4826 was duly adopted by the City Council of the City of Murrieta at a regular meeting held on the ____ day of ________, 2025, by the following votes:

AYES:

NOES:

ABSENT:

CRISTAL MCDONALD, CITY CLERK

984

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EXHIBIT A

BALLOT PROPOSITIONS
COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE)

OF THE CITY OF MURRIETA

SPECIAL TAX AND SPECIAL BOND ELECTION
April 1, 2025

YES______
NO_______

PROPOSITION C: For each year commencing with
Fiscal Year 2025 -26, shall the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIII B of the California Constitution, for the District be an amount equal to $10,000,000?

YES______
NO_______

985

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EXHIBIT B

CERTIFICATE OF CITY CLERK

AS TO THE RESULTS OF THE CANVASS OF THE ELECTION RETURNS I, Cristal McDonald , City Clerk of the City of Murrieta, do hereby certify that I have examined the returns of the Special Tax and Bond Election for Community Facilities District No. 2025-3 (Discovery Village ) of the City of Murrieta. The election was held in the City of Murrieta Council Chambers, 1 Town Square, Murrieta, California , on April 1, 2025. I caused to be delivered ballots to each qualified elector. One (1) ballot was returned.

I further certify that the results of said election and the number of votes cast for and against Propositions A, B, and C are as follows:

PROPOSITION A PROPOSITION B PROPOSITION C
YES: YES: YES:

NO: NO: NO:

TOTAL: TOTAL: TOTAL:

Dated this 1st day of April, 2025.

CRISTAL MCDONALD, CITY CLERK

986
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4918-0994-5123v3/022972-0049
ORDINANCE NO. 616-25

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MURRIETA,

CALIFORNIA, ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE) OF

THE CITY OF MURRIETA AUTHORIZING THE LEVY OF SPECIAL TAXES WHEREAS, on February 4, 2025 , the City Council (the “City Council”) of the City of Murrieta (the “City”) adopted Resolution No. 25-4807 declaring its intention to form Community Facilities District No. 2025-3 of the City of Murrieta (Discovery Village) (the “District”) pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, comprising Chapter 2.5 of Part 1 of Division 2 o f Title 5 of the Government Code of the State of California (the “Act”), and its Resolution No. 25-4808 declaring its intention to incur bonded indebtedness for the District; and WHEREAS, on April 1, 2025 , after providing all notice required by the Act, th e City Council conducted a noticed public hearing required by the Act relative to the proposed formation of the District, the proposed levy of a special tax therein to finance certain public facilities described in Resolution No. 25-4807 and to secure the payment of any bonded indebtedness of the District, and the proposed issuance of bonded indebtedness in one or more series in the maximum aggregate principal amount of $27,500,000, as described in Resolution No. 25-4808; and
WHEREAS, at the April 1, 2025 , public hearing, all persons desiring to be heard on all matters pertaining to the formation of the District and the proposed levy of the special tax to finance the facilities described in Resolution No. 25-4807 and to secure the payment of bonded indebtedness in the maximum aggregate principal amount of $27,500,000 of the District as described in Resolution No. 25-4807 (the “Bonds”) were heard and a full and fair hearing was held; and
WHEREAS, on April 1, 2025 , the City Council adopted Resolution Nos. ______ and _____ which formed the District and called a special election within the District on April 1, 2025 on three propositions relating to the levy of a special tax within the District, the issuance of the Bonds and the establishment of an appropriations limit within the District; and WHEREAS, on April 1, 2025, a special election was held within the District at which the qualified electors approved by more than a two thirds vote Propositions A, B, and C authorizing the levy of a special tax within the District for the purposes described in Resolution _____, the issuance of the Bonds as described in Resolution No. _____ and establishing an appropriations limit for the District; and

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MURRIETA,

CALIFORNIA, ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE) OF THE CITY OF MURRIETA DOES HEREBY ORDAIN AS FOLLOWS:
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Section 1. The above recitals are all true and correct.

Section 2. By the passage of this Ordinance, the City Council authorizes and levies special taxes within the District p ursuant to Sections 53328 and 53340 of the Act at the rates and in accordance with the rate and method of apportion ment set forth in Attachment C to Resolution No. 25-4807, which is incorporated by reference herein (the “Rate and Method”).

The special tax es are hereby levied commencing in the fiscal year specified in the Rate and Method and in each fiscal year thereafter until payment in full of the Bonds (including any bonds issued to refund the Bonds), payment of all costs of the public facilities and se rvices authorized to be financed by the District, and payment of all costs of administering the District.

Section 3. Each of the Mayor, the City Manager, the Assistant City Manager , the Director of Finance, or their written designees (each, an “Authorized Officer”), acting alone, is hereby authorized and directed each fiscal year to determine the specific special tax rates and amounts to be levied in such fiscal year on each parcel of real property within the District, in the manner and as provided in the Rate and Met hod. The special tax rate levied on a parcel pursuant to the Rate and Method shall not exceed the maximum rate set forth in the Rate and Method for such parcel, but the special tax may be levied at a lower rate. Each Authorized Officer is hereby authorized and directed to provide all necessary information to the Treasurer - Tax Collector of the County of Riverside and to otherwise take all actions necessary in order to effect proper billing and collection of the special tax, so that the special tax shall be levied and collected in sufficient amounts and at times necessary to satisfy the financial obligations of the District in each fiscal year, and with respect to Special Tax, until the Bonds are paid in full, the facilities have been paid for, and provision has been made for payment of all of the administrative costs of the District.

Section 4. Properties or entities of the state, federal or other local governments shall be exempt from the special tax, except as otherwise provided in Sections 53317.3 and 53317.5 of the Act and Section F of the Rate and Method. No other properties or entities are exempt from the special tax unless the properties or entities are expressly exempted in Resolution No. _____ or in a resolution of consideration to levy a new special tax or special taxes or to alter the rate or method of apportionment or an existing special tax as provided in Section 53334 of the Act.

Section 5. All of the collections of the special tax shall be used as provided for in the Act, the Rate and Method and Resolution No. _____.

Section 6. The special tax shall be collected in the same manner as ordinary ad valorem property taxes are collected and shall be subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem taxes (which such procedures include the exercise of all rights and remedies permitted by law to make corrections, including, but not limited to, the issuance of amended or supplemental tax bills), as such procedure may be modified by law or by this City Council from time to time.

Section 7. As a cumulative remedy, if any amount levied as a special tax for payment of the interest or principal of the Bonds (including any bonds issued to refund the Bonds), together with any penalties and other charges accruing under this Ordin ance, are not paid when due, the City Council may, not later than four years after the due date of the last installment of principal on the Bonds (including any bonds issued to refund the Bonds), order that the same be collected by an action brought in the superior court to foreclose the lien of such special tax, as authorized by the Act.
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Section 8. The Mayor of the City shall sign this Ordinance and the City Clerk or Deputy City Clerk (referred to herein as the “City Clerk”) shall attest to the Mayor’s signature and then cause the same to be published within fifteen (15) days after its passage at least once in The Press Enterprise, a newspaper of general circulation published and circulated in the City of Murrieta.

Section 9. The specific authorization for adoption of this Ordinance is pursuant to the provisions of Section 53340 of the Act.

Section 10. The City Clerk is hereby authorized to transmit a certified copy of this ordinance to the Treasurer -Tax Collector of the County of Riverside, and to perform all other acts which are required by the Act, this Ordinance or by law in order to accomplish the purpose of this Ordinance.

Section 11. A full reading of this Ordinance is dispensed with prior to its final passage, a written or printed copy having been available to the City Council and the public a day prior to its final passage.

Section 12. This Ordinance shall take effect thirty days after its final passage.

PASSED AND ADOPTED by the City Council at a regular meeting held on the _____ day of _____, 2025.

CITY COUNCIL OF THE CITY OF MURRIETA

By:_______________________________
Cindy Warren
Mayor of the City of Murrieta
ATTEST:
________________________________
Cristal McDonald
City Clerk of the City of Murrieta

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STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE )ss.

CITY OF MURRIETA )
I, Cristal McDonald, City Clerk of the City of Murrieta, do hereby certify that the foregoing Ordinance No. 616-25 was introduced by the City Council of the City of Murrieta, California, at its Regular meeting of April 1, 2025 and adopted at its Regular meeting of _____, 2025 and that the same was adopted by the following vote:

AYES:

NOES:

ABSENT:

CRISTAL MCDONALD, CITY CLERK
990
991
Stradling Yocca Carlson & Rauth
Draft of March 6, 2025

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ACQUISITION AGREEMENT
among

CITY OF MURRIETA
and

CITY OF MURRIETA
COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE), and

DISCOVERY VILLAGE LLC

992

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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS ......................................................................................................1 Section 1.01 Definitions ...........................................................................................................1 ARTICLE II. RECITALS ...........................................................................................................5 Section 2.01 The CFD ..............................................................................................................5 Section 2.02 The Development .................................................................................................5 Section 2.03 The Facilities ........................................................................................................5 Section 2.04 The Financing ......................................................................................................5 Section 2.05 The Bonds ............................................................................................................5 Section 2.06 No Advantage to City Construction .....................................................................5 Section 2.07 Agreements ..........................................................................................................6 ARTICLE III. FUNDING.............................................................................................................6 Section 3.01 District Proceedings .............................................................................................6 Section 3.02 Bonds ...................................................................................................................6 Section 3.03 Bond Proceeds .....................................................................................................7 Section 3.04 No “Pay Go” Taxes Following the Issuance of Bonds ........................................8 Section 3.05 Prepayments .........................................................................................................8 Section 3.06 Limitation .............................................................................................................9 ARTICLE IV. CONSTRUCTION OF CITY FACILITIES .........................................................9 Section 4.01 Plans .....................................................................................................................9 Section 4.02 Construction .........................................................................................................9 Section 4.03 Independent Contractor ......................................................................................10 Section 4.04 Performance and Payment Bonds ......................................................................10 Section 4.05 Contracts and Change Orders ............................................................................10 Section 4.06 Time for Completion .........................................................................................11 Section 5.01 Inspection ...........................................................................................................11 Section 5.02 Acquisition of City Facilities .............................................................................11 Section 5.03 Payment Requests ..............................................................................................12 Section 5.04 Processing Payment Requests ............................................................................12 Section 5.05 Payment .............................................................................................................13 Section 5.06 Restrictions on Payments ...................................................................................13 Section 5.07 Allocation of Costs ............................................................................................15 Section 5.08 Expectations of the Parties .................................................................................15 Section 5.09 Defective or Nonconforming Work ...................................................................16 Section 5.10 Modification of Discrete Components ...............................................................16 ARTICLE VI. OWNERSHIP AND TRANSFER OF CITY FACILITIES ...............................16 Section 6.01 Facilities to be Owned by the City - Conveyance of Land and Easements to City .....................................................................................................................16 Section 6.02 Facilities to be Owned by the City - Title Evidence ..........................................16 Section 6.03 Facilities Constructed on Private Lands ............................................................17 Section 6.04 Facilities Constructed on City Land ..................................................................17 Section 6.05 Maintenance and Warranties .............................................................................17 993

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ARTICLE VII. PAYMENT OF CITY FEES ..............................................................................18 Section 7.01 Request for Payment of City Fees .....................................................................18 Section 7.02 Payment of City Fees in Advance of Availability of Funding Sources .............18 Section 7.03 Return of Deposits .............................................................................................18 Section 7.04 Deposits Allocated First .....................................................................................19 Section 7.05 Application of Deposits .....................................................................................19 Section 7.06 Expectations .......................................................................................................19 Section 7.07 Return of Funds Following DIF Fee Credits .....................................................19 ARTICLE VIII. INSURANCE ......................................................................................................20 Section 8.01 Insurance Requirements .....................................................................................20 Section 8.02 Standards Applicable .........................................................................................21 ARTICLE IX. INDEMNIFICATION.........................................................................................21 Section 9.01 Indemnification and Hold Harmless ..................................................................21 Section 9.02 Disclosure of Special Tax ..................................................................................22 ARTICLE X. EVENT OF DEFAULT; TERMINATION ........................................................22 Section 10.01 Event of Default .................................................................................................22 Section 10.02 Owner Termination ............................................................................................23 ARTICLE XI. EMWD FACILITIES..........................................................................................23 Section 11.01 EMWD Acquisition Facilities ...........................................................................23 Section 11.02 EMWD Fees ......................................................................................................24 ARTICLE XII. MISCELLANEOUS ...........................................................................................25 Section 12.01 Limited Liability of City ....................................................................................25 Section 12.02 Audit ..................................................................................................................25 Section 12.03 Attorney’s Fees ..................................................................................................25 Section 12.04 Notices ...............................................................................................................25 Section 12.05 Severability ........................................................................................................26 Section 12.06 Successors and Assigns .....................................................................................26 Section 12.07 Other Agreements ..............................................................................................26 Section 12.08 Waiver ................................................................................................................26 Section 12.09 Merger ................................................................................................................26 Section 12.10 Binding on CFD .................................................................................................26 Section 12.11 Amendment ........................................................................................................26 Section 12.12 Counterparts .......................................................................................................26 Section 12.13 Governing Law ..................................................................................................27

EXHIBIT A DESCRIPTION OF ELIGIBLE PUBLIC FACILITIES AND DISCRETE

COMPONENTS

EXHIBIT B DESCRIPTION OF PROPERTY

EXHIBIT C FORM OF PAYMENT REQUEST

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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the “Acquisition Agreement”), dated as of _______________, 2025, is by and among the CITY OF MURRIETA, a municipal corporation and a political subdivision of the State of California (the “City”), the CITY OF MURRIETA COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE) (the “CFD”), and DISCOVERY VILLAGE LLC, a Delaware limited liability company (the “Owner”).

ARTICLE I.

DEFINITIONS
Section 1.01 Definitions. Except for terms defined herein, t he following terms sh all have the meanings ascribed to them in this Section 1.01 for purposes of this Acquisition Agreement.
“Acceptable Title” means title to land or interest therein, in form acceptable to the Director, free and clear of all liens, taxes, assessments, leases, easements and encumbrances, whether or not recorded, but subject to any exceptions determined by the Director as not interfering with the actual or intended use of the land or interest therein . Notwithstanding the foregoing, an irrevocable offer of dedic ation may constitute land with an “Acceptable Title” if:
(i) such offer is necessary to satisfy a condition to a tentative or final parcel map, (ii) such offer is in a form acceptable to the Director, (iii) the Director has no reason to believe that such offer of dedication will not be accepted by the applicable public agency, and (iv) the Owner commits in writing not to allow any liens to be imposed on such property prior to its acceptance .

Notwithstanding the foregoing, if the land is within the boundar ies of any existing community facilities district (including the CFD), an assessment district, or other financing district, then the lien of the special taxes or assessments shall be a permitted exception to title so long as the land, while owned by the City or other public agency, is exempt from the special tax or assessments to be levied by the community facilities district, assessment district, or other financing district. “Acceptance Date” means the date the City Council (or other public entity which is to own a Facility) takes final action to accept dedication of or transfer of title to a Facility. “Acquisition Agreement” means this Acquisition Agreement, together with any Supplement hereto.
“Act” means the Mello-Roos Community Facilities Act of 1982, Section 53311 et seq. of the California Government Code, as amended.
“Actual Cost” means the substantiated cost of a Facility or a Discrete Component, which costs may include all hard and soft costs associated with the Facility or a Discrete Component, including, but not limited to: (i) the costs for the design, engineering, and construction (including grading) of such Facility or Discrete Component, (ii) the costs incurred by the Owner in preparing the Plans for such Facility or Discrete Component and the related costs of environmental evaluations of the Facility or Discrete Component, (iii) the fees paid to governmental agencies for, and all other costs incurred in connection with obtaining permits, licenses or other governmental approvals for such Facili ty or Discrete Component, 995

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(iv) professional costs incurred by the Owner or the City associated with such Facility or Discrete Component, such as engineering, legal, accounting, inspection, construction staking, materials testing and similar professional se rvices; and (v) costs directly related to the construction and/or acquisition of a Facility or Discrete Component, such as costs of payment, performance and/or maintenance bonds, and insurance costs (including costs of any title insurance required hereunder).
“Affiliate” means any entity with respect to which fifty percent (50%) or more of the ownership or voting power is held individually or collectively by the Owner and any other entity owned, controlled or under common ownership or control by or with, as applicable, the Owner, and includes all general partners of any entity which is a partnership . Control shall mean ownership of fifty percent (50%) or more of the voting power of or ownership interest in the respective entity . A title or escrow company t hat is an affiliate of the Owner shall not be considered an Affiliate for purposes of this Acquisition Agreement. “Authorized Fees” means, collectively, the City Fees and the EMWD Fees. “Bonds” means the bonds to be issued by the City for the CFD, in one o r more series, secured by the levy of special taxes of the CFD.
“Business Day” means a day other than a Saturday, Sunday or a day that Murrieta City Hall is not open for business and serving the public.
“CFD” means the City of Murrieta Community Facilities District No. 2025-3 (Discovery Village), created by the City under the Act.
“City” means the City of Murrieta, a municipal corporation and a political subdivision of the State.
“City Facilities” means the streets, storm drainage, and landscaping improveme nts to be owned, operated or maintained by the City; and City Fees as set forth in Exhibit “A.” “City Facilities Account” means the subaccount of the Improvement Fund by that name from which the City Facilities may be funded.
“City Fees” means the City -imposed development impact fees described in Exhibit “A” attached hereto.
“County” means the County of Riverside, California.
“Director” means the City Manager of the City or his or her written designee acting as such under this Acquisition Agreement.
“Disbursement Request Form” means the request form attached to the EMWD JCFA as Exhibit D (for EMWD Fees) or Exhibit E (for EMWD Acquisition Facilities), which shall be used to requisition Funding Sources to pay for EMWD Facilities and EMWD Fees. 996

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“Discrete Component” means a segment or component of a Facility that the Director has agreed can be separately identified, inspected and completed consistent with the provisions of Section 53313.51 of the Act, and be the subject of a Payment Request hereunder . The Discrete Components are shown on Exhibit A hereto with each lettered description of work constituting a Discrete Component of the corresponding Facility.
“EMWD” means Eastern Municipal Water District.
“EMWD Acquisition Facilities” means the sewer and water facil ities described in Exhibit “A” which are constructed by Owner and acquired by EMWD. “EMWD Facilities” means (i) EMWD Acquisition Facilities and (ii) EMWD Fees. “EMWD Fees” means water connection fees, sewer connection fees, annexation fees, sewer treatment capacity charges, sewer surcharge fees, and all components thereof imposed by EMWD with respect to development of the property within the CFD. “EMWD JCFA” means the Joint Community Facilities Agreement entered into by and among City, EMWD and Owner, dated as of _____, 2025, as it may be amended. “Event of Default” is defined in Section 10.01 herein.
“Facility” or “Facilities” means the public facility or facilities described in Exhibit “A” hereto which are eligible to be financed by the CFD consisting of C ity Facilities and EMWD Facilities. The descriptions of the Facilities in Exhibit “A” are preliminary in some cases . The final Plans may show substitutes or modifications approved by the applicable public agency to the proposed Facilities in order to acc omplish the work or serve the new development within the CFD.
“Fiscal Agent” means the agent named to such position as fiscal agent or trustee under the Fiscal Agent Agreement, or any successor thereto acting as fiscal agent under the Fiscal Agent Agreement.
“Fiscal Agent Agreement” means the fiscal agent agreement, indenture of trust or other agreement providing for, among other matters, the issuance of the Bonds and the establishment of the Improvement Fund, as it may be amended or supplemented from time to time. “Funding Sources” shall mean, collectively, the proceeds of Bonds , any special taxes collected to directly finance Facilities (as set forth in but subject to the limitations of Section 3.04) and prepayments of special taxes applied to the costs of Facilities (as set forth in Section 3.05), as further described in Section 3 herein. “Goals and Policies” means the Community Facilities District Goals and Policies, dated October 3, 2023. Any future amendments to the Goals and Policies shall not be applicable to the CFD.
“Improvement Fund” means the Improvement Fund, and the following two subaccounts thereof: City Facilities Account; and the Other Facilities Account. 997

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“Other Facilities Account” means the subaccount of the Improvement Fund by that name from which the EMWD Facilities may be funded.
“Owner” means Discovery Village LLC , a Delaware limited liability company, and its successors and assigns to the extent permitted under Section 12.06 hereof. “Payment Request” means a document, substantially in the form of Exhibit “C” hereto, to be used by the Owner in requesting payment of a Purchase Price or funding with respect to one or more City Facilities or Discrete Components thereof or any City Fees. “Plans” means the plans, specifications, schedules and related construction contracts for the Facilities and/or any Discrete Components thereof approved pursuant to the applicable standards of the City or other entity that will own or operate the Facilities when completed and acquired.
“Price Point Study” means a report that consists of the following: (i) for homes that have been previously sold and closed, the actual sales prices of such homes, (ii) for homes that are in escrow but have not closed, the actual purchase price of the homes, and (iii) for all other homes and for all other lots, the estimated home sale prices prepared by an independent third party consultant chosen by the City.
“Principal Payment Date” shall mean, with respect to Bonds issued in the CFD, the semi- annual payment date in which princip al or sinking fund payments on such Bonds are, in any year, payable. For example, if the principal amount of Bonds are payable on September 1, the Principal Payment Date shall be September 1, regardless of whether principal payments are actually due in any particular year.
“Proof of Assignment” shall mean any of the following: (i) a letter from a merchant builder acknowledging that the Owner is entitled to all refunds of deposits; (ii) excerpts from the purchase and sale agreement with the Owner that the merchant builder has agreed that all refunds of deposits belong to the Owner; or (iii) other evidence that the merchant builder has agreed that the Owner is entitled to the return of all deposits.
“Purchase Price” means the amount paid by the City for a Fa cility and/or any Discrete Components thereof determined in accordance with Article V hereof, being an amount equal to the Actual Cost of such Facility or Discrete Component, but subject to any limitations and reductions provided for in Article V.
“Rate and Method” means the rate and method of apportionment of the special tax for the CFD.
“Substantially Complete(d)” with respect to a Facility or Discrete Component means that such Facility or Discrete Component is substantially complete in accordance with its Plans and is available for use by the public for its intended purpose, notwithstanding any final “punch list” items still required to be completed, unless such items are required for the safe operation of such Facility or Discrete Component, and shall be based upon approval of the City inspector, which shall not be unreasonably withheld.
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“Supplement” means a written document amending, supplementing or otherwise modifying this Acquisition Agreement and any exhibit hereto, or the list of Facilities to be financed by the Funding Sources.

ARTICLE II.

RECITALS
Section 2.01 The CFD. The City Council of the City is the legislative body of the CFD established under the Act for the financing of, among other things, the acquisition, construction and installation of public facilities ident ified in the proceedings to form the CFD, which include the Facilities listed in Exhibit “A” hereto.

Section 2.02 The Development . The real property in the CFD is described in Exhibit “B” hereto (the “Property”) . The Owner proposes to develop the Property (by itself, through sales to merchant builders, or a combination thereof) as a residential community containing approximately 365 single-family residential dwelling units and other uses (the “Development”).

Section 2.03 The Facilities. The Owner will benefit from a coordinated plan of design, engineering and construction of the Facilities and the development of the land . The Owner acknowledges that the inclusion of Facilities in Exhibit “A” hereto in no way, in itself, obligates the City to issue any Bonds to acquire the Facilit ies from the Owner or implies that the City has in any way engaged the Owner to construct the Facilities . The City and CFD acknowledge that the inclusion of Facilities in Exhibit “A” hereto in no way, in itself, obligates the Owner to construct any such Facilities under the terms of this Acquisition Agreement.

Section 2.04 The Financing. The Owner and the City wish to finance the acquisition of the Facilities and the payment therefor by entering into this Acquisition Agreement for the acquisition of the Facilities and payment for Discrete Components thereof (as it may be amended and supplemented) from the Funding Sources.

Section 2.05 The Bonds . The CFD will be proceeding with the authorization and issuance of the Bonds under the Act and the Fiscal Agent Agreement, the proceeds of which Bonds shall be used, in part, to finance the acquisition of all or a portion of the Facilities . The execution by the City and the CFD of this Acquisition Agreement in no way obligates the City or the CFD to issue any Bonds, or to acquire any Facili ties with proceeds of any Bonds issued, except the Facilities listed in Exhibit “A” hereto which are to be acquired subject to the terms and conditions set forth in this Acquisition Agreement.

Section 2.06 No Advantage to City Construction . The City, by its approval o f this Acquisition Agreement, has determined that it will obtain no advantage from undertaking the construction by the City directly of the City Facilities, and that the provisions of this Acquisition Agreement require that the Facilities to be constructed by the Owner and acquired with the proceeds of the Bonds be constructed as if they had been constructed under the direction and supervision of the applicable Public Agency, as set forth in Section 4.02 below. Notwithstanding anything in this Acquisition Agreement to the contrary, upon the mutual agreement of the City 999

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and the Owner and upon an Event of Default, the City and the Owner may allocate a portion of the Funding Sources to the construction of City Facilities that are constructed by the City.

Section 2.07 Agreements. In consideration of the mutual promises and covenants set forth herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City, the CFD, and the Owner agree that the foregoing recitals, as appli cable to each, are true and correct and further make the agreements set forth herein.

ARTICLE III.

FUNDING
Section 3.01 District Proceedings. The CFD shall conduct all necessary proceedings under the Act for the issuance, sale and delivery of the Bonds; provided, however, that no thing herein shall be construed as requiring the CFD to issue the Bonds or any series thereof . The Owner and the City staff shall meet regarding the amount, timing and other material aspects of each series of the Bonds, but the legal proceedings and the s eries, principal amounts, rates, terms and conditions and timing of the sale of the Bonds shall be consistent with this Acquisition Agreement and in all respects subject to the approval of the City Council as legislative body of the CFD.

Section 3.02 Bonds. The CFD anticipates issuing one or more series of Bonds for the CFD when building permits have been issued on Property within the CFD that is projected to be responsible for at least 50% of the projected Special Tax levy (the “50% Threshold”) . In each case, the Bonds will be sized to be secured by 100% of the assigned special tax rates on all taxable property (at build out, and, at the CFD’s discretion, excluding any Property therein currently delinquent in payment of special taxes) as set forth in the Ra te and Metho d. If requested by the Owner, the CFD may, however, in its sole discretion, agree to issue Bonds prior to the 50% Threshold being met for the CFD. If the CFD agrees to issue Bonds prior to the 50% Threshold being met, the CFD shall require one or more le tters of credit or cash deposits from the Owner or other homebuilders within the CFD to secure the payment of Special Taxes on land owned by the Owner or such other homebuilders as the CFD shall determine until such time as the 50% Threshold is met in the CFD. The letter of credit or cash deposit shall be in an amount equal to two (2) years special taxes to be levied on property owned by the Owner or the homebuilders, as applicable . The issuance of Bonds within the CFD shall comply with the parameters set forth below, except as such parameters are required to be changed to comply with state law:
• Credit enhancement will not be required as condition precedent to the issuance of the Bonds unless the City agrees to issue the Bonds prior to the 50% Threshold being satisfied for the CFD.
• Debt service on the Bonds shall be sized based on the assumption that the maximum special taxes that may be levied on taxable property shall be 110% of the projected debt service on the Bonds in each year plus priority administ rative expenses (subject to the application of capitalized interest in accordance with Section 3.03 hereof). While the actual coverage ratio may be in excess of 110%, 1000

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the City shall not, as a condition of issuing the Bonds, require a ratio in excess of 110%.
• The assessed or appraised value of the taxable property within CFD shall be at least three times the principal amount of the Bonds and any direct or overlapping community facilities district or assessment district debt . While the actual value - to-lien ratio may be in excess of 3:1, the City shall not, as a condition of issuing the Bonds, require a ratio in excess of 3:1.
• The Reserve Fund shall be funded in an amount equal to the least of the three federal tax safe harbor amounts.
• The proceeds of the Bonds for the CFD may be used to finance any of the Facilities set forth in Exhibit A, including the capital fees listed on Exhibit A. • The debt service on Bonds in the CFD may escalate in an annual amount equal to any escalation of the special taxes under the Rate and Method as provided in Section 2.01 hereof.
• The City in its sole discretion may require the Owner, or its assigns to prepay a portion of the special taxes on any parcel that has a tax rate in excess of 2% at the time such Bonds are issued, based upon a Price Point Study.

Any time after three years following the issuance of the Bonds, if the balances in the Improvement Fund or any subaccount therein for such the CFD is $0, the City may close such fund or account. If funds remain on de posit in the Improvement Fund for the CFD five years following the issuance of the Bonds, the City may elect to use such funds to defease Bonds or to pay directly for any authorized facility or facilities.

Section 3.03 Bond Proceeds . The proceeds of the Bonds shall be deposited, held, invested, reinvested and disbursed as provided in the Fiscal Agent Agreement and this Acquisition Agreement. A portion of the proceeds of the Bonds will be set aside under the Fiscal Agent Agreement in the Improvement Fund and upon the d irection of the Owner used to finance City Facilities and EMWD Facilities . Moneys in the Improvement Fund shall be withdrawn therefrom in accordance with the provisions of the Fiscal Agent Agreement and the applicable provisions hereof for payment , without priority, of all or a portion of the costs of construction and/or acquisition of the Facilities (including payment of the Purchase Price of Discrete Components thereof), and payment or reimbursement of City Fees and EMWD Fees all as herein provided or as provided in the EMWD JCFA; provided, however, that, if tax -exempt Bonds are issued, City Fees shall be financed only if the City shall certify in connection with such financing of City Fees that it reasonably expects to spend Bond proceeds attributable to the financing of such City Fees on public capital improvements within three years from the date of issuance of the Bonds.

Unless otherwise requested in writing by the Owner prior to issuance of each series of Bonds, earnings on amounts in a subaccount of the Improvement Fund shall be retained in the respective subaccount of the Improvement Fund until all Facilities have been financed, as evidenced by a certificate provided by the Owner, or Owner provides a certificate to the CFD 1001

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indicating that the funds o n deposit in the Improvement Fund are sufficient to finance the remaining Facilities for which the Owner expects to submit a payment request . For a period not to exceed three (3) years after issuance of the Bonds, earnings on amounts in the reserve fund(s ) for the Bonds in excess of the applicable reserve requirement shall, prior to receipt of either certificate described in the preceding sentence, be deposited in the Improvement Fund, and after receipt of such certificate, shall be deposited in the fund e stablished by the Fiscal Agent Agreement for payment of debt service on the Bonds.

The City agrees to include capitalized interest for eighteen (18) months in each series of Bonds, unless the Owner requests capitalized interest for a shorter period prior t o issuance of each series of Bonds.

The Owner agrees that the City alone shall direct the investment of the funds on deposit in the funds and accounts established by or pursuant to the Fiscal Agent Agreement, including the Improvement Fund, and that the Ow ner has no right whatsoever to direct investments under the Fiscal Agent Agreement.

Neither the City nor the CFD shall have any responsibility whatsoever to the Owner with respect to any investment of funds made by the Fiscal Agent under the Fiscal Agent A greement, including any loss of all or a portion of the principal invested or any penalty for liquidation of an investment. Any such loss may diminish the amounts available in the Improvement Fund to pay the Purchase Price of Facilities and Discrete Compo nents hereunder . The Owner further acknowledges that the obligation of any owner of real property in the CFD, including the Owner to the extent it owns any real property in the CFD, to pay special taxes levied in the CFD is not in any way dependent on: ( i) the availability of amounts in the Improvement Fund to pay for all or any portion of the Facilities or Discrete Components thereof, or (ii) the alleged or actual misconduct of the City or CFD in the performance of its obligations under this Acquisition Agreement, the Fiscal Agent Agreement, any Owner agreement or amendment thereto or any other agreement to which the Owner and the CFD and/or the City are signatories.

Section 3.04 No “Pay Go” Taxes Following the Issuance of Bonds. Following the issuance of Bonds, the CFD shall not levy taxes within the CFD directly to pay for the costs of acquiring Facilities. Prior to the issuance of any Bonds , the CFD shall levy special taxes on all parcels of Developed Property (as defined in the Rate and Method) at the assigned sp ecial tax rates and use such funds to pay for the costs of administering the CFD and for the costs of acquiring Facilities.

Section 3.05 Prepayments. To the extent authorized under the Rate and Method, any prepayments of special tax obligations that the Rate and Metho d requires to be used to pay for Facilities, whether before or after the issuance of the Bonds , shall be placed in a special fund to be held by the City (the “Prepayment Fund”). Moneys in the Prepayment Fund shall be a source for the payment of the costs of the acquisition of the Facilities and the Discrete Components thereof and the payment of Authorized Fees and shall be applied in the same manner as the proceeds of Bonds ; provided that the amounts in the Prepayment Fund shall be used to redeem Bonds to the extent required to maintain debt service coverage from Special Taxes at least equal to 110% of debt service on the Bonds plus administrative expenses. Notwithstanding anything in this Section 3.05 to the contrary, the Owner and the City agree that if only one series of Bonds is 1002

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issued in the amount required by Section 3.02, then the City shall no longer collect any Future Facilities Costs (as defined in the Rate and Method) in connection with a prepayment of Special Taxes after such Bonds are issued.

Section 3.06 Limitation. The City shall not be obligated to pay the Purchase Price of the Facilities or any Discrete Components thereof or the Authorized Fees except from amounts on deposit in the Prepayment Fund, and the Improvement Fund in any combination. The City makes no warranty, express or implied, that amounts on deposit in the Prepayment Fund, and the Improvement Fund will be sufficient for payment of the Purchase Price of the Facilities or any Discrete Components thereof or the Authorized Fees. The Owner ack nowledges that any lack of availability of amounts in the Prepayment Fund, and the Improvement Fund to pay the Purchase Price of Facilities or any Discrete Components thereof and the Authorized Fees shall in no way diminish any obligation of the Owner with respect to the construction of or contributions for public facilities or the payment of fees required by the conditions of approval for the project.

ARTICLE IV.

CONSTRUCTION OF CITY FACILITIES
Section 4.01 Plans. To the extent that it has not already done so, the Owner shall ca use Plans to be prepared for the City Facilities to be constructed by Owner and funded with the Funding Sources. Upon completion of the Plans for each City Facility to the satisfaction of the City in accordance with applicable ordinances and regulations o f the City, the City shall immediately notify Owner that the Plans are completed and acceptable to the City. Copies of all Plans shall be provided by the Owner to the Director upon request therefor, and, in any event, as- built drawings and a written assignment of the Plans for any City Facility shall be provided to the City prior to its acceptance of the City Facility.

Section 4.02 Construction. Subject to all of the provisions of this Agreement, the City agrees to acquire from the Owner those Facilities listed in Exh ibit A which are constructed by the Owner and tendered for acquisition in accordance with the provisions of this Agreement.

The Owner agrees that any Facility being constructed by, or under the direction of, the Owner and to be acquired by the City shall be constructed in substantial compliance with the approved Plans and in compliance with the requirements of Government Code Section 53313.5, which requires those improvements to be constructed as if such improvements had been constructed under the direction and supervision, or under the authority, of the City. The Owner shall require its contractor or contractors to pay the prevailing rate of per diem wages for work of a similar character in the locality of the CFD and not less than the general prevailing rate of per diem wages for holiday and overtime work, as provided in Section 1771 et seq. of the California Labor Code, to all workers employed by each such contractor in the construction of the Facilities. As to each Facility, the Owner shall obtain fro m its contractor or contractors and furnish to the City payroll records for a minimum of one payroll period as to all such workers employed by the contractor or contractors demonstrating compliance with the requirements of Section 1771 et seq. of the Cali fornia Labor Code. In addition to any other warranty or indemnification set forth in this Agreement, the Owner specifically warrants that it and its contractors, subcontractors, successor and assigns shall comply with the provisions of California Labor Co de Section 1771 et seq. or any similar applicable state or federal laws relating to payment of the prevailing wage as set forth above. The Owner shall indemnify, defend and hold 1003

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harmless the City and the CFD in any action brought by any person, entity or state or federal governmental agency for any failure to pay the prevailing wage or to comply with the applicable law governing payment of the prevailing wage.

This Acquisition Agreement is for the acquisition by the City of the City Facilities to be constructed by Owner and funded with the Funding Sources and payment for City Facilities and Discrete Components and EMWD Facilities (in accordance with the EMWD JCFA) thereof from such Funding Sources and is not intended to be a public works contract. The City and the Owner agree that the Owner shall award all contracts for the construction of the City Facilities to be constructed by Owner, acquired by the City and funded with the Funding Sources and the Discrete Components thereof and that this Acquisition Ag reement is necessary to assure the timely and satisfactory completion of such City Facilities . Notwithstanding the foregoing, the Owner shall award all contracts for construction of the City Facilities to be acquired by City with the Funding Sources by me ans of a bid process whereby at least three independent bids are obtained, and the contract is awarded to the lowest responsible bidder. The Director shall be entitled to discuss the bidding process with the Owner at any time and from time to time, and to require reasonable changes thereto for future contracts if, in the judgment of the Director, said process is not resulting in competitive bids for the City Facilities . Notwithstanding the foregoing, Owner may proceed with fewer than three bids if the Cit y reasonably determines that three bids were not reasonably available at the time of the bid.

Section 4.03 Independent Contractor. In performing this Acquisition Agreement, the Owner is an independent contractor and not the agent or employee of the City or the CFD .

Neither the City nor the CFD shall be responsible for making any payments to any contractor, subcontractor, agent, consultant, employee or supplier of the Owner.

Section 4.04 Performance and Payment Bonds. The Owner agrees to comply with all applicable performance and payment bonding requirements of the City (and other applicable public entities and/or public utilities) and the California Public Contracts Code with respect to the construction of the City Facilities to be constructed by Owner, acquired by City and funded with the Funding Sources.

Section 4.05 Contracts and Change Orders . The Owner shall be responsible for entering into all contracts and any supplemental agreements (commonly referred to as “change orders”) required for the construction of the City Facilities to be con structed by Owner, acquired by City and funded with the Funding Sources, and all such contracts and supplemental agreements shall be submitted to the Director. Prior approval of supplemental agreements by the Director shall only be required for such chang e orders which in any way materially alter the quality or character of the subject City Facilities, or which involve an amount equal to the greater of ten percent (10%) of the amount of the bid for the Discrete Component involved or $50,000 for supplemental agreements entered into subsequent to the date of this Acquisition Agreement .

The City expects that such contracts and supplemental agreements needing prior approval by the Director will be approved or denied (any such denial to be in writing, stating t he reasons for denial and the actions, if any that can be taken to obtain later approval) within fifteen (15) Business Days of receipt by the Director thereof.
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Section 4.06 Time for Completion . The Owner agrees that this Acquisition Agreement is for the benefit of the City and the Owner and, therefore, the Owner represents that it expects that the City Facilities to be constructed by Owner, acquired by City and funded with proceeds of a series of Bonds will be completed and the payment request for such City Facilities submitted within thirty -six (36) calendar months from the date of the closing of such series of Bonds. Any failure to complete such City Facilities within said time period shall not, however, in itself, constitute a breach by the Owner of the terms of this Acquisition Agreement.

The Owner agrees to use its good faith efforts to complete all City Facilities to be constructed by Owner, acquired by City and funded with proceeds of a series of Bonds within thirty-six (36) calendar months from the date of closing of such series of Bonds.

ARTICLE V.

ACQUISITION AND PAYMENT
Section 5.01 Inspection. The City’s inspector shall conduct its inspection within fifteen (15) Business Days following notice from the Owner to the City that the construction of each City Facility or Discrete Compo nent thereof to be acquired with the Funding Sources is complete. Upon the City inspector’s determination that construction of the City Facility or Discrete Component thereof has been completed in accordance with the Plans, the City shall immediately noti fy Owner in writing that the construction of such City Facility or Discrete Component thereof has been satisfactorily completed . No payment hereunder shall be made by the City to the Owner for a City Facility or Discrete Component thereof until the City F acility or Discrete Component thereof has been inspected and found to be completed in accordance with the approved Plans by the City or other applicable public entity or utility. The City shall make or cause to be made periodic site inspections of the Cit y Facilities to be constructed by Owner and acquired by City with the Funding Sources; provided that in no event shall the City incur any liability for any delay in the inspection of any City Facilities or Discrete Components . For City Facilities to be co nstructed by Owner, acquired by other public entities or utilities and funded with proceeds of the Bonds, the Owner shall be responsible for obtaining such inspections and providing written evidence thereof to the CFD . The reasonable costs incurred by the City in inspecting and approving the City Facilities to be constructed by Owner, acquired by City and funded with the Funding Sources and all related permit and other similar fees of the City applicable to construction of such City Facilities shall be pai d by Owner or, at the election of the City, from the Funding Sources.

Section 5.02 Acquisition of City Facilities . Upon completion of a City Facility to be constructed by Owner, and funded with the Funding Sources, Owner hereby agrees to sell the City Facility to the City (or other applicable public agency that will own such City Facility), and the City hereby agrees to use the Funding Sources to pay the Purchase Prices thereof to the Owner, subject to the terms and conditions hereof . The City shall not be obligated t o purchase any City Facility until the City Facility is completed and the Acceptance Date for such City Facility has occurred; provided that the City has agreed hereunder to make payments to the Owner for Discrete Components of City Facilities . The Owner acknowledges that the Discrete Components have been identified for payment purposes only, and that the City (or other applicable public agency that will own a City Facility) shall not accept a City Facility of which a Discrete Component is a part until the entire City Facility has been completed . The City 1005

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acknowledges that the Discrete Components do not have to be accepted by the City (or other applicable public agency that will own a City Facility) as a condition precedent to the payment of the Purchase P rice therefor, but the City shall not be obligated to make such payment until the Discrete Component has been Substantially Completed . In any event, the City shall not be obligated to pay the Purchase Price for any City Facility or Discrete Component exce pt from the Funding Sources.

Section 5.03 Payment Requests . In order to receive the Purchase Price for a City Facility or Discrete Component thereof, inspection thereof under Section 5.01 shall have been made and the Owner shall deliver to the Director: (i) a Payment Request in the form of Exhibit “C” hereto for such City Facility or Discrete Component thereof, together with all supporting documentation evidencing the Actual Costs of the City Facility or Discrete Component thereof; (ii) if payment is requested for a c ompleted City Facility, (a) if the property on which the City Facility is located is not owned by the City at the time of the request, a copy of the recorded documents conveying to the City Acceptable Title to the real property on, in or over which such Ci ty Facility is located, as described in Section 6.01 hereof, (b) a copy of the recorded notice of completion of such City Facility (if applicable), (c) to the extent paid for with the proceeds of the Bonds, an assignment to the CFD of any reimbursements that may be payable with respect to the City Facility, such as public or private utility reimbursements, and (d) an assignment of the warranties and guaranties for such City Facility, as described in Section 6.05 hereof, in a form acceptable to the City; and (iii) if reimbursement is requested for City Fees advanced by a third party builder, proof acceptable to the City of the assignment of such reimbursement to the Owner.

Section 5.04 Processing Payment Requests . Upon receipt of a Payment Request (including all accompan ying supporting documentation evidencing the Actual Costs), the Director shall conduct a review in order to confirm that such request is complete, that such City Facility or Discrete Component thereof and identified therein was constructed in accordance with the Plans therefor, and to verify and approve the Actual Cost of such Discrete Component or City Facility specified in such Payment Request . The Director shall also conduct such review as is required in his discretion to confirm the matters certified i n the Payment Request. The Owner agrees to cooperate with the Director in conducting each such review and to provide the Director with such additional information and documentation as is reasonably necessary for the Director to conclude each such review. For any City Facilities to be acquired by a utility, the Owner shall provide evidence acceptable to the Director that such City Facilities are acceptable to such utility. Within fifteen (15) Business Days of receipt of any Payment Request, the Director s hall review the request for completeness and notify the Owner whether such Payment Request is complete, and, if not, what additional documentation must be provided . If such Payment Request is complete, the Director shall provide a written approval or deni al (specifying the reason for any denial) of the request within 30 calendar days of its submittal . If a Payment Request seeking reimbursement for more than one City Facility or Discrete Component is denied, the Director shall state whether the Payment Req uest is nevertheless approved and complete for any one or more City Facilities or Discrete Components and any such City Facilities or Discrete Components shall be processed for payment under Section 5.05 notwithstanding such partial denial.
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Section 5.05 Payment. Upon approval of the Payment Request by the Director, the Director shall sign the Payment Request and forward the same to the City finance department of the City . Upon receipt of the reviewed and fully signed Payment Request, the City finance department shall, within fifteen (15) Business Days of receipt of the approved Payment Request, cause the same to be paid by the Fiscal Agent under the applicable provisions of the Fiscal Agent Agreement, to the extent of the Funding Sources . Any approved Payment Request not paid due to an insufficiency of Funding Sources, shall be paid promptly following the deposit of additional Funding Sources.

The Purchase Price paid hereunder for any City Facility or Discrete Component (in any number of installments as Funding Sources become available) shall constitute payment in full for such City Facility or Discrete Component, including, without limitation, payment for all labor, materials, equipment, tools and services used or incorporated in the work, supervision, administration, overhead, expenses and any and all other things required, furnished or incurred for completion of such City Facility or Discrete Component, as specified in the Plans.

Section 5.06 Restrictions on Payments. Notwithstanding any other provisions of this Acquisition Agree ment, the following restrictions shall apply to any payments made to the Owner under Sections 5.02 and 5.05 hereof:

A. Amounts of Payments . Subject to the following paragraphs of this Section 5.06, payments for each Discrete Component or City Facility will b e made only in the amount of the Purchase Price for the respective Discrete Component or City Facility . Nothing herein shall require the City in any event (i) to pay more than the Actual Cost of a City Facility or Discrete Component or (ii) to make any pa yment beyond the Funding Sources (at the time of initial payment or later upon subsequent deposits to the Improvement Fund). The parties hereto acknowledge and agree that all payments to the Owner for the Purchase Prices of City Facilities or Discrete Com ponents are intended to be reimbursements to the Owner for monies already expended or for immediate payment by the Owner (or directly by the City) to third parties in respect of such City Facilities and/or Discrete Components.

B. Joint or Third Party Payments. The City may make any payment jointly to the Owner and any mortgagee or trust deed beneficiary, contractor or supplier of materials, as their interests may appear, or solely to any such third party, if the Owner so requests the same in writing or as the City otherwise determines such joint or third party payment is necessary to obtain lien releases.

C. Withholding Payments . The City shall be entitled, but shall not be required, to withhold any payment hereunder for a Discrete Component or a Facility if the Owner or any Affiliate is delinquent in the payment of ad valorem real property taxes, special assessments or taxes, or special taxes levied in the CFD . In the event of any such delinquency, the City shall only make payments under this Section 5.06, should any be made at the City’s sole discretion, directly to contractors or other third parties employed in connection with the construction of the City Facilities or to any assignee of the Owner’s interests in this Acquisition Agreement (and not to the Owner or any Affiliate), until such time as the Owner provides the Director with evidence that all such delinquent taxes and assessments have been paid. 1007

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The City shall be entitled to withhold any payment hereunder for a City Facility or Discrete Component thereof that is the subject of a Payment Request until it is satisfied that any and all claims for labor and materials have been paid by the Owner for the City Facility or Discrete Component thereof that is the subject of a Payment Request, or conditional lien releases have been provided by the Owner for such City Facility or Discrete Component thereof, or until all certificates required by Section 5.03 have been obtained. The City, in its discretion, may waive this limitation upon the provision by the Owner of sureties, undertakings, securities and/or bonds of the Owner or appropriate contractors or subcontractors and deemed satisfactory by the Director to assure payment of such claims.

The City shall be entitled to withhold payment for any City Facility (or th e final Discrete Component of any such City Facility) hereunder to be constructed by Owner, acquired by City and reimbursed with the Funding Sources until: (i) the Director determines that the City Facility is ready for its intended use, (ii) the Acceptance Date for the City Facility has occurred and the requirements of Section 6.01, if applicable to such City Facility, have been satisfied, and (iii) a Notice of Completion executed by the Owner, in a form acceptable to the Director, has been recorded for the City Facility and general lien releases conditioned solely upon payment from the Funding Sources to be used to acquire such City Facility (or final Discrete Component) have been submitted to the Director for the City Facility. The City hereby agrees th at the Owner shall have the right to post or cause the appropriate contractor or subcontractor to post a bond with the City to indemnify it for any losses sustained by the City because of any liens that may exist at the time of acceptance of such a City Fa cility, so long as such bond is drawn on an obligor and is otherwise in a form acceptable to the Director. If the Director determines that a City Facility is not ready for intended use under (i) above, the Director shall so notify the Owner as soon as reasonably practicable in writing specifying the reason(s) therefor.

Nothing in this Acquisition Agreement shall be deemed to prohibit the Owner from contesting in good faith the validity or amount of any mechanics or materialman lien nor limit the remedies a vailable to the Owner with respect thereto so long as such delay in performance shall not subject the City Facilities or any Discrete Component thereof to foreclosure, forfeiture or sale. In the event that any such lien is contested, the Owner shall only be required to post or cause the delivery of a bond in an amount equal to the amount in dispute with respect to any such contested lien, so long as such bond is drawn on an obligor and is otherwise in a form acceptable to the Director.

D. Retention. The City may withhold in the Improvement Fund an amount equal to ten percent (10%) of the Purchase Price of each City Facility or Discrete Component to be paid hereunder. Any such retention will be released to the Owner upon final completion and acceptance of the related City Facility and the expiration of a maintenance period consistent with applicable City policy thereafter (a one year maintenance period for any landscaping, and upon receipt of a faithful performance bond acceptable to the Director to remain in effect for one year as to other City Facilities).

Notwithstanding the foregoing, the Owner shall be entitled to payment of any such retention upon the completion and acceptance of a Facility or Discrete Component, if a maintenance or warranty bond is poste d in lieu thereof in accordance with Section 6.05 hereof.

Payment of any retention shall also be contingent upon the availability of monies in the 1008

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Improvement Fund therefore. No retention shall apply if the Owner proves to the Director’s satisfaction that the Owner’s contracts for the City Facilities (or Discrete Components) provide for the same retention as herein provided, so that the Purchase Price paid for the City Facility or Discrete Component is at all times net of the required retention.

E. Frequency. Unless otherwise agreed to by the Director, no more than one Payment Request shall be submitted by the Owner in any calendar month, but the Payment Request may include more than one Facility or Discrete Component or Authorized Fee.

Section 5.07 Allocation of Costs. If Owner incurs costs that (1) apply to more than one Facility or Discrete Component (e.g., soft costs) or (2) apply to both Facilities or Discrete Components and improvements other than the Facilities or Discrete Components (e.g., grading), Owner shall a llocate, or cause the contractor to reasonably allocate, such costs between the Facilities or Discrete Components (in the case of clause (1)) or between the Facilities or Discrete Components and the improvements other than the Facilities or Discrete Compon ents (in the case of clause (2)) (the “Owner Allocation”). The City shall notify Owner of its good -faith reasonable disapproval of any Owner Allocation within fifteen (15) Business Days of submittal of the payment request. If the City has disapproved the Owner Allocation, then the City and Owner shall promptly allocate such costs, on a reasonable basis, between the Facilities or Discrete Components (in the case of clause (1)) or between the Facilities or Discrete Components and the improvements other than the Facilities or Discrete Components (in the case of clause (2)) (the “Agreed -Upon Allocation”). Based on the Owner Allocation or the Agreed - Upon Allocation, if applicable, the City shall include the costs allocated to a specific Facility or Discrete Component as part of the Actual Costs of such Facility or Discrete Component when such Facility or Discrete Component is subject to a payment request.

Section 5.08 Expectations of the Parties. The City understands and agrees that (i) the Owner will be constructing City Facilities (and Discrete Components) prior to the availability of the Funding Sources that will be used to pay for such City Facilities (and Discrete Components), (ii) the City may be inspecting such City Facilities (or Discrete Components) and processing and completing Payment Requests for the payment on such City Facilities (or Discrete Components) with knowledge that there may be insufficient Funding Sources available at such time, (iii) the City Facilities (or Discrete Components) may be conveyed to and accepted by the City when there are insufficient Funding Sources to pay the Purchase Prices of such City Facilities (or Discrete Components), and (iv) in any such case, the payment of any approved Payment Requests for the Purchase Prices of such City Faci lities (or Discrete Components) will be deferred until there are sufficient Funding Sources available to pay the Purchase Prices of such City Facilities (or Discrete Components), at which time the City will make such payments in accordance with this Acquis ition Agreement. At all times, the Owner will be constructing such City Facilities (or Discrete Components) with the expectation that the Purchase Prices for such City Facilities (or Discrete Components) will be paid from the Funding Sources. The conveyance of City Facilities (or Discrete Components) to the City prior to receipt of the Purchase Prices for such City Facilities (or Discrete Components) shall not be construed as a dedication or gift, or a waiver of the payment of the Purchase Prices, or any part thereof, for such City Facilities (or Discrete Components). The Owner acknowledges that the Funding Sources may not be sufficient to reimburse the Owner for all of its costs incurred to complete or pay for the Facilities.
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Section 5.09 Defective or Nonconforming W ork. If any of the work done or materials furnished for a City Facility or Discrete Component are found by the Director to be defective or not in accordance with the applicable Plans: (i) and such finding is made prior to payment for the Purchase Price o f such City Facility or Discrete Component hereunder, the City may withhold payment therefor until such defect or nonconformance is corrected to the satisfaction of the Director, or (ii) and such finding is made after payment of the Purchase Price of such City Facility or Discrete Component, the City and the Owner shall act in accordance with the City’s standard specification for public works construction.

Section 5.10 Modification of Discrete Components . Upon written request of the Owner, the Director shall consider m odification of the description of any Facility or Discrete Component or the addition or substitution of Facilities and Discrete Components. Any such modification shall be subject to the written approval of the Director, which will not be unreasonably delayed.

ARTICLE VI.

OWNERSHIP AND TRANSFER OF CITY FACILITIES
Section 6.01 Facilities to be Owned by the City - Conveyance of Land and Easements to City . Owner shall provide Acceptable Title to all property on, in or over which each City Facility to be constructed by Owner, acquire d by the City and funded out of the Funding Sources will be located, which Acceptable Title shall be deeded over to the City by way of grant deed, quitclaim, or dedication of such property, or easement thereon, if such conveyance of interest is approved by the City as being a sufficient interest therein to permit the City to properly own, operate and maintain such City Facility located therein, thereon or thereover, and to permit the Owner to perform its obligations as set forth in this Acquisition Agreemen t.

Completion of the transfer of title to land shall be accomplished prior to the payment of the Purchase Price for a City Facility and shall be evidenced by recordation of the acceptance thereof by the City Council or the designee thereof.

Section 6.02 Facilities to be Owned by the City - Title Evidence. The Owner shall furnish to the City a preliminary title report for land with respect to City Facilities to be constructed by Owner, acquired by the City and funded out of the Funding Sources and not previously dedicated or otherwise conveyed to the City, for review and approval at least fifteen (15) Business Days prior to the transfer of Acceptable Title to such City Facility to the City. The City shall approve the preliminary title report unless it reveals a matter which, in the reasonable judgment of the City, could materially affect the City’s use and enjoyment of any part of the property or easement covered by the preliminary title report. In the event the City does not approve the preliminary title report, the C ity shall not be obligated to accept title to such City Facility or pay the Purchase Price for such City Facility (or the last Discrete Component thereof) until the Owner has cured such objections to title to the satisfaction of the City. As a further precondition to the payment of the Purchase Price for a City Facility, the Owner shall provide a policy of title insurance on such land, in an amount determined by the Director, which is equal to or, with the consent of the Owner, greater than the Purchase Pr ice for a City Facility and in the form normally required by the City in connection with the dedication of land for subdivision improvements.
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Section 6.03 Facilities Constructed on Private Lands . If any City Facilities to be constructed by Owner, acquired by the City and funded out of the Funding Sources are located on privately-owned land, the owner thereof shall retain title to the land and the completed City Facilities until acquisition of the City Facilities under Article V hereof. Pending the completion of such t ransfer, the Owner shall not be entitled to receive any payment for any such City Facility or the last Discrete Component thereof. The Owner shall, however, be entitled to receive payment for Discrete Components of City Facilities (other than the last Dis crete Component) upon making an irrevocable offer of dedication of such land, or appropriate interest therein, in form and substance acceptable to the Director. Notwithstanding the foregoing, before payment for any Discrete Component of such a City Facili ty, the Owner shall convey or cause to be conveyed Acceptable Title thereto in the manner described in Sections 6.01 and 6.02 hereof.

If the land is within the boundaries of any existing community facilities district (including the CFD), an assessment dis trict, or other financing district, then the lien of the special taxes or assessments shall be a permitted exception to title so long as the land, while owned by the City or other public agency, is exempt from the special tax or assessments to be levied by the community facilities district, assessment district, or other financing district.

Section 6.04 Facilities Constructed on City Land . If the City Facilities to be constructed by Owner, acquired by the City and funded out of the Funding Sources are on land owned by t he City, the City hereby grants to the Owner a license to enter upon such land for purposes related to the construction (and maintenance pending acquisition) of the City Facilities.

The provisions for inspection and acceptance of such City Facilities othe rwise provided herein shall apply.

Section 6.05 Maintenance and Warranties . The Owner shall maintain each Discrete Component of a City Facility to be constructed by Owner, acquired by the City and funded out of proceeds of the Funding Sources in good and safe conditio n until the Acceptance Date of the City Facility of which such Discrete Component is a part. Prior to the Acceptance Date, the Owner shall be responsible for performing any required maintenance on any such completed Discrete Component or City Facility. O n or before the Acceptance Date of a City Facility to be constructed by Owner, acquired by City and funded with the Funding Sources, the Owner shall assign to the City all of the Owner’s rights in any warranties, guarantees, maintenance obligations or other evidence of contingent obligations of third persons with respect to such City Facility. After the Acceptance Date, and subject to the City’s rules and regulations in effect at the time of this Acquisition Agreement, the acquiring public agency shall be solely responsible for maintenance of the City Facility. With respect to each City Facility constructed by Owner, acquired by City and funded with the Funding Sources, the Owner shall warrant each such City Facility to be free from construction defects (a nd shall correct or cause to be corrected any such defects) for a period of one year from the Acceptance Date thereof, and shall provide a maintenance bond reasonably acceptable in form and substance to the Director for such period and such purpose to insu re that such defects, which appear within said period will be repaired, replaced, or corrected by the Owner, at its own cost and expense, to the satisfaction of the Director. The Owner shall continue to repair, replace or correct any such defects within t hirty (30) calendar days after written notice thereof by the City to the Owner, and shall complete such repairs, replacement or correction as soon as practicable. Any warranties, guarantees or other evidences of contingent obligations of third persons wit h respect to the City Facilities to be constructed by Owner, acquired by City and funded with the Funding Sources shall be delivered 1011

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to the Director as part of the transfer of title. For purposes of this Acquisition Agreement, following conveyance of a Ci ty Facility to the City, the terms “maintain” and “maintenance” mean the repair, replacement, or correction of any defects in the City Facility, and shall not mean the day -to-day upkeep or correction of normal wear and tear of the City Facility (such as watering or weeding for landscape improvements, painting, graffiti removal, etc.).

ARTICLE VII.

PAYMENT OF CITY FEES
Section 7.01 Request for Payment of City Fees . The Owner may request payment of City Fees from the Funding Sources by executing and submitting to the CFD a payment r equest.

Upon receipt of such payment request, the CFD shall pay, or cause to be paid, to the City the City Fees requested in such payment request, subject to the following conditions:

A. The City Fees shall be payable only to the extent of available Funding Sources; provided that , if tax -exempt Bonds are issued, City Fees shall be financed only if the City shall certify in connection with such financing of City Fees that it reasonably expects to spend Bond proceeds attributable to the financing of such City F ees on public capital improvements within three years from the date of issuance of the Bonds. Notwithstanding the foregoing, the Owner understands that the City Fees are an obligation of the Owner or its assignees for the public impacts created by the Own er’s or its assignees development of the real property within the CFD. Whether or not funds become available from the Funding Sources to pay City Fees, the owner of the property at the time such City Fees are due is obligated to pay the City Fees. Any City Fees paid from the Funding Sources that are in excess of the Deposits will result in a credit being provided to the Property for such City Fees (such that the prepaid City Fees are no longer payable by the property owners).

B. The City Fees shall be payable only to the extent that the City has not provided Development Impact Fee credits for such City Fees pursuant to the Development Agreement. For example, if the City Fee is $3,000 per unit, and the Owner constructs facilities equivalent to $2,000 per unit and the City provides a credit of $2,000 against the City Fee, then only $1,000 per unit may be financed by the Funding Sources.

Section 7.02 Payment of City Fees in Advance of Availability of Funding Sources.

The Owner or a merchant builder may be required pursuant t o the conditions of development or the fee ordinance to pay the City Fees prior to the availability of the Funding Sources to pay such City Fees. In the event such City Fees are paid prior to the availability of the Funding Sources, the amounts paid to the City shall be deemed to be deposits (each a “Deposit”) that are subject to refund by the City to Owner (and the Owner only, regardless of the entity that paid the Deposits), upon submission by Owner of Proof of Assignment, in the manner set forth in Section 7.04. The City shall place each Deposit in a capital facilities account(s).

Section 7.03 Return of Deposits. If the Owner or a merchant builder has made any Deposits to the City, then following deposit of Funding Sources with the City for the corresponding City F ees, the City shall return to the Owner (and the Owner only, regardless of the entity that paid the Deposit), upon submission by Owner of Proof of Assignment, from the capital account in which the Deposits were deposited the Deposits not previously returne d, 1012

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without interest or other earnings thereon. The City shall be so obligated to return such Deposits only to the extent that an equivalent amount of the Deposits to be returned is deposited with the City from the Funding Sources. The Deposits may be ret urned from time to time as additional Funding Sources become available.

Section 7.04 Deposits Allocated First. Funding Sources used to pay City Fees shall be allocated first for return of all Deposits prior to being allocated to the payment of City Fees not previously deposited by the Owner or a merchant builder. For example, if the Owner has paid $10,000 in Deposits, and Funding Sources become available in the amount of $15,000, the City shall apply the first $10,000 of the Funding Sources to the payment of the City Fees that were paid by the Deposits (and, thereafter, return the Deposits to the Owner) and use the remaining $5,000 of the Funding Sources to the payment of City Fees identified in the payment requisition.

Section 7.05 Application of Deposits. Any Deposits that have not been returned to the Owner at the time it is determined that there will be no further Funding Sources available (now or in the future) shall be retained by the City and may be used for the purposes for which the City Fee was required, and the unrefunde d Deposits shall constitute full and final payment for such City Fees, without any increase of any kind.

Section 7.06 Expectations. The Owner or merchant builder may pay City Fees (as Deposits) prior to the availability of Funding Sources to pay such City Fees. Any C ity Fees paid (as Deposits) by the Owner or a merchant builder shall be made with the understanding that such Deposits will be returned from the Funding Sources if, and when, such Funding Sources become available. The payment of Deposits prior to the avai lability of the Funding Sources shall not be construed as a dedication or gift of the City Fees, or a waiver of the return of the Deposits, it being the intention that the City Fees be paid by the Funding Sources to the extent of the Funding Sources.

Section 7.07 Return of Funds Following DIF Fee Credits. If the City provides fee credits against a Development Impact Fee as the result of the Owner constructing Facilities, any deposits made by the Owner or any other party to secure the payment of the subject Development Impact Fee shall be returned in accordance with the City’s procedures for returning deposits following a DIF Fee credit. To the extent that there remains any deposit of the Development Impact Fees that are otherwise City Fees for which credit was not prov ided, such amounts shall be considered Deposits within the meaning set forth in Section 7.02 and shall be returned to the Owner upon the funding of such differential from Funding Sources, as set forth in this Article VII. Nothing in this Article VII shall adversely affect the financing of Facilities for which a DIF credit is provided . For example, if the City Fee is $3,000 per unit, and the Owner constructs Facilities equivalent to $2,000 per unit and the City provides a credit of $2,000 against the City Fee, both the $1,000 remaining portion of the City Fee as well as the costs of the Facilities from which the credit was derived may be financed by the Funding Sources under this Agreement. The $2,000 portion of the City Fee shall not be financed by the Fu nding Sources and any deposits returned pursuant to the City’s policies as a result of the DIF Fee credit shall not be considered a Deposit within the meaning of Section 7.02. 1013

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ARTICLE VIII.

INSURANCE
Section 8.01 Insurance Requirements. The Owner shall, at all times prior to the f inal Acceptance Date of all City Facilities to be constructed by Owner, acquired by City and funded out of the Funding Sources, maintain and deliver to the City evidence of and keep in full force and effect, or cause the general contractor for such City Fa cilities to maintain and deliver to the City evidence of and keep in full force and effect, not less than the following coverage and limits of insurance, which shall be maintained with insurers and under forms of policies satisfactory to the Director: (i) Workers, Compensation and Employer’s Liability - Workers’ Compensation coverage as required by law; Employer’s Liability - limits of at least $100,000.00 per occurrence; (ii) Comprehensive General Liability - Combined Single Limit - $1,000,000.00; and (iii) Automobile Liability - Combined Single Limit - $1,000,000.00. The automobile and general comprehensive liability policies shall be accompanied by an umbrella policy with a combined limit of $5,000,000.00 . All of the Owner’s insurance policies shall co ntain an endorsement providing that written notice shall be given to the City at least 30 calendar days prior to termination, cancellation, or reduction of coverage in the policy.

The Bodily Injury and Property Damage Liability policies shall contain the following:

A. An endorsement extending coverage to the City and its agents as an insured, in the same manner as the named insured as respects liabilities arising out of the performance of any work related to the City Facilities to be constructed by Owner, acqu ired by City and funded out of the Funding Sources . Such insurance shall be primary insurance as respects the interest of the City, and any other insurance maintained by the City shall be excess and not contributing insurance with the insurance required hereunder.

B. Severability of Interest clause.

C. Provision or endorsement stating that such insurance, subject to all of its other terms and conditions, applies to the liability assumed by the Owner under this Acquisition Agreement.

Before awarding a contract fo r the construction of the City Facilities to be acquired with the Funding Sources, the Owner shall deliver to the Director certificates of insurance and endorsements as to such insurance, in a form acceptable to the City and the City Attorney, and Owner shall upon each renewal of such insurance policy provide the City with new certificates of insurance with respect thereto.

The Owner shall require and verify the same insurance on the part of its contractors and subcontractors.

The foregoing requirements as to the types, limits and City approval of insurance coverage to be maintained by the Owner are not intended to and shall not in any manner limit or qualify the liabilities and obligations assumed by the Owner under this Acquisition Agreement.

Any policy or policies of insurance that the Owner or its contractors or subcontractors elect to carry as insurance (i) against loss or damage to their construction equipment and tools or 1014

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other personal property used in fulfillment of this Acquisition Agreement or a co ntract related to the City Facilities to be constructed by Owner and funded out of the Funding Sources shall include a provision waiving the insurer’s right of subrogation against the City, and (ii) in fulfillment of this Acquisition Agreement involving a dual obligee bond may contain a clause to the effect that: “provided that Principal and Surety shall not be liable to the Obligees or any of them unless the Obligees or any of them have performed the obligations to the Principal in accordance with the terms of said contract; and provided, further, that Principal and Surety shall not be liable to all Obligees in the aggregate in excess of the penal sum above stated.” Section 8.02 Standards Applicable . The Owner may effect such coverage under blanket insurance policies, provided, however, that (i) such policies are written on a per occurrence basis, (ii) such policies comply in all other respects with the provisions of Section 8.01, and (iii) the protection afforded the City under any such policy shall be no less than that which would be available under a separate policy relating only to this Acquisition Agreement. All policies of insurance shall be with companies licensed or approved by the State of California Insurance Commissioner and rated (i) A12 or better with resp ect to primary levels of coverage, and (ii) B+12 or better with respect to excess levels of coverage, in the most recent edition of Best’s Insurance Guide and shall be issued and delivered in accordance with State law and regulations.

ARTICLE IX.

INDEMNIFICATION
Section 9.01 Indemnification and Hold Harmless. The Owner hereby assumes the defense of, and indemnifies and saves harmless the City, the CFD and each of their respective officers, directors, employees and agents, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from the design, engineering and construction of any of the City Facilities, or arising out of a failure of the Owner to provide notice of the special t ax to be levied by the CFD pursuant to Section 53341.5 of the Act (but only if the Owner is required to provide such notice), or arising out of any alleged misstatements of fact or alleged omission of a material fact made by the Owner, its officers, direct ors, employees or agents to the City, the CFD, the CFD’s underwriter and its counsel, appraiser, special tax consultant, market absorption consultant or bond counsel regarding the Owner, its proposed developments, its property ownership, and any contractual arrangement it may enter into in a disclosure document describing the CFD and the risks relating to the Bonds; provided that the actions, damages, claims, losses and expenses covered by this Section 9.01 which relate to the City Facilities being acquired shall be those arising out of the personal injury or property damage which occurred during the period up to the acceptance of the City Facilities by the City, whether or not an action or claim is filed by the date of acceptance of the City Facilities; and provided, further, that nothing in this Section 9.01 shall limit in any manner the indemnified party’s rights against any of the Owner’s architects, engineers, contractors or other consultants. The Owner shall furnish to the CFD a certificate or certificates of insurance substantiating that it has obtained for the entire period of the construction of the City Facilities a policy of comprehensive general liability insurance with coverage broad enough to include the Owner’s contractual obligations under thi s section and having a combined single limit of liability meeting the requirements set forth in Article VIII. 1015

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Said certificate of insurance shall include an endorsement naming the parties entitled to indemnity under this Section 9.01 as additional named insureds.

Except as set forth in this Section 9.01, no provision of this Agreement shall in any way limit the extent of the responsibility of the Owner for payment of damages resulting from the operations of the Owner, its agents, employees or contractors. Nothing in this Section 9.01 shall be understood or construed to mean that the Owner agrees to indemnify the City or the CFD, or any of their respective officers, directors, employees or agents, for any negligent or wrongful acts or omissions to act of th e City or the CFD, or any of their respective officers, directors, employees or agents.

Section 9.02 Disclosure of Special Tax. Provided the Owner is selling property within the CFD to individual homeowners, the Owner covenants and agrees that it will provide all forms of disclosure of the special tax to be levied by the CFD as required by existing law and by any future laws. In particular, provided the Owner is selling property within the CFD to individual homeowners, the Owner covenants and agrees from and after the date hereof to provide the special tax disclosure notice required by Section 53341.5 of the Act and to retain in its files copies of all notices signed by purchasers in accordance with Section 53341.5. If the Owner is selling property within the CFD to h omebuilders, it shall require such homebuilders to provide such disclosures to home purchasers in its purchase and sale agreement. The City shall have the right to inspect and obtain copies of all of the Owner’s records regarding special tax disclosure. The Owner represents that it has included in its contracts with purchasers of land within the CFD, and further agrees to include in its contracts with purchasers of land within the CFD entered into from and after the date hereof, a requirement that such pu rchasers (i) provide to the City all forms of disclosure of the special tax required by law, including the Section 53341.5 notice, (ii) retain signed copies of the Section 53341.5 notice following the sale of any parcel of land within the CFD to another, a nd (iii) provide the City on request an opportunity to review and obtain copies of all records relating to disclosure of the special tax.

Such contractual provision shall further provide that the City and the CFD are third party beneficiaries of such disc losure requirements and that the purchaser of land will indemnify the City, the CFD and their respective officers and employees for any failure of such purchaser to disclose the special tax as required by law.

ARTICLE X.

EVENT OF DEFAULT; TERMINATION
Section 10.01 Event of Default. If the City has provided the Owner with written notice that the work to construct the City Facilities is not being timely performed in a satisfactory manner (and providing a description of the defect or failure to timely perform) and the Owner has not commenced actions to cure any such defects identified in such notice within 60 calendar days after the giving of such notice and does not diligently pursue to completion the cure of any such defects as determined by the Director, the City may declare that an “Event of Default” has occurred. The Event of Default may be cured by the Owner by commencing within the 60 calendar day period following receipt of notice of default and diligently pursuing to completion the cure of such defect identified in the notice.
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During the occurrence and continuation of an Event of Default, the City shall have the right but not the obligation to require the Owner to make an irrevocable offer of dedication to the City of the land owned by the Owner for the City Facility identi fied in the notice and to assume responsibility for the work to be performed thereunder. In the event the City elects to assume the responsibility for any work on a previously awarded contract as described in the preceding sentence, the following will occur:

A. the Owner will make an irrevocable offer of dedication to the City of the land owned by the Owner for such City Facility identified in the notice; B. to the extent permitted by law and the applicable contract, the Owner will assign all of the contracts fo r the work performed to date on the City Facility identified in the notice to the City, if requested to do so by the Director; C. the City will use its best efforts to complete the City Facility within a reasonable time frame; and
D. upon completion of the City Facility, to the extent there are Funding Sources available following payment to the City for the costs of completing such City Facility, the Owner will be reimbursed for the lesser of the cost or value of the previously unreimbursed satisfactory work performed or paid for by the Owner. The cost of such work will be determined by taking the unreimbursed amounts expended by the Owner under the contract(s) taken over by the City and deducting any incremental cost incurred by the City to complete the work und er the contracts in question. Incremental cost shall be costs in excess of the sum of the original contract cost plus change orders approved by the City.

Section 10.02 Owner Termination. This Acquisition Agreement shall terminate and be of no further force as of July 1, 2035, unless extended by agreement of all the parties . If the Acquisition Agreement is terminated as provided herein, neither City nor Owner shall have any further responsibility or liability pursuant to this Acquisition Agreement, except for Owner’s responsibility and liability as set forth in Article IX, which shall continue upon termination of this Acquisition Agreement . Upon the termination of this Agreement, the City shall direct the use of any remaining Bond or Special Tax proceeds to complete an y remaining authorized facilities, redeem Bonds or use in any way permitted by the Act.

ARTICLE XI.

EMWD FACILITIES
Section 11.01 EMWD Acquisition Facilities.

A. EMWD Acquisition Facilities shall be acquired from the Funding Sources, and such EMWD Acquisition Facilities shall be bi d and constructed in accordance with the EMWD JCFA. EMWD Acquisition Facilities shall be funded from the Funding Sources, to the extent available, pursuant to the Disbursement Request Form set forth as Exhibit E in the EMWD JCFA. Upon receipt of a fully-executed Disbursement Request Form, the City shall pay the amount so requested from the available Funding Sources. With respect to any EMWD Acquisition Facility and EMWD Construction Facility constructed by Owner, acquired by EMWD and funded out of the Fu nding Sources, the Owner shall comply with EMWD’s rules 1017

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and regulations regarding title and conveyance of the subject EMWD Acquisition Facility and EMWD Construction Facility . The provision of a signed Disbursement Request Form from EMWD shall be evidence of such compliance.

B. EMWD Acquisition Facilities may be financed by the Funding Sources, including Bonds, pursuant to the JCFA . There is no requirement that the City Facilities or City Fees be paid first before financing EMWD Acquisition Facilities . The amount and timing of the financing of the EMWD Acquisition Facilities shall be in the discretion of the Owner.

C. The City understands and agrees that (i) the Owner will be constructing EMWD Facilities prior to the availability of the Funding Sources that w ill be used to pay for such EMWD Facilities, (ii) EMWD will be inspecting such EMWD Facilities and processing and completing Disbursement Request Forms for the payment on such EMWD Facilities with knowledge that there may be insufficient Funding Sources av ailable at such time, (iii) the EMWD Facilities may be conveyed to and accepted by EMWD when there are insufficient Funding Sources to pay the Purchase Prices of such EMWD Facilities, and (iv) in any such case, the payment of any approved Disbursement Requ est Forms for the Purchase Prices of such EMWD Facilities will be deferred until there are sufficient Funding Sources available to pay the Purchase Prices of such EMWD Facilities, at which time the City will make such payments in accordance with this Acqui sition Agreement. At all times, the Owner will be constructing such EMWD Facilities with the expectation that the Purchase Prices for such EMWD Facilities will be paid from the Funding Sources. The conveyance of EMWD Facilities to EMWD prior to receipt of the Purchase Prices for such EMWD Facilities shall not be construed as a dedication or gift, or a waiver of the payment of the Purchase Prices, or any part thereof, for such EMWD Facilities.

Section 11.02 EMWD Fees.

A. EMWD Fees shall be paid from the Funding Sources . EMWD Fees paid in advance of the availability of Funding Sources shall be deemed deposits and shall be reimbursed to the Owner in accordance with the EMWD JCFA following the funding of such EMWD Fees from the Funding Sources . EMWD Fees shall be funded from the Funding Sources, to the extent available, pursuant to the Disbursement Request Form set forth as Exhibit D in the EMWD JCFA . Upon receipt of a fully -executed Disbursement Request Form, the City shall pay the amount so requested from the available Fun ding Sources. With respect to any EMWD Fees funded out of the Funding Sources, the Owner shall comply with the provisions of the EMWD JCFA . The provision of a signed Disbursement Request Form from EMWD shall be evidence of such compliance.

B. EMWD Fees may be financed by the Funding Sources, including Bonds, pursuant to the JCFA . There is no requirement that the City Facilities or City Fees or EMWD Fees be paid first before financing EMWD Fees . The amount and timing of the financing of the EMWD Fees shall be in the discretion of the Owner.

C. The Owner or merchant builder may pay EMWD Fees (as deposits) prior to the availability of Funding Sources to pay such EMWD Fees . Any EMWD Fees paid (as deposits) by the Owner or a merchant builder shall be made with t he understanding that such 1018

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deposits will be returned from the Funding Sources if, and when, such Funding Sources become available. The payment of deposits prior to the availability of the Funding Sources shall not be construed as a dedication or gift of t he EMWD Fees, or a waiver of the return of the deposits, it being the intention that the EMWD Fees be paid by the Funding Sources to the extent of the Funding Sources. Prior to the reimbursement of any EMWD Fees to the Owner which were paid by third party merchant builders, the Owner shall provide to the City proof of assignment to the Owner of such reimbursement.

ARTICLE XII.

MISCELLANEOUS
Section 12.01 Limited Liability of City. The Owner agrees that any and all obligations of the City arising out of or related to this Acquisiti on Agreement are special and limited obligations of the City and the City’s obligations to make any payments hereunder are restricted entirely to the moneys, if any, from the Funding Sources . No member of the City Council, or City staff member, employee o r agent shall incur any liability hereunder to the Owner or any other party in their individual capacities by reason of their actions hereunder or execution hereof.

Section 12.02 Audit. The Director and/or the Finance Director or other finance officer of the City shall have the right, during normal business hours and upon the giving of two (2) Business Days prior written notice to the Owner, to review all books and records of the Owner pertaining to costs and expenses incurred by the Owner in the construction of the Cit y Facilities to be funded with the Funding Sources, and any bids taken or received for the construction thereof or materials therefor.

Section 12.03 Attorney’s Fees. In the event that any action or suit is instituted by either party against the other arising out of thi s Acquisition Agreement, the party in whose favor final judgment shall be entered shall be entitled to recover from the other party all costs and expenses of suit, including reasonable attorneys’ fees.

Section 12.04 Notices. Any notice, payment or instrument required o r permitted by this Acquisition Agreement to be given or delivered to any party hereto shall be deemed to have been received when personally delivered, or transmitted by telecopy or facsimile transmission (with telecopy or facsimile confirmation obtained), or seventy-two hours following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid, addressed as follows:

City:

City of Murrieta
1 Town Square
Murrieta, CA 92562
Attention: City Manager
Owner:

Discovery Village LLC
c/o Argent Management
2646 Dupont Dr., Suite 60 #520
Irvine, CA 92612
Attention: Travis Devan
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Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party.

Section 12.05 Severability. If any part of this Acquisition Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Acquisition Agreement shall be given effect to the fullest extent possible.

Section 12.06 Successors and Assigns . This Acquisition Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. The Owner may not assign its rights or obligations hereunder except with the prior written approval of the City Manager, or his d esignee, which approval shall not be unreasonably withheld, provided such assignment is in whole . Notwithstanding the preceding sentence, the Owner may assign its rights and obligations hereunder as security to lenders for the purpose of obtaining loans t o finance development within the CFD, but no such assignment shall release the Owner from its obligations hereunder to the City and the CFD, which the Owner shall remain obligated to perform itself . The Owner shall provide written notice to the City of an y assignment of this Agreement as security for lenders.

Section 12.07 Other Agreements . The obligations of the Owner hereunder shall be those of a party hereto and not as an owner of property in the CFD . Nothing herein shall be construed as affecting the City’s or the Owner’s rights, or duties to perform their respective obligations, under other agreements, use regulations or subdivision requirements relating to the development of the lands in the CFD . This Acquisition Agreement shall not confer any additional rights, or waive any rights given, by either party hereto under any development or other agreement to which they are a party.

Section 12.08 Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Acquisition Agreement by the other par ty, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by the other party with the terms of this Acquisition Agreement thereafter.

Section 12.09 Merger. No other agreement, statement or promise made by any party or any employee, officer or agent of any party with respect to any matters covered hereby that is not in writing and signed by all the parties to this Acquisition Agreement shall be binding.

Section 12.10 Binding on CFD . The City Council of the City, acting as the legislative body of the CFD, shall perform all parts of this Acquisition Agreement which require performance on the part of the CFD.

Section 12.11 Amendment. This Acquisition Agreement may be amended, from time to time, by written Supplement hereto and executed by both the City and the Owner.

Section 12.12 Counterparts. This Acquisition Agreement may be executed in counterparts, each of which shall be deemed an original. 1020

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Section 12.13 Governing Law . This Acquisition Agreement and a ny dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State. 1021

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IN WITNESS WHEREOF, the parties have executed this Acquisition Agreement as of the day and year first-above written.

CITY: CITY OF MURRIETA
For the City of Murrieta Community Facilities
District No. 2025-3 (Discovery Village)

By: __________________________
City Manager

OWNER:

DISCOVERY VILLAGE LLC,
a Delaware limited liability company

By: __________________________
Name: ________________________
Title: ________________________

1022

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Exhibit “A”

PUBLIC FACILITIES AND DISCRETE COMPONENTS ELIGIBLE TO BE FINANCED BY CITY OF MURRIETA COMMUNITY FACILITIES DISTRICT 2025-31 Facility Discrete Component

CITY FACILITIES

1. City Fees a. Law Enforcement
b. Fire Facilities
c. Streets and Bridges
d. Traffic Signals
e. Storm Drainage
f. General Facilities
g. Park Land Facilities
h. Community Center
i. Public Library

2. Storm Drainage None

3. Street Improvements None

4. Landscaping/Fencing/Signage None

5. Design & Permit Fees @ 15% None

EMWD FACILITIES

6. EMWD Fees a. Sewer Treatment Plant Capacity Charge
b. Water Financial Participation Charge
c. Water Supply Development Fee
d. (MARS) Area B

7. Sanitary Sewer None

8. Domestic Water None

9. Design & Permit Fees None

1 The descripti on of the Facilities and Discrete Components set forth in this Exhibit “A” are preliminary in some cases. The final plans and specifications may show substitutes or modifications to the proposed Facilities and Discrete Components approved by the applicable public agency. In no event shall any Facility or Discrete Component thereof be 1023

A-2
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eligible for acquisition and/or reimbursement to the extent that such Facility or Discrete Component thereof was previously reimbursed to the Owner out of Funding Sources. U nless agreed to otherwise by the Owner and the City, dry utility cost reimbursements shall not exceed 5% of the proceeds of any series of Bonds.

1024

B-1
4900-5221-9670v4/022972-0049
Exhibit “B”

DESCRIPTION OF PROPERTY
PARCELS 1 AND 2 AND LOTS 4, 5, 6, 7, AND 8, OF THE CITY OF MURRIETA TRACT MAP NO. 38228 RECORDED IN THE OFFICIAL RECORDS OF THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, ON THE 13TH DAY OF DECEMBER, 2024, IN BOOK 499 OF MAPS, AT PAGES 71-78, AS DOCUMENT NO. 2024-0379976.

RIVERSIDE COUNTY ASSESSOR’S PARCEL NUMBER: 392-290-049(P) 1025

C-1
4900-5221-9670v4/022972-0049
Exhibit “C”

FORM OF PAYMENT REQUEST
City of Murrieta
Community Facilities District No. 2025-3 (Discovery Village) The City of Murrieta (the City”) and Discovery Village LLC (“Owner”) are parties to the Acquisition Agreement, dated as of __________, 20 25 (the “Acquisition Agreement”).

Capitalized undefined terms use herein shall have the meanings ascribed thereto in the Acquisition Agreement. Pursuant to the Acquisition Agreement, Owner hereby requests confirmation that the City Facilities (or Discrete Components) described in Attachment A attached hereto (the “City Facilities or Discrete Components”) is [Complete] [Substantially Complete] and hereby further requests approval of the Purchase Price of the City Facilities or Discrete Components. In conne ction with this Payment Request, Owner hereby represents and warrants to the City as follows:
(a) The person executing this Payment Request on behalf of Owner is qualified to execute this Payment Request on behalf of Owner and knowledgeable as to the matters set forth herein.
(b) Owner has submitted or submits herewith to the Director as-built drawings or similar plans and specifications for the City Facilities or Discrete Components for which payment is requested, and such drawings or plans and specifications, as applicable, are true, correct and complete; provided, however, that if certification is being requested that such City Facilities or Discrete Components is Substantially Complete, such drawings or plans and specifications need not be submitted to t he Director until certification is being requested that such City Facilities or Discrete Components is complete.
(c) Each of the City Facilities or Discrete Components described in Attachment A has been constructed in accordance with the Plans therefor, an d in accordance with all applicable City standards and the requirements of the Acquisition Agreement, and the as -built drawings or similar Plans and specifications referenced in paragraph (b) above.
(d) The true and correct Actual Cost of each City Facilit ies or Discrete Components is set forth in Attachment A.
(e) Owner has submitted or submits herewith to the City Engineer invoices, receipts, worksheets and other evidence of costs which are in sufficient detail to allow the City Engineer to verify the Act ual Cost of each City Facility or Discrete Component for which payment is requested.

Owner hereby declares that the above representations and warranties are true and correct. 1026

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Owner hereby requests that the Purchase Price be paid to the Person or Persons, i n the amounts, set forth in Attachment B hereto.

Date: DISCOVERY VILLAGE LLC,
a Delaware limited liability company
By: __________________________
Name: ________________________
Title: ________________________

APPROVED FOR PAYMENT
Date: CITY OF MURRIETA
By:

Name: ______________________________
Title:
1027

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ATTACHMENT A
City Facilities or
Discrete Components Actual Cost Purchase Price

Total Purchase Price to be Paid:

1028

C-4
4900-5221-9670v4/022972-0049

ATTACHMENT B

PURCHASE PRICE PAYMENT INSTRUCTIONS

1029

1 JOINT COMMUNITY FACILITIES AGREEMENT

relating to

Community Facilities District No. 2025-3 (Discovery Village) of the City of Murrieta

by and among

City of Murrieta, Eastern Municipal Water District and
Discovery Village LLC

THIS JOINT COMMUNITY FACILITIES AGREEMENT (“Agreement”) is entered into effective as of the ___th day of ___________, 2025, by and among CITY OF MURRIETA, a general law city organized and existing under the laws and constitution of the State of California (the “City”), EASTERN MUNICIPAL WATER DISTRICT, a public agency organized and existing pursuant to Division 20 of the California Water Code (“ EMWD”), and DISCOVERY VILLAGE LLC, a Delaware limited liability company (“Developer”), and relates to the formation by the City of a community facilities district known as “Community Facilities District No. 2025-3 (Discovery Village) of the City of Murrieta” (the “CFD”) for the purpose of financing certain facilities to be owned, operated or maintained by the City or EMWD from proceeds of bonds issued by the CFD and the proceeds of special taxes levied by the CFD.

R E C I T A L S:

A. The property depicted in Exhibit “A” hereto (“ Property”) which is located in the City, County of Riverside, State of California, constitutes the land within the boundaries of the CFD.

B. Developer owns the Property included in the CFD. Developer intends to develop the Property for residential purposes. The Property is described in Exhibit “B” hereto.

C. The City received a petition in accordance with the Act (defined below) to form the CFD for the purpose of financing, among other things, certain public facilities to be const ructed and owned and operated by EMWD (the “ EMWD Facilities”) in lieu of the payment of EMWD Fees (defined herein) and certain water and sewer facilities to be constructed by Developer and acquired by EMWD (the “Acquisition Facilities”).

D. In conjunction with the issuance of permits for the construction of homes on the Property and/or receipt of water meters for such homes, the Developer, or its successors or assigns, may elect to advance EMWD Facilities costs in lieu of payment of EMWD Fees (the “ Advances”) before Bond Proceeds (defined herein) are available in sufficient amounts to pay for EMWD Facilities. In such case, the Developer shall be entitled to (i) reimbursement of such Advances limited to Bond Proceeds available to EMWD, if any ( the Advances being considered an interest free loan by the Developer with no repayment obligation except to the extent there are Bond Proceeds received by or made available to EMWD as described herein, all as further described in Section 5(a) below), and (ii) credit against EMWD Fees which would otherwise be due to EMWD equal to the amount of Bond Proceeds disbursed to EMWD or at the direction of EMWD for EMWD Facilities, all as further described herein.

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2 E. The City will have sole discretion and responsib ility for the formation and administration of the CFD.

F. The City is authorized by Section 53313.5 of the Act to assist in the financing of the acquisition and/or construction of the EMWD Facilities and/or the Acquisition Facilities. This Agreement constitutes a joint community facilities agreement, within the meaning of Section 53316.2 of the Act, by and among EMWD, the Developer and the City, pursuant to which the CFD, when and if formed, will be authorized to finance the acquisition and/or construction of all or a portion of the EMWD Facilities and/or the Acquisition Facilities. As authorized by Section 53316.6 of the Act, responsibility for constructing, providing for and operating the EMWD Facilities and/or the Acquisition Facilities is delegate d to EMWD.

G. The Parties (defined below) hereto find and determine that the residents residing within the boundaries of EMWD, the City and the CFD will be benefited by the construction and/or acquisition of the EMWD Facilities and/or the Acquisition Facilities and that this Agreement is beneficial to the interests of such residents.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Parties hereto agree as follows:

1. Recitals. Each of the above recitals is incorporated herein and is true and correct.

2. Definitions. Unless the context clearly otherwise requires, the terms defined in this Section shall, for all purposes of this Agreement, have the meanings herein specified.

(a) “Acquisition Facility(ies)” means the sewer and water facilities described as such in Exhibit “C” hereto.

(b) “Act” means the Mello -Roos Community Facilities Act of 1982, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code.

(c) “Advance” or “Advances” means an amount advanced by Developer to EMWD for EMWD Facilities in lieu of payment of EMWD Fees prior to the availability of sufficient Bond Proceeds .

Advances shall be deemed payment of EMWD Fees to the extent sufficient Bond Proceeds are not received by or made available to EMWD.

(d) “Bond Proceeds” or “Proceeds of the Bonds ” shall mean those net funds generated by the sale of the Bonds and investment earnings thereon , net of costs of issuance, reserve fund, capitalized interest and administrative expenses, and may include net funds generated by the levy of Special Taxes and investment earnings thereon.

(e) “Bond Resolution” means that Resolution, Resolution Supplement, Fiscal Agent Agreement, Indenture of Trust or other equivalent document(s) providing for the issuance of the Bonds.

(f) “Bonds” shall mean those bonds, or other securities, issued by , or on behalf of the CFD, in one or more series, as authorized by the qualified electors within the CFD.

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3 (g) “Disbursement Request” means a request for payment relating to EMWD Facilities in the form attached hereto as Exhibit “D.”

(h) “EMWD Engineer Representative ” means an EMWD engineer duly authorized to act on behalf of EMWD or his or her designee.

(i) “EMWD Fees” means water supply development fees, water backup fees, sewer backup fees, sewer treatment capacity charges and all components thereof imposed by EMWD upon the Property to finance EMWD Facilities.

(j) “EMWD Facilities” mea ns those sewer and water facilities listed on Exhibit “C” hereto, which are necessary for the provision of water and sewer services to the Property and paid for with Bond Proceeds in lieu of the payment of EMWD Fees.

(k) “Other Facilities Account of the Improvement Fund” means the fund, account or subaccount of the CFD (regardless of its designation within the Bond Resolution) into which a portion of the Bond Proceeds may be deposited in accordance with the Bond Resolution to finance EMWD Facilities and/ or the Acquisition Facilities and which may have subaccounts.

(l) “Party” or “Parties” shall mean any one or all of the parties to this Agreement.

(m) “Payment Request” means a request for payment relating to Acquisition Facilities in the form attached hereto as Exhibit “E.”

(n) “Rate and Method” means the Rate and Method of Apportionment of the Special Tax authorizing the levy and collection of Special Taxes pursuant to proceedings undertaken for the formation of the CFD pursuant to the Act.

(o) “Special Taxes” means the special taxes authorized to be levied and collected within the CFD pursuant to the Rate and Method.

(p) “State” means the State of California.

3. Formation of the CFD . The City, in its sole discretion, shall determin e whether and when it may be appropriate to establish the CFD. The City has and will retain, at the expense of the Developer, the necessary consultants to analyze the formation of the CFD. In no event shall EMWD have any right to compel the City to establish the CFD.

4. Sale of Bonds and Use of Bond Proceeds. In the event that the CFD is formed and Bonds are issued, the City and the Developer shall determine the amount of Bond Proceeds to be deposited in the Other Facilities Account of the Improvement Fund and each subaccount thereof. As Bond Proceeds are transferred to EMWD and reserved to fund EMWD Facilities, as described in Section 5 below, the Developer shall receive a credit in the amount transferred against the payment of EMWD Fee s with respect to the Property. Nothing herein shall supersede the obligation of an owner of the Property to make an Advance or pay EMWD Fees to EMWD when due. The purpose of this Agreement is to provide a mechanism by which the CFD may issue the Bonds and levy Special Taxes to provide a source of funds to finance EMWD Facilities and Acquisition Facilities in lieu of the payment of EMWD Fees and provision of Acquisition Facilities. In the event that Bond Proceeds, including investment earnings thereon, are not available or sufficient to satisfy the obligation, then the Developer shall remain obligated to make an Advance for which it will receive no reimbursement (except to the extent Bond Proceeds later 1032

4 become available to EMWD), or pay EMWD Fees to EMWD as a condition of receiving water and sewer service to the Property.

The Bonds shall be issued only if , in its sole discretion, the City Council determines that all requirements of State and federal law and all City policies have been satisfied or have been waived by the City. Nothing in this Agreement shall confer upon EMWD or any owner or developer of the Property, including Developer, a right to compel the issuance of the Bonds or the disbursement of Bond Proceeds to fund EMWD Facilities and/or Acquisitio n Facilities except in accordance with the terms of this Agreement.

If and when the CFD determines to issue Bonds, the CFD shall take such actions necessary in its reasonable discretion to ensure the total effective tax rate within the CFD does not excee d two percent (2%) at the time of Bond sale. The total effective tax rate shall be based on a method of determination of property values reasonably acceptable to the City. CFD shall not include EMWD’s name on property owners’ special tax bills within the CFD.

By entering into this Agreement and requisitioning Bond Proceeds as described herein, EMWD is not passing upon, determining or assuming the tax -exempt status of the Bonds for federal or California state income tax purposes.

5. Disbursements for EMWD Facilities.

(a) Upon the funding of the Other Facilities Account of the Improvement Fund with funds reserved to fund EMWD Facilities, the Developer shall notify EMWD of the amount of Bond Proceeds reserved to fund EMWD Facilities and the Developer and EMWD may execute and submit a Disbursement Request for payment to the City or the CFD requesting disbursement of an amount equal to all or a portion of Advances from the Other Facilities Account of the Improvement Fund to the extent that Bond Proceeds are available in the Other Facilities Account of the Improvement Fund for such purpose.

Upon EMWD’s receipt of funds pursuant to such Disbursement Request, the Developer shall receive reimbursement of the Advances from EMWD. To facilitate EMWD’s bookkeeping, EMWD may direct in a Disbursement Request, that all or a portion of a payment be made directly from the Other Facilities Account to the Developer as reimbursement for Advances made by the Developer. In the event of a reimbursement to the Developer pursuant to the preceding sentence, EMWD shall account for an equivalent amount of Advances previously received from the Developer in accordance with Section 5(c) below.

To the extent that EMWD expends all or a portion of an Advance pending the deposit of Bond Proceeds in the Other Facilities Account of the Improvement Fund, for purposes of Treasury Regulations regarding investment and expenditure of Bond Proceeds and State law provisions regarding financing of public capital facilities, the Adva nce shall be a considered an interest free loan by the Developer, which EMWD only agrees to repay to the extent of the deposit, if any, of Bond Proceeds in the Other Facilities Account of the Improvement Fund and EMWD’s written direction as described below to pay all or a portion of such deposit to the Developer as repayment of an Advance.

(b) From time to time following the funding of the Other Facilities Account of the Improvement Fund, the Developer may notify EMWD in writing and the Developer and EMWD may jointly request a disbursement from the Other Facilities Account of the Improvement Fund to fund EMWD Facilities by executing and submitting a Disbursement Request. Upon receipt of such Disbursement Request completed in accordance with the terms of t his Agreement, the CFD shall wire transfer or otherwise pay to EMWD (or upon EMWD’s written direction pay to the Developer or an EMWD contractor) such 1033

5 requested funds to the extent that Bond Proceeds are available in the Other Facilities Account of the Improvement Fund for such purpose. Upon such notice and EMWD’s receipt of such disbursement (or upon payment to the Developer or an EMWD contractor in accordance with directions from EMWD relating to EMWD Facilities), the Developer shall be deemed to have sat isfied the applicable EMWD Fees with respect to the number of dwelling units or lots for which the EMWD Fees would otherwise have been required in an amount equal to such disbursement.

(c) EMWD agrees that prior to submitting a Disbursement Request requesting payment from the CFD it shall review and approve all costs included in its request and will have already paid or incurred such costs of EMWD Facilities from its own funds (which may include Advances from the Developer) subsequent to the date of this Agreement , or will disburse such amounts to pay the costs of EMWD Facilities following receipt of funds from the CFD. In the event that EMWD does not disburse any Bond Proceeds (or equivalent amount of Advances repaid pursuant to the second to the last sentence of the first paragraph of Section 5(a) above) received by it to third parties within five banking days of receipt, it will trace and report to the CFD all earnings, if any, earned by EMWD, from the date of receipt of such Bond Proceeds by EMWD (or the date of disbursement pursuant to the second to the last sentence of the first paragraph of Section 5(a) above) to the date of expenditure by EMWD for capital costs of the EMWD Facilities. Such report shall be delivered at least semiannually until all Bond Proceeds are expended by EMWD. EMWD agrees that in processing the above disbursements it will comply with all legal requirements for the expenditure of Bond Proceeds under the Internal Revenue Code of 1986 and any amendments thereto.

(d) EMWD agrees to maintain adequate internal controls over its payment function and to maintain accounting records in accordance with generally accepted accounting procedures. EMWD will, upon request, provide the City and/or the Developer with access to EMWD’s records related to the EMWD Facilities and expenditure of Advances and will provide to the City its annual financial report certified by an independent certified public accountant for purposes of assisting the City in calculating the arbitrage rebate obligation of the CFD, if any.

(e) The City or the CFD agrees to maintain full and accurate records of all amounts, and investment earnings, if any, expended from the Other Facilities Account of the Improveme nt Fund and expenditure of Advances. The City or the CFD will, upon request, provide EMWD and/or Developer with access to the City’s or the CFD’s records related to the Other Facilities Account of the Improvement Fund.

(f) District and EMWD acknowledge that the City has the ultimate responsibility for issuance of the Bonds, the administration of the CFD, and the tax -exempt status of any Bonds issued by the CFD.

Accordingly, the City Council shall have ultimate responsibility for mak ing all decisions with respect to the issuance of any CFD Bonds and the levy of CFD Special Taxes.

(g) In connection with the issuance of any tax-exempt Bonds, a portion of the proceeds of which are to be made available to finance the acquisition, const ruction and installation of EMWD Facilities and Acquisition Facilities, EMWD agrees to execute and deliver such certifications and agreements as may be reasonably required in order for bond counsel to conclude that interest on such Bonds will be excludable from gross income under Section 103 of the Internal Revenue Code of 1986 and any amendments thereto.

The decision regarding whether to issue Bonds for EMWD Facilities and Acquisition Facilities, and, if so, whether they should be taxable or tax-exempt, shall be the decision of City in its sole discretion.

6. Construction, Ownership and Maintenance of EMWD Facilities and Acquisition Facilities. EMWD shall be solely responsible for the acquisition, construction and installation of the 1034

6 EMWD Facilities and Acquisition Facilities and neither the City nor the CFD shall have any responsibility therefor or liability with respect thereto. The EMWD Facilities and Acquisition Facilities shall be and remain the sole and separate property of EMWD.

7. Acquisition Facilities. The requirements of this Section 7 shall apply to any Acquisition Facility for which a Payment Request is submitted to EMWD pursuant to this Section 7.

(a) Design Plans and Specifications . All plans, specifications and bid documents for the Acquisition Facility (“Plans”) constructed or to be constructed by the Developer shall be prepared by the Developer at the Developer’s initial expense, subject to approval by EMWD. Costs for preparation of the Plans shall be included in the acquisition pr ice. Reimbursement of costs for plan revisions will be considered on a case by case basis. The Developer shall not award bids for construction, or commence or cause commencement of construction, of the Acquisition Facility until the Plans and bidding docum ents have been approved by EMWD. The bid opening for the Acquisition Facility shall be coordinated with and take place at EMWD’s offices, with EMWD personnel in attendance.

(b) Construction of Acquisition Facilities . A qualified engineering firm (the “ Field Engineer”) shall be employed by the Developer to provide all field engineering surveys determined to be necessary by the EMWD’s inspection personnel. Field Engineer shall promptly furnish to EMWD a complete set of grade sheets listing all locations, o ffsets, etc., in accordance with good engineering practices, and attendant data and reports resulting from Field Engineer’s engineering surveys and/or proposed facility design changes. EMWD shall have the right, but not the obligation, to review, evaluate and analyze whether such results comply with applicable specifications.

A full -time soil testing firm, approved by EMWD, shall be employed by the Developer to conduct soil compaction testing and certification. The Developer shall promptly furnish results of all such compaction testing to EMWD for its review, evaluation and decision as to compliance with applicable specifications. In the event the compaction is not in compliance with applicable specifications, the Developer shall be fully liable and responsible for the costs of achieving compliance. A final report certifying all required compaction in accordance with the specifications shall be a condition of final acceptance of the Acquisition Facility.

The costs of all s urveying, testing and reports associated with the Acquisition Facility furnished and constructed by the Developer’s contractor(s) shall be included in the acquisition price.

EMWD shall not be responsible for conducting any environmental, archaeological, biological, or cultural studies or any mitigation requirements that may be requested by appropriate Federal, State, and/or local agencies with respect to the Acquisition Facility. Any such work shall be paid for and conducted by the Developer and included in the acquisition price of the Acquisition Facility.

(c) EMWD Public Works Requirements . In order that the Acquisition Facility may be properly and readily acquired by EMWD, the Developer shall comply with all of the following requirements with respect to the Acquisition Facility, and the Developer shall provide such proof to the EMWD as EMWD may reasonably require and at such intervals and in such form as EMWD may reasonably require, that the following requirements have been satisfied as to the Acquisition Facility:

i. The Developer shall prepare a bid package for review, comment and approval by the General Manager of EMWD or his designee (the “EMWD Representative”).

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7 ii. The Developer shall, after obtaining at least three sealed bids for the con struction of the Acquisition Facility in conformance with the procedures and requirements of EMWD, submit to EMWD written evidence of such competitive bidding procedure, including evidence of the means by which bids were solicited, a listing of all responsive bids and their amounts, and the name or names of the contractor or contractors to whom the Developer proposes to award the contracts for such construction, which shall be the lowest responsible bidder.

iii. The EMWD Representative shall attend the bid opening. If unable to attend the bid opening, the EMWD Representative shall approve or disapprove of a contractor or contractors, in writing, within five (5) business days after receipt from the Developer of the name or names of such contractor or contractors recommended by the Developer. If the EMWD Representative disapproves of any such contractor; the Developer shall select the next lowest responsible bidder from the competitive bids received who is acceptable to the EMWD Representative.

iv. The specifications and bid and contract documents shall require all such contractors to pay prevailing wages and to otherwise comply with applicable provisions of the Labor Code, the Government Code and the Public Contract Code relating to public works project s and as required by the procedures and standards of EMWD with respect to the construction of its public works projects.

v. The Developer shall submit faithful performance and payment bonds conforming in all respects to the requirements set forth in EMWD’s “Standard Water and/or Sewer Facilities and Service Agreement.” The following documents shall be submitted to EMWD along with the performance and payment bonds:

(1) The original, or a certified copy, of the unrevoked appointment, power of attorney, bylaws, or other instrument entitling or authorizing the person who executed the bond to do so;

(2) A certified copy of the certificate of authority of the insurer issued by the State of California’s Insurance Commissioner; and

(3) Copies of the insurer’s most recent annual and quarterly statements filed with the Department of Insurance.

vi. The Developer and its contractor and subcontractors shall be required to provide proof of insurance coverage throughout the term of the construction o f the Acquisition Facility, which they will construct in conformance with EMWD’s standard procedures and requirements. EMWD’s insurance requirements are set out in Section 7(n) herein.

vii. The Developer and all such contractors shall comply with such other requirements relating to the construction of the Acquisition Facility which EMWD may impose by written notification delivered to the Developer and each such contractor at the time either prior to the receipt of bids by the Developer for the construction of such Acquisition Facility or, to the extent required as a result of changes in applicable laws, during the progress of construction thereof. In accordance with Section 7(f), the Developer shall be deemed the awarding body and shall be solely respons ible for compliance and enforcement of the provisions of the Labor Code, Government Code, and Public Contract Code.

viii. A “Change Order” is an order from the Developer to a contractor authorizing a change in the work to be performed. The Developer shall receive comments from the EMWD Representative prior to the Developer’s approval of any Change Order. The EMWD Representative shall comment on or deny the Change Order request within five (5) business days of receipt of all necessary 1036

8 information. EMWD’s comments to a Change Order shall not be unreasonably delayed, conditioned or withheld. The Developer shall not be entitled to include in the acquisition price costs associated with a Change Order that have not been approved by the EMWD Representative.

(d) Inspection; Completion of Construction . EMWD shall have primary responsibility for inspecting the Acquisition Facility to assure that the work is being accomplished in accordance with the Plans. Such inspection does not include inspection for compli ance with safety requirements by the Developer’s contractor(s). EMWD’s personnel shall be granted access to each construction site at all reasonable times for the purpose of accomplishing such inspection. Upon satisfaction of EMWD’s inspectors, the Developer shall notify EMWD in writing that an Acquisition Facility has been completed in accordance with the Plans.

Within three (3) business days of receipt of written notification from EMWD inspectors that an Acquisition Facility has been completed in accord ance with the Plans, the EMWD Representative shall notify the Developer in writing that such Acquisition Facility has been satisfactorily completed. Upon receiving such notification, the Developer shall file a Notice of Completion with the County of Rivers ide Recorder’s Office, pursuant to the provisions of Section 3093 of the Civil Code. The Developer shall furnish to EMWD a duplicate copy of each such Notice of Completion showing thereon the date of filing with the County of Riverside (the “ County”). EMWD will in turn file a notice with the County for acceptance.

(e) Liens. With respect to the Acquisition Facility, upon the earlier of (i) receipt of all applicable lien releases, or (ii) expiration of the time for the recording of claim of liens as presc ribed by Sections 3115 and 3116 of the Civil Code, the Developer shall provide to EMWD such evidence or proof as EMWD shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment for the construction of th e Acquisition Facility have been paid, and that no claims of liens have been recorded by or on behalf of any such person, firm or corporation.

(f) Acquisition; Acquisition Price; Source of Funds . The costs eligible to be included in the acquisition price of the Acquisition Facility (the “Actual Costs”) shall include:

i. The actual hard costs for the construction of such Acquisition Facility as established by EMWD-approved construction contracts and approved Change Orders, including costs of payment, performance and maintenance bonds and insurance costs, pursuant to this Agreement;

ii. The design and engineering costs of such Acquisition Facility including, without limitation, the costs incurred in preparing the Plans. Costs for plan revisions will be considered on a case by case basis;

iii. The costs of environmental evaluations and public agency permits and approvals attributable to the Acquisition Facility;

iv. Costs incurred by the Developer for construction management and supervision of such Acquisition Facility, not to exceed five percent (5%) of the actual construction cost, subject to prior approval by EMWD of any construction management or supervision contract with respect to the Acquisition Facility;

v. Professional costs associ ated with the Acquisition Facility such as engineering, inspection, construction staking, materials, testing and similar professional services; and

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9 vi. Costs approved by EMWD of acquiring from an unrelated third party any real property or interests therein required for the Acquisition Facility including, without limitation, temporary construction easements, temporary by-pass road and maintenance easements.

Provided the Developer has complied with the requirements of this Agreement, EMWD agrees to execute and submit to the City a Payment Request for payment of the acquisition price of the completed Acquisition Facility to the Developer or its designee within thirty (30) days after EMWD has determined Developer’s satisfaction of the preconditions to such payment stated herein.

As a condition to EMWD’s execution of the Payment Request for the acquisition price, the property ownership of the completed Acquisition Facility shall be transferred to EMWD by grant deed, bill of sale or such other documentation as EMWD may require free and clear of all taxes, liens, encumbrances, and assessments, but subject to any exceptions determined by EMWD to not interfere with the actual or intended use of the land or interest therein (including the lien of a community fac ilities district so long as the subject property is exempt from taxation or is otherwise not taxable by such community facilities district). Upon the transfer of property ownership of the Acquisition Facility or any portion thereof to EMWD, EMWD shall be r esponsible for the maintenance of such Acquisition Facility or the portion transferred. Notwithstanding the foregoing, the acquisition price of an Acquisition Facility may be paid prior to transfer of property ownership and acceptance of the Acquisition Fa cility if it is substantially completed at the time of payment. The Acquisition Facility shall be considered “substantially complete” when it has been reasonably determined by EMWD to be usable, subject to final completion of such items as the final lift or any other items not essential to the primary use or operation of the Acquisition Facility.

For purposes of determining the acquisition price to be paid by the CFD for the acquisition of each Acquisition Facility by EMWD, the value of such Acquisition F acility shall include the construction costs specified in EMWD -approved contracts and EMWD -approved change orders conforming to this Section 7, as hereinbefore specified. EMWD approval is a condition prior to initiation of contract work.

However, if EMWD r easonably determines that the additional Actual Costs are excessive and that the value of the Acquisition Facility is less than the total amount of such Actual Costs and such construction costs, the price to be paid for the acquisition of the Acquisition F acility shall be the value thereof as determined by the EMWD Engineer Representative, subject, however, to the Developer’s right to appeal to EMWD’s Board of Directors.

Upon completion of the construction of an Acquisition Facility, the Developer shall deliver or cause to be delivered to EMWD a Payment Request in substantially the form of Exhibit “E,” attached hereto, copies of the contract(s) with the contractor(s) who have constructed the Acquisition Facility and other relevant documentation with regard to the payments made to such contractor(s) and each of them for the construction of the Acquisition Facility, documentation evidencing payment of prevailing wages, and shall also provide to EMWD invoices and purchase orders with respect to all equipment, materials and labor purchased for the construction of the Acquisition Facility. EMWD shall require the EMWD Engineer Representative to complete its determination of the acquisition price of the Acquisition Facility as promptly as is reasonably possible.

Notwithstanding the preceding provisions of this Section, the source of funds for the acquisition of the Acquisition Facility or any portion thereof shall be funds on deposit in the Other Facilities Account of the Improvement Fund. If no such funds are av ailable, EMWD shall not be required to acquire the Acquisition Facility from the Developer. In such event, the Developer shall complete the design and construction and offer to EMWD property ownership of such portions of the Acquisition Facility as are required to be constructed by the Developer as a condition to recordation of subdivision maps for the 1038

10 Property, but need not construct any portion of the Acquisition Facility which it is not so required to construct. Reimbursement for these facilities would b e made pursuant to the “Standard Water and/or Sewer Facilities and Service Agreement(s)” by and between EMWD and the Developer.

(g) Easements and/or Fee Title Property Ownership Deeds . The Developer shall, at the time EMWD acquires the Acquisition Facil ity as provided in Section 7(f) hereof, grant or cause to be granted to EMWD, by appropriate instruments prescribed by EMWD, all easements across private property and/or fee title property ownership deeds which may be reasonably necessary for the proper operation and maintenance of such Acquisition Facility, or any part thereof.

(h) Permits. The Developer shall be responsible for obtaining all necessary construction permits from the City covering construction and installation of the Acquisition Facility. EMWD will request the City to issue an “operate and maintain permit” to EMWD, which will become effective upon the completion of the Acquisition Facility and acceptance of property ownership therewith by EMWD.

(i) Maintenance. Prio r to the transfer of property ownership of an Acquisition Facility by the Developer to EMWD, as provided in Section 7(f) hereof, the Developer shall be responsible for the maintenance thereof and shall require its contractor(s) to repair all facilities damaged by any party, prior to acceptance by EMWD and/or make corrections determined to be necessary by EMWD’s inspection personnel.

(j) Inspection of Records . EMWD shall have the right to review all books and records of the Developer pertaining to the costs and expenses incurred by the Developer for the design and construction of the Acquisition Facility during normal business hours by making arrangements with the Developer.

The Developer shall have the right to review all books and records of EMWD pertain ing to costs and expenses incurred by EMWD for services of the EMWD Engineer Representative by making arrangements with EMWD.

(k) Property Ownership of Improvements . Notwithstanding the fact that some or all of the Acquisition Facility may be constructe d in dedicated street rights -of-way or on property which has been or will be dedicated to EMWD, each Acquisition Facility shall be and remain the property of the Developer until acquired by EMWD as provided in this Agreement.

(l) Materials and Workmanship Warranty . Upon the completion of the acquisition of an Acquisition Facility by EMWD, the performance bond related to such individual Acquisition Facility provided by the Developer pursuant to Section 7(c)(v) hereof, shall be reduced by 90%, and the remaining 10% shall serve as a maintenance bond to guarantee that such Acquisition Facility will be free from defects due to faulty workmanship or materials for a period of one year. Release of performance and payment bonds is addressed in the Standard Water and/or Sewer Facilities and Service Agreement, by and between EMWD and the Developer.

(m) Independent Contractor . In performing this Agreement with respect to the Acquisition Facilities, the Developer is an independent contractor and not the agent of EMWD. EMWD shall not have any responsibility for payment to any contractor, subcontractor or supplier of the Developer. It is not intended by the Parties that this Agreement create a partnership or joint venture among them and this Agreement shall not otherwise be construed.

(n) Insurance Requirements. Neither the Developer nor its contractor shall commence work on an Acquisition Facility under this Agreement prior to obtaining all insurance required hereunder with a company or companies acceptable to EMWD, nor shall the Developer’s contractor allow any 1039

11 subcontractor to commence work on its subcontract until all insurance required of the subcontractor has been obtained.

The Developer shall, during the life of this Agreement, notify EMWD in writing of any incident giving rise to any potential bodily injury or property damage claim and any resultant settlements, whether in conjunction with this or any other project which may affect the limits of the required coverage, as soon as is reasonable and practical.

Both the Developer and its contractor shall conform in every respect to the requirements set forth in the Standard Water and/or Sewer Facilities and Service Agreement, by and between EMWD and the Developer.

8. Indemnification.

(a) Indemnification by the City. The City shall assume the defense of, indemnify and save harmless, EMWD, its officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of the City with respect to this Agreement and the issuance of the Bonds; provided, however, that the City shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees.

(b) Indemnification by Developer. Developer shall assume the defense of, indemnify and save harmless, the City, the CFD and EMWD , their respective officer s, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of Developer with respect to this Agreement; provided, however, that Developer shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees.

(c) Indemnification by EMWD . EMWD shall assume the defense of, indemnify and save harmless, the City, the CFD and their respective officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of EMWD with respect to this Agreement, and the design, engineering and construction of the EMWD Facilities and the Acquisition Facilities constructed by EMWD; provided, however, that EMWD shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees.

9. Allocation of Special Taxes. The entire amount of any Special Taxes levied by the CFD to repay Bonds, or to fund other obligations, shall be allocated to the CFD.

10. Amendment and Assignment. This Agreement may be amended at any time but only in writing signed by each Party hereto. This Agreement may be assigned, in whole or in part, by the Developer to the purchaser of any parcel of land within the Property, provided, however, such assignment shall not be e ffective unless and until EMWD and the City have been notified, in writing, of such assignment and the assignment specifies whether the Developer or such assignee is authorized to execute disbursement requests.

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12 11. Entire Agreement. This Agreement contains the entire agreement between the Parties with respect to the matters provided for herein and supersedes all prior agreements and negotiations between the Parties with respect to the subject matter of this Agreement.

12. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either Party shall be deemed to have been received when personally delivered or seventy-two hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows:

City: City of Murrieta
1 Town Square
Murrieta, CA 92562
Attention: Director of Finance

Email: [email protected]

EMWD: Eastern Municipal Water District
P.O. Box 8300
2270 Trumble Road
Perris, CA 92572-8300
Attention: Special Funding Division
Email: [email protected]

Developer: Discovery Village LLC
c/o Argent Management
2646 Dupont Dr., Suite 60 #520
Irvine, CA 92612
Attention: Travis Devan

Email: [email protected]

Each Party may change its address for delivery of notice by delivering written notice of suc h change of address to the other Parties hereto. Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if perso nally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier upon the sender’s receipt of written acknowledgement from the addressee, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at the address specified in this Section.

13. Exhibits. All exhibits attached hereto are incorporated into this Agreement by reference.

14. Attorney’s Fees. In the event of the bringing of any action or suit by any Party against any other Party arising out of this Agreement, the Party in whose favor final judgment shall be entered shall be entitled to recover from the losing Party all costs and expenses of s uit, including reasonable attorney’s fees.

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13 15. Interpretation in the event of Ambiguities or Disputes . The Parties acknowledge and agree that each has been given the opportunity to review this Agreement with legal counsel independently, and/or has the requisite experience and sophistication to understand, interpret, and agree to the particular language of the provisions hereof. In the event of an ambiguity in or dispute regarding the interpretation of same, the interpretation of this Agreement shall not be resolved by any rule of interpretation providing for interpretation against the Party who causes the uncertainty to exist or against the drafter.

16. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible.

17. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California.

18. Waiver. Failure by a Party to insist upon the strict performance of any of the provisions of this Agreement by any other Party hereto, or the failure by a Party to exercise its rights upon the default of any other Party, shall not constitute a waiver of such Party’s right to insist and demand strict compliance by such other Party with the terms of this Agreement thereafter.

19. No Third Party Beneficiaries. No person or entity other than the CFD, when and if formed, shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or enti ty, other than EMWD, the City, the CFD and Developer (and their respective successors and assigns, exclusive of individual homebuyers), any rights, remedies, obligations or liabilities under or by reason of this Agreement.

20. Singular and Plural; Gender. As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine.

21. Termination. If the City determines and notifies the other Parties in writing that the CFD is unable to complete the sale of the Bonds, any obligation of the Parties, if any, to finance all or any EMWD Facilities with Bond Proceeds pursuant to this Agreement shall automatically terminate and be of no further force or effect. This Agreement shall terminate and be of no further force as of July 1, 2035, unless extended by agreement of all the parties.

22. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument.

IN W ITNESS WHEREOF, the Parties have executed this Agreement as of the day and year written above.

CITY OF MURRIETA
a political subdivision of the State of California

By: _____________________________
City Manager
ATTEST:

By: _____________________________
Candace Alvarez, City Clerk
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14 APPROVED AS TO FORM:

CITY ATTORNEY

By: _____________________________
City Attorney

[SIGNATURES CONTINUED ON NEXT PAGE.]
1043

15 EASTERN MUNICIPAL WATER DISTRICT

By: _________________________________
Joe Mouawad, P.E., General Manager

ATTEST:

By: _____________________________
Sheila Zelaya, Board Secretary

DEVELOPER

DISCOVERY VILLAGE LLC,
a Delaware limited liability company

By: _________________________________
Name: _________________________________
Its: Authorized Signatory

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A-1

EXHIBIT “A”

COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE)

OF THE CITY OF MURRIETA

DEPICTION OF PROPERTY

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B-1

EXHIBIT “B”

COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE)

OF THE CITY OF MURRIETA

DESCRIPTION OF PROPERTY

PARCELS 1 AND 2 AND LOTS 4, 5, 6, 7, AND 8, OF THE CITY OF MURRIETA TRACT MAP NO. 38228 RECORDED IN THE OFFICIAL RECORDS OF THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, ON THE 13TH DAY OF DECEMBER, 2024, IN BOOK 499 OF MAPS, AT PAGES 71-78, AS DOCUMENT NO. 2024-0379976.

RIVERSIDE COUNTY ASSESSOR’S PARCEL NUMBER: 392-290-049(P)

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C-1

EXHIBIT “C”

COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE)

OF THE CITY OF MURRIETA

FACILITIES DESCRIPTION

1. EMWD Facilities. The type of EMWD Facilities eligible to be financed by the CFD under the Act are as follows:

Those water and sewer facilities included in EMWD’s water and sewer capacity and connection fee programs used to finance expansion projects, exclusive of in -tract facilities contributed by Developer.

EMWD Facilities include, but are not limited to the following: water and sewer transmission pipelines, sewer treatment plants, disposal ponds, pumping plants, lift stations and water reservoirs, including all costs of site acquisition, planning, design, engineering, legal services, materials testing, coordination, surveying, construction staking, construction, inspection and any and all appurtenant facilities and appurtenant work relating to the foregoing.

2. Acquisition Facilities. The types of Acquisition Facilities eligible to be financed by the CFD under the Act shall consist of sewer and water transmission lines, sewer and water pump stations and water reservoirs, including all costs of site acquisition, planning, design, engineering, legal s ervices, materials testing, coordination, surveying, construction staking, construction inspection and any and all appurtenant facilities to the foregoing required to serve the Property. The facilities listed above are representative of the types of facili ties eligible to be financed by the CFD as Acquisition Facilities.

Detailed scope and limits of specific projects will be determined by EMWD as appropriate, consistent with the standards of the EMWD.

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D-1

EXHIBIT “D”

COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE)

OF THE CITY OF MURRIETA

DISBURSEMENT REQUEST FORM
(EMWD Facilities)

1. Community Facilities District No. 2025-3 (Discovery Village) of the City of Murrieta (“CFD”) is hereby requested to pay from the CFD bond proceeds (“Bond Proceeds ”) to Eastern Municipal Water District (“EMWD”), as Payee, or to EMWD’s designee, the sum set forth in 3 below.

2. The undersigned certifies that the amount requested for EMWD Facilities is due and payable, has not formed the basis of prior request or payment , and is being made with respect to the connection of the property described below to the EMWD system.

3. Amount requested: $________________
For Tract/Lot Nos: _________________

4. The amount set forth in 3 above is authorized and payable pursuant to the terms of the Joint Community Facilities Agreement , by and among the City of Murrieta , EMWD and Discovery Village LLC, dated ___________, 2025 (the “Agreement”). Capitalized terms not defined herein shall have the meaning set forth in the Agreement. EMWD shall spend the Bond Proceeds allocated hereby in accordance with the requirements set forth in Section 5 of the Agreement.

5. By entering into the Agreement and requisitioning Bond Proceeds as described herein, EMWD is not passing upon, determining or assumin g the tax -exempt status of the Bonds for federal or California state income tax purposes.

DEVELOPER

DISCOVERY VILLAGE LLC,
a Delaware limited liability company

By: ______________________
Name: ___________________
Its: Authorized Signatory

EASTERN MUNICIPAL WATER DISTRICT

By: _______________________
Name: _____________________
Title: _____________________
Date: _____________________

cc: EMWD Special Funding District

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E-1

EXHIBIT “E”

COMMUNITY FACILITIES DISTRICT NO. 2025-3 (DISCOVERY VILLAGE)

OF THE CITY OF MURRIETA

PAYMENT REQUEST FORM
CFD NO. 2025-3– OTHER FACILITIES ACCOUNT

OF THE IMPROVEMENT FUND

City of Murrieta (“City”), Eastern Municipal Water District (“ EMWD”) and Discovery Village LLC (“Developer”) are parties to the Joint Community Facilities Agreement, da ted as of ___________, 2025 (the “JCFA”). Capitalized undefined terms used herein shall have the meanings ascribed thereto in the JCFA. Pursuant to the JCFA, Developer hereby requests approval of the acquisition price of the Acquisition Facility(ies) described in Attachment A attached hereto. In connection with this Payment Request, Developer hereby represents and warrants to the EMWD as follows:

(a) The person executing this Payment Request is qualified to execute this Payment Request on behalf of Developer and knowledgeable as to the matters set forth herein.

(b) The Acquisition Facility(ies) have been constructed in accordance with the Plans therefor, and in accordance with all applicable EMWD standards and the requirements of the JCFA.

(d) Developer has submitted or submits herewith to EMWD the contracts, invoices, receipts, worksheets and other evidence of Actual Costs which are in sufficient detail to allow the EMWD Representative to verify the Actual Cost of the Acquisition Facility(ies) for which payment is requested.

(e) There are no liens, rights to lien or attachment upon, or claims affecting the right to receive the payment requested herein which has not been released or will not be released simultan eously with the payment of such obligation, other than materialmen’s or mechanics’ liens accruing by operation of law. Copies of lien releases for all work for which payment is requested hereunder are attached hereto.

Developer hereby declares under penalty of perjury that the above representations and warranties are true and correct.

Developer hereby requests that the acquisition price be paid to the person or persons, in the amount set forth in Attachment B hereto.

DEVELOPER

DISCOVERY VILLAGE LLC,
a Delaware limited liability company

By: ______________________
Name: ___________________
Its: Authorized Signatory
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E-2

CONFIRMATION AND APPROVAL BY EMWD

EMWD has (a) confirmed that the Acquisition Facility(ies) described in Attachment A is complete and was constructed in accordance with the Plans therefor, and (b) reviewed, verified and approved the acquisition price of such Acquisition Facility(ies). Such Acquisition Facility(ies) is/are complete and the acquisition price therefor eligible for payment is $________. The amount to be paid and the payee(s) are described in Attachment B.

Date: AUTHORIZED REPRESENTATIVE OF
EMWD

By:_________________________________

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E-3

ATTACHMENT A

Acquisition Facility Actual Cost Acquisition Price*

Total Acquisition Price to be Paid:

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E-4

ATTACHMENT B

ACQUISITION PRICE PAYMENT INSTRUCTIONS

[Include name and address of payee and wire transfer instructions] 1052

CITY OF MURRIETA
City Council Meeting Agenda
Report
4/1/2025
Agenda Item No. 13.

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Paul Early, City Attorney
SUBJECT:

Fleet Vehicle Procurement Authority Ordinance

RECOMMENDATION
Conduct the first reading and introduce Ordinance No. 617-25 entitled: An Ordinance of the City Council of the City of Murrieta, California, Amending Chapter 3.08 of the Murrieta Municipal Code Granting the City Manager Authority for Fleet Purchases within Budget Limits.

PRIOR ACTION/VOTE
None.

CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.

BACKGROUND
As part of the biennial budget adoption process, the City Council approves the Police Department’sOperating budget, which includes funds designated for the purchase of police vehicles. However, after budget approval, the Police Department must return to the City Council for a second authorization to execute the purchase of these vehicles. This extra measure can lead to postponements and/or, on occasion, a missed purchasing opportunity, particularly in a highly competitive automotive market, where pricing and inventory levels can fluctuate swiftly.

The lengthy procedure of determining vehicle specifications and coordinating collaborative agreements adds complexity to the purchasing process and leads to inefficiencies. These challenges also affect vehicles that other City departments intend to acquire.

Murrieta Municipal Code Section 3.08.200 requires City Council approval for all purchases over $100,000. The attached ordinance (Attachment 1) amends Municipal Code Section 3.08.200, Award of Formal Bid Contracts, to grant the City Manager authority to approve individual fleet vehicle purchases without Council approval, provided that no single vehicle exceeds $100,000, and the purchases align with the adopted budget, as CITY OF MURRIETA Printed on 3/27/2025Page 1 of 2
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Agenda Item No. 13.
provided that no single vehicle exceeds $100,000, and the purchases align with the adopted budget, as amended. This change allows for quicker acquisitions as suitable fleet vehicles become available. Importantly, this Ordinance does not increase expenditures but streamlines the existing process to enhance efficiency. It also provides clarity and consistency between the Municipal Code and the adopted Purchasing Policy.

Staff will continue to follow current purchasing protocols and financial limits. Any vehicle purchase exceeding $100,000, will still require City Council approval. This Ordinance aims to eliminate unnecessary delays, ensure the timely acquisition of essential fleet vehicles, and support the City’s operational needs.

FISCAL IMPACT
There is no fiscal impact associated with this action.

ATTACHMENTS

1. Ordinance No. 617-25

2. Municipal Code Section 3.08.200 Redlined Version
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01375.0007/1055846.3 - 1 -
ORDINANCE NO. 617-25

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
MURRIETA, CALIFORNIA, AMENDING CHAPTER 3.08 OF THE

MURRIETA MUNICIPAL CODE GRANTING THE CITY MANAGER
AUTHORITY FOR FLEET PURCHASES WITHIN BUDGET LIMITS.

Summary: This ordinance authoriz es the City Manager to purchase fleet vehicles without requiring Council approval, provided that the cost of an individual vehicle does not exceed $100,000.00 and the total purchase of multiple vehicles remains within the allocated amount in the fiscal year’s adopted budget, as amended.

WHEREAS, the City Manager has the power to direct and supervise all the purchasing activities of the City; and

WHEREAS, the City of Murrieta Procurement Policy authorizes the City Manager to make and enter into agreements for the purchase of commodities up to $100,000.00; and

WHEREAS, the Murrieta Police Department, as well as other City departments, regularly need to replace or procure new vehicles that individually or cumulatively exceed the City Manager’s general signature authority for commodities; and

WHEREAS, as a result of limited inventory of new vehicles and delays in the manufacturing and acquisition of parts, replacement vehicles can be difficult to locate and obtain and often sell quickly once available at a local dealer; and

WHEREAS, the City Council adopts a budget allocation each year for the purchase and replacement of vehicles for each department; and,

WHEREAS, it is in the best interest of the City to allow for the quick and direct purchase of available vehicles by the City Manager when such purchases are within the adopted budget, as amended.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF
MURRIETA, CALIFORNIA DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. Section 3.08.200 is replaced, in its entirety, to read as follows:

“3.08.200 Award of Formal Bid Contracts.

01375.0007/1055846.3 - 2 -
B. Notwithstanding paragraph A above, the City Manager , or his/her designee may execute purchase orders or agreements, in a form approved by the City Attorney, for the purchase of fleet vehicles when any individual vehicle purchase is for not more than $100,000.00 and the aggregate purchase of multiple vehicles does not exceed the amount allocated for such purchases in that fiscal year’s adopted budget, as amended.”

SECTION 2. This ordinance is exempt from the California Environmental Quality Act (“CEQA”) under Section 15061(b)(3) of the CEQA Guidelines, which provides that CEQA only applies to projects that have the potential for causing a significant effect on the environment.

Where, as here, it can be seen with certainty that there is no possibility that the activity in question would have a significant effect on the environment, the activity is not subject to CEQA.

SECTION 3. If any section, subsection, sentence, clause, or phrase of this ordinance is for any reason held to be invalid or unconstitutional by a decisio n of any court of any competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this ordinance, and each and every section, subsection, sente nce, clause and p hrase thereof not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional.

SECTION 4. This Ordinance shall become effective on the thirty -first (31st) day after its passage and adoption, and within fifteen (15) days after its final passage and the City Clerk shall cause it to be posted and published in a newspaper of general circulation, printed, published and circulated in the City in the manner required by law and shall cause a copy of this Ordinance and its certification, to be entered in the Book of Ordinances of the City.

PASSED AND ADOPTED this ___ day of ________, 2025.

Cindy Warren, Mayor
ATTEST:

Cristal McDonald, City Clerk

APPROVED AS TO FORM:

Tiffany J. Israel, City Attorney
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01375.0007/1055846.3 - 3 -

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE )§

CITY OF MURRIETA )
I, Cristal McDonald, City Clerk of the City of Murrieta, California, do hereby certify that the foregoing Ordinance No. 617-25 was duly pass ed and adopted by the City Council of the City of Murrieta at the regular meeting thereof, held on the ___th day of _______, 2025, and was signed by the Mayor of the said City, and that the same was passed and adopted by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Cristal McDonald, City Clerk
I, Cristal McDonald, City Clerk of the City of Murrieta, California further certify that Ordinance No. 617-25 was duly published according to law and the order of the City Council of said Ci ty and the same was so published in Press-Enterprise, a newspaper of general circulation on the following date(s):

Adopted Ordinance: , 2025.

In witness whereof, I have hereunto subscribed my name this ___ day of _____________, 2025.

Cristal McDonald, City Clerk
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3.08.200 Award of formal bid contracts.

A. Except as otherwise provided in this chapter, formal bid contracts for materials and supplies over one hundred thousand dollars ($100,000.00) shall be awarded by the city council to the lowest responsible bidder. The determination of "lowest responsible bidder" shall be at the discretion of the city council pursuant to findings and recommendations presented by the purchasing agent at the time of award of contract.
(Ord. 567-21 Exhibit A, 2021; Ord. 460 § 1 (part), 2011: Ord. 3 § 1 (part), 1991: prior code § 3.12.200)
B. Notwithstanding paragraph A above, the City Manager, or his/her designee may execute purchase orders or agreements, in a form approved by the City Attorney, for the purchase of fleet vehicles when any individual vehicle purchase is for not more than $100,000.00 and the aggregate purchase of multiple vehicles does not exceed the amount allocated for such purchases in that fiscal year’s adopted budget, as amended.
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CITY OF MURRIETA
City Council Meeting Agenda
Report
4/1/2025
Agenda Item No. 14.

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Brian Ambrose, Community Services Director
PREPARED BY: Crystal Arora, Management Analyst - Parks & Recreation SUBJECT:

Discussion of Direction for Support for Tour de Murrieta

RECOMMENDATION
Review the anticipated cost for providing staff support for the 2025 Tour de Murrieta Signature Event; and Provide direction to staff on next steps.

PRIOR ACTION/VOTE
On July 6, 2021, the City Council adopted Resolution No. 21-4440, establishing fee waiver tiers for approved Murrieta Signature Events, and declaring the Tour de Murrieta a signature event, which is eligible for in kind services from the City not to exceed $10,000 (Vote 5-0).

On September 21, 2021, the City Council adopted Resolution No. 21-4473, retroactively applying new signature event tier 4 fee waiver to the 2021 Tour de Murrieta bicycle race (Vote 5-0).

On November 16, 2021, the City Council adopted Resolution No. 21-4490, approving the Tour de Murrieta’s request to waive the pending fee balance for the 2020 Tour de Murrieta in the amount of $7,797.92 (Vote 5-0).

At the June 6, 2023, City Council meeting, Tour de Murrieta founder Ernie Sanchez spoke on the need for continued support from the City. Mayor DeForest asked and gained consensus from the City Council to add this to a future City Council meeting for consideration (Non-Action item).

On August 15, 2023, the City Council voted to maintain the event’sin-kind support level at $10,000, and for continued City support by providing needed road closures (Vote 4-1).

CITY COUNCIL GOAL
Foster and promote an engaged, connected and caring community.

BACKGROUND
Tour de Murrieta is an official annual USA Cycling-sanctioned race, attracting the most competitive race teams CITY OF MURRIETA Printed on 3/27/2025Page 1 of 4
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Agenda Item No. 14.

Tour de Murrieta is an official annual USA Cycling-sanctioned race, attracting the most competitive race teams in California. This year’sevents, set for April 5-6, will be the 20th race series in Murrieta. The event includes multiple races, including a one-mile lightning course, a four-mile circuit race, and a popular children’srace.

Tour de Murrieta is organized by a nonprofit organization and brings in sponsorships to help offset the costs.

Recognizing the economic benefit Tour de Murrieta brings to downtown Murrieta and local hotels, it was designated by the City Council as a Murrieta “Signature Event” in July 2021. “SignatureEvents”are deemed to benefit the public culturally and economically. They recur annually and are large-scale. Only the City Council has the authority to approve new Signature Events, which provides event organizers with in-kind contributions (not funding) from the City of Murrieta (City), such as waiver of City permit fees and staff assistance with public safety, setting up signage, marketing, cleaning, and trash pick-up.

In 2021, the City Council adopted a resolution establishing formal tiers for approved City Signature Events, authorizing the provision of in-kind services between $5,000 and $10,000, per event per year, depending on the number of years the event has been held. Tier 4 is the highest support level for events that have occurred for ten or more years. Tour de Murrieta was designated for Tier 4 status in 2021.

In 2023, Tour de Murrieta brought to the City’sattention that the increasing cost of City services was causing a financial burden on the event:
· To mitigate these costs, Tour de Murrieta requested that the waiver for the value of services be increased by $5,000;
· Tour de Murrieta also requested continued support of the Public Works Department for traffic route set- up and tear-down as part of the in-kind contribution.
o Currently, the Tour de Murrieta is the only Signature City Event that receives Public Works Department assistance installing traffic control devices. o For other events that require traffic control set-up, the event organizer contracts for this service at their expense.
· The City Council denied the request but voted to provide continued Public Works support for traffic control efforts, estimated at the time to cost about $6,600 per year. · For prior recent years, amounts paid by Tour de Murrieta were $2,859 for 2022 and $1,019 for 2023. · For 2024, Tour de Murrieta paid $5,980, and the City absorbed $14,809 in the value of services provided.

In preparing for this year’s Tour de Murrieta with the event organizer and identifying the necessary staff resources, the anticipated value of the services will exceed the $10,000 Signature Event level. Therefore, staff wanted to bring this to the City Council’s attention for direction.

The table below lists the anticipated value of staff services associated with Tour de Murrieta 2025:
· This reflects the value of direct staff support provided on the actual event days or directly before and after for set-up and teardown.
· It does not reflect staff time spent assisting with event preparation and organization of logistics, such as that spent by the Community Services Department.
o “Direct”costs listed below mean overtime rates are paid for the applicable personnel for services provided outside of regular working hours.
o “Indirect”costs mean that while no overtime rates are paid, normal operations are impacted as individuals are assigned to focus instead on Tour de Murrieta. § While traffic control setup takes place during staffs regularly scheduled work hours, utilizing internal staff impacts their regular assignments and commits staffing that may CITY OF MURRIETA Printed on 3/27/2025Page 2 of 4
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Agenda Item No. 14.
not be available.

As described above, in addition to Tour de Murrieta’sSignature Event status and the $10,000, “credit”toward City services Tour de Murrieta receives with that designation, going back to 2023, there has been a City Council-endorsed practice to invoice Tour de Murrieta about $6,600, for the value of the traffic control services provided by Public Works staff.

Using that same formula, for 2025, the net total amount due from Tour de Murrieta toward their event costs would be $6,383.21, as calculated in the table below:

Since this approach is not formally memorialized, staff seeks City Council direction on how to proceed for Tour de Murrieta 2025.

As a further next step, since there are an increasing number of similar requests from other local nonprofit groups for waivers for fees and the value of services, staff plans to present to City Council both an alternative user fee structure for the Town Square Park and Amphitheater and a review of the Signature Event policy to consider adding an additional tier or other potential modifications. This type of structure will be helpful both to CITY OF MURRIETA Printed on 3/27/2025Page 3 of 4
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Agenda Item No. 14.
provide clarity to event hosts and for staff administering the policies.

While there are many benefits of community events in terms of fostering quality of life and attracting visitors to Murrieta to stay in hotels, shop, and dine at local restaurants, it is important to acknowledge there is a financial impact to the City that requires the City forgo other investments in services, including possible investments in other and or new community events.

FISCAL IMPACT
If the City Council decides to lower the fees charged for staff time reimbursement, it will lead to a decrease in City revenues. This reduction will affect the overtime budgets of the departments providing assistance and/or impact the department's work plan.

ATTACHMENTS
None.

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Murrieta City CouncilApril 1, 2025

Murrieta City Council
April 1, 2025