Agenda packet — Ontario City Council, April 19, 2022 (part 11 of 12)

April 2022
Policy Plan Goals and Policies Overlay Consistency
CD 4-4 Incentives. We use the Mills Act and other
federal, state, regional and local programs to assist
property owners with the preservation of select
properties and structures.

N/A
CD 4-5 Adaptive Reuse. We actively promote and
support the adaptive reuse of historic sites and
buildings to preserve and maintain their viability.

N/A
CD 4-6 Promotion of Public Involvement in
Preservation. We engage in programs to publicize and
promote the City’s and the public’s involvement in
preservation efforts.

N/A
CD 4-7 Public Outreach. We provide opportunities
for our residents to research and learn about the
history of Ontario through the Planning Department,
Museum of History and Art, Ontario and the Robert E.

Ellingwood Model Colony History Room.

N/A
GOAL CD5: A sustained level of maintenance and improvement of properties, buildings and infrastructure that protects the property values and encourages public and private investments.

CD 5-1 Maintenance of Buildings and Property.

We require all public and privately owned buildings
and property (including trails and easements) to be
properly and consistently maintained.

There is an existing Piemonte at Ontario Center
Property Owners Association that maintains the
private drives.

CD 5-2 Maintenance of Infrastructure. We require the
continual maintenance of infrastructure.

There is an existing Piemonte at Ontario Center
Property Owners Association that maintains the
private drives.

CD 5-3 Improvements to Property & Infrastructure.

We provide programs to improve property and
infrastructure.

N/A
CD 5-4 Neighborhood Involvement. We encourage
active community involvement to implement
programs aimed at the beautification and
improvement of neighborhoods.

N/A

SOCIAL SERVICES ELEMENT
Goal SR1: A community where residents have access to information, services and goods that improve their health and well being.

SR 1-1 Partnering for Healthcare. We work with
healthcare providers, and local, regional, state and
federal agencies to attract and retain a diversity of
affordable, quality healthcare and facilities for the
entire community.

N/A
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General Plan Consistency
April 2022 Page 5-33
Policy Plan Goals and Policies Overlay Consistency
SR 1-2 Nutrition Choices. We support the promotion
of healthy nutritional food choices in the community. N/A SR 1-3 Health Education. We promote health
education, including disease prevention, mental
health, nutrition and physical fitness.

N/A
SR 1-4 Physical Activity. We encourage activities and
community design that improve the physical fitness of
our community members.

N/A
Goal SR2: A range of educational and training opportunities for residents and workers of all ages and abilities that improves their life choices and provides a skilled workforce for our businesses.

SR 2-1 Educational Partners. We partner with
educational institutions throughout the region in
order to expand the range and quality of educational
offerings available to the community.

N/A
SR 2-2 Workforce Training. We will work with
industrial organizations, businesses and educational
institutions to create opportunities for workforce
training.

N/A
SR 2-3 Joint Use of Facilities. We partner with public
and private educational institutions to jointly use
facilities for both City and educational purposes.

N/A
SR 2-4 Access to Schools. We work with local and
regional partners to improve the safety in and around
schools and to improve access for citizens of all ages
and abilities to schools and community services, such
as after school and other programs.

N/A
SR 2-5 School Facilities. We plan and coordinate
with school districts for designing and locating school facilities to meet the City’s goals, such as for health, walkability, and safety and to minimize impacts to
existing neighborhoods.

N/A
Goal SR3: A range of community and leisure programs and activities provided by public, private and non-profit organizations that meet the needs of the community’s varied interests, age groups and abilities.

SR 3-1 Partnerships. We partner with local and
regional agencies, non-profit organizations and the
private sector to provide a comprehensive range of
community activities and events to citizens.

N/A
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Ontario Center Specific Plan
Piemonte Overlay

Page 5 ends

April 2022
Policy Plan Goals and Policies Overlay Consistency
SR 3-2 Needs Assessment. We track the needs and
priorities for community services and look for ways to
meet demands and avoid duplication of offerings.

N/A
SR 3-3 Program Outreach. We promote information
about leisure activities, classes, special events and
other services and activities to our community.

N/A
SR 3-4 Community Events. We plan and actively
participate in regularly scheduled community events
and seasonal or yearly citywide events.

N/A
SR 3-5 Community Activities as Crime Deterrents.

We promote and participate in community activities
as part of our crime prevention efforts. (Link to Safety Element Policy S7-3)
N/A
Goal SR4: City libraries that connect community members of all ages and abilities to a broad range of programs, communication and informational resources.

SR 4-1 Community Needs. We identify and monitor
community needs for library services, technologies
and facilities, and tailor them to effectively meet those needs.

N/A
SR 4-2 Interagency Coordination. We leverage
relationships with outside agencies, educational
institutions and neighboring jurisdictions to share
library resources to the benefit of Ontario residents.

N/A
SR 4-3 Library Outreach. We outreach to the
community to increase the patronage of the library. N/A SR 4-4 Coordination with Other Community
Services. We coordinate library programs with other
recreational and community programs and facilities.

N/A
SR 4-5 Focal Points of the Community. We design
and program Ontario’s libraries as focal points for
community engagement, including public outreach
and community events.

N/A
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General Plan Consistency
April 2022 Page 5-35
Policy Plan Goals and Policies Overlay Consistency
SR 4-6 Robert E. Ellingwood Model Colony History
Room. We work with the Museum of History and
Art, Ontario in order to collect, preserve and display
artifacts and images from Ontario’s heritage and
connect the City’s past to the present through the
History Room.

N/A
Goal SR5: Local heritage, entertainment and cultural experiences that enrich the lives of Ontario’s residents, workers, and visitors and serve to attract residents and businesses to the City.

SR 5-1 Provision of Entertainment and Culture.

We support a range of entertainment and cultural
experiences such as public art, exhibitions and
performances.

The Overlay allows for an entertainment district
surrouding the Arena and would include a series
of open plazas to encourage the possibility for
public art, exhibitions and performances.

SR 5-2 Local Heritage Education. We partner with
educational providers to promote culture and
heritage. (Link to Historic Preservation Section of
Community Design Element)
N/A
SR 5-3 Public Art. We encourage public art in
buildings, parks, open spaces and other public and
private spaces.

N/A
SR 5-4 Private-Public Sector Events. We partner with
private and nonprofit sectors to provide and promote
participation in cultural activities including fairs,
festivals and other events geared to neighborhoods,
the City as a whole and the region.

N/A
SR 5-5 Promotion of Ontario Artists and Musicians.

We promote awareness of entertainment and culture
produced in Ontario.

N/A
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APPENDIX A - LEGAL DESCRIPTION
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Appendix A
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Appendix B

APPENDIX B - SUBAREAS
OCSP Parcel Numbers or
Portions Thereof Subareas
1, 2, 3, 4, 5, 6, 7, 8, 9 1
10 2
11 3
12, 13 4
14, 15 5
16, 17, 18, 19 6
20 7, 8
21 9
22 10
23 11, 12
24, 25, 26, 27 13
28, 29, 31, 32 14
30 15
Remainder Parcel 16, 17, 18, 19
Table B.1: 2021 Piemonte Overlay OCSP Parcels/Subarea Correlation 3477
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Appendix C

APPENDIX C -

ONTARIO CENTER SPECIFIC PLAN

STATISTICAL SUMMARY
Table C.1: Statistical Areas D & E / Planning Areas 7, 8, 9, 10, 12 & 15 Development Maximum
GFA (in SF)
Maximum
No. DUs
Existing or Entitled Development
955 N Duesenberg Dr (Vintage Apartments) - 300 DUs 309
950 N Duesenberg Dr (Camden Landmark Apartments) - 472 DUs 491 4000 E Ontario Center Parkway (Arena) 200,020
1051 N Milliken Ave (Kohl’s) 96,736
1041 N Milliken Ave (Starbucks) 1,500
1021 N Milliken Ave (Applebee’s) 4,603
4290 E Fourth St (El Pollo Loco) 2,406
4275 E Concours St (Home Thai/Professional Nail/Sunrise Optometry) 8,528 4295 E Concours St (Comerica Bank) 3,262
901 N Via Piemonte (5-story Office) 125,685
4150 E Fourth St (Spa/Wax Center/Weight Watchers) 8,385 4190 E Fourth St (Jeweler/Hair Salon/Dentist) 7,320
4240 E Fourth St (Wells Fargo) 4,845
4120 E Fourth St (Big Al’s/Petsmart/DSW Shoes) 91,280
4200 E Fourth St (Target = 140,941 SF + 10,800 SF garden center) 151,742 900 N Via Piemonte (Marriott - Element Ontario Hotel, 131 rooms) 92,823 901 N Via Piemonte (Office) 125,685
Southwest Corner of N Via Alba & E Via Villagio - 72 DUs 72 Northeast Corner of Ontario Center Pkwy & N Via Alba - 110 DUs 110 Total 924,823 982
Remaining Allocation
Office/Commercial 608,488
Hotel 1 - 131 Rooms 87,177
Hotel 2 - 100 Rooms 110,400
Residential Units 483,600 **1,500
Total 1,382,488
GRAND TOTAL 2,840,000 2,300
Note: ** Residential units replace office/retail gross floor area (GFA) at the rate of one dwelling unit for each 600 SF of office/commercial GFA (based on equivalent traffic generation, water demand, and wastewater generation rates). 3479
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Table C.2: Statistical Area D / Planning Area 7
Table C.3: Statistical Area E / Planning Areas 8, 9 & 10 Development Maximum GFA (in SF)
Existing Development
Vintage Apartments - 300 DUs 290,151
Total 290,151
Remaining Allocation
Office/Commercial 239,449
Hotel - 100 Rooms 110,400
Total 349,849
GRAND TOTAL 640,000
Development Maximum GFA (in SF)
Existing or Entitled Development
Camden Apartments - 472 DUs 461,049
Arena 200,020
Kohl’s 96,736
Starbucks 1,500
Applebee’s 4,603
El Pollo Loco 2,406
Home Thai/Nails/Optometry 8,528
Comerica Bank 3,262
5-Story Office 125,685
Spa/Waxing/Weight Watchers 8,385
Jeweler/Hair Salon/Dentist 7,320
Wells Fargo 4,845
Big Al’s/Petsmart/DSW Shoes 91,280
Target 151,742
Marriott - Element Ontario Hotel (131 rooms) 92,823
901 N Via Piemonte (Office) 125,685
Southwest Corner of N Via Alba & E Via Villagio (72 units) Northeast Corner of Ontario Center Pkwy & N Via Alba (110 units) Total 1,385,859
Remaining Allocation
Office/Commercial 243,354
Hotel - 105 Rooms 87,177
Residential - 806 DUs 483,600
Total 1,032,639
GRAND TOTAL 2,200,000
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Appendix D
Table D.1: 2006 Piemonte Overlay Intensity
Allocation by Subarea for Traffic Analysis
SubareasNet
Acres
Land Use
Maximum
Floor Area
Maximum
Dwelling
Units Commercial
Entertainment/
Retail
Special Use
(Hotel)
Offices Residential
1 13.02 • • 100 Rooms • 220,713
2 2.28 • 24,800
3 1.36 • • 18,000
4 12.35 • 251,370
5 8.29 • 403
6 3.20 • • • 43,300
7 2.68 • • • 25,300 170
8 0.76
9* 5.16 • 125,685
10 3.24 236 Rooms 180,000
11 0.91 • • 32,300 218
12 2.49
13 4.07 • 49,200
14* 20.35 • • 228,400
15 4.27 • 93,000
Totals 84.43 1,292,068 791
* Built-out Subarea
APPENDIX D - 2006 OVERLAY LAND

USE ALLOCATION & MAXIMUM

DEVELOPMENT INTENSITY

ANALYZED FOR TRAFFIC

GENERATION
The 2006 traffic analysis for the Piemonte at Ontario Center Project Addendum to the Ontario Center EIR (Applied Planning Inc., February 2006) used the anticipated development shown in Table D.1: 2006 Piemonte Overlay Intensity Allocation by Subarea for Traffic Analysis to determine the remaining traffic capacity for the Overlay area. That traffic analysis used lower numbers that were permitted by the 2006 Overlay. However, it also concluded that the 2006 Piemonte Overlay only used 28% of the daily trips, 29% of the peak daily evening trips and 92% of the peak morning trips.
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Appendix E
Fehr & Peers completed a draft Transportation Impact Study (TIS) for the proposed Empire Lakes project in the City of Rancho Cucamonga. That study documented potential transportation impacts associated with the proposed project.

Since completing that study, we have completed a trip generation estimate for the Piemonte Site based on their most recent site plan that will be submitted to the City of Ontario. We also completed additional work in support of designing the 4th Street access to both the Piemonte Site and the Empire Lakes site. The purpose of this memorandum is to document the methodology, recommendations, and results of the project access assessment.

Piemonte Trip Generation Estimates
Piemonte Trip Generation As Approved
As part of the Empire Lakes traffic study, the portion of the Piemonte Site that has not yet been developed was estimated using information from the Piemonte at Ontario Center Project Addendum to the Ontario Center EIR (Applied Planning Inc., February 2006). Table E-1: Piemonte Trip Generation – As Currently Approved summarizes the trip generation estimate used in the Empire Lakes traffic study:

APPENDIX E - PIEMONTE TRIP

GENERATION COMPARISON AND
THE PIEMONTE/EMPIRE LAKES 4TH

STREET ACCESS CONFIGURATION
- FEHR & PEERS MEMORANDUM
(DATED JUNE 8, 2016)
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Table E-1: Piemonte Trip Generation – As Approved in 2006 Use Daily
AM Peak Hour PM Peak Hour
In Out Total In Out Total
Total Net Piemonte (From Study) 29,800 1,284 812 2,096 1,124 1,471 2,595 Parcel 1 (Constructed) 4,990 71 46 117 150 162 312
Parcel 2 (Constructed) 3,182 69 54 123 99 104 203
Parcel 10 (Constructed) 1,107 154 21 175 29 140 169
Undeveloped Piemonte 20,521 990 691 1,681 846 1,065 1,911 Source: Piemonte at Ontario Center Project Addendum to the Ontario Center EIR (Applied Planning Inc., February 2006).

As shown in Table E-1: Piemonte Trip Generation – As Currently Approved, the portion of Piemonte that is not yet developed is estimated to generate 20,521 daily trips, 1,681 AM peak hour trips, and 1,911 PM peak hour trips. These trips were utilized in the Empire Lakes traffic study.

Piemonte Trip Generation As Currently Proposed
The site concept for the Piemonte site provided by Lewis Operating Companies (dated March 11, 2016) is attached. Using this site plan, Fehr & Peers estimated the trip generation for the project site as shown in Table E-2: Piemonte Trip Generation – As Proposed in 2016 on the following page.

As shown in Table E-2: Piemonte Trip Generation – As Proposed in 2016, with the proposed site plan the undeveloped portion of Piemonte would be projected to generate 13,905 daily trips, 957 AM peak hour trips, and 1,357 PM peak hour trips.

Table E-3: Piemonte Trip Generation Comparison of 2006 and 2016 Data compares the as-approved trip generation to the currently proposed trip generation. As shown in the table, the undeveloped portion of Piemonte, as currently proposed, is anticipated to generate 6,616 fewer daily trips, 724 fewer AM peak hour trips, and 554 fewer PM peak hour trips.

Given that the currently proposed development in Piemonte is less than what was approved, the assumptions in the Empire Lakes traffic study is considered conservative as part of this effort.
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Appendix E
Table E-2: Piemonte Trip Generation – As Proposed in 2016 Use Daily
AM Peak Hour PM Peak Hour
In Out Total In Out Total
Lewis and Lincoln Proposed Uses
Zone 1 - Retail 3,822 53 33 86 159 173 332
Zone 2 - Office 552 69 9 78 13 62 75
Zone 3 - Residential 1,915 29 118 147 116 63 179
Zone 4 - Residential 1,144 18 70 88 69 38 107
Zone 4 - Retail 3,565 50 30 80 149 161 310
Zone 5 - Residential 765 12 47 59 46 25 71
Total Gross Trip Generation Proposed 11,763 231 307 538 552 522 1,074 Internalization (Consistent with
Previous Study) 17% Daily, 12% AM
Peak Hour, 18% PM Peak Hour
-2,000 -28 -37 -65 -99 -94 -193
Total Trip Generation 9,763 203 270 473 453 428 881
Parcel 6 Trip Generation (from previous study) 1,928 81 52 133 74 65 139 Parcel 13 Trip Generation (from previous study) 2,214 309 42 351 57 280 337 Total New Trips In Piemonte 13,905 593 364 957 584 773 1,357 Source: Fehr & Peers, 2016. Site Plan provided by Lewis Operating Companies (March 2016). Note: Parcel 6 and Parcel 13 are not included in the Lewis Site Plan and trip generation from the previous Applied Planning dated February 2006 study is used.

Table E-3: Piemonte Trip Generation Comparison of 2006 and 2016 Data Use Daily
AM Peak Hour PM Peak Hour
In Out Total In Out Total
Undeveloped Piemonte (as approved) 20,521 990 691 1,681 846 1,065 1,911 Undeveloped Piemonte (as proposed) 13,905 593 364 957 584 773 1,357 Net Difference -6,616 -397 -327 -724 -262 -292 -554
Source: Fehr & Peers, 2016
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4Th Street Access Methodology
Given the proximity of up-stream and down-stream intersections to the proposed site access, micro-simulation was utilized to evaluate traffic operations.

Micro-simulation utilizes driver behavior parameters to simulate how driver decisions affect traffic operations. Additionally, micro-simulation has the ability to evaluate how vehicles queues can extend over space and time and account for the operational effects associated with those queues.

To evaluate the network, Fehr & Peers utilized the SimTraffic 8.0 software which is consistent with the Highway Capacity Manual methodology (Transportation Research Board, 2010). Assumptions utilized in this assessment specific to this software are documented below:
• Lane configurations utilized are based on the proposed design shown in Attachment A
• Signal timing information began with existing timing data provided by the City and were optimized for the corridor related to signal timing splits and timing offsets
• A base saturation flow rate of 1,900 vehicles per hour per lane • A peak hour factor of 0.95 was applied
• A total of 20 simulations were completed with different random seeds • The results are based on the average of all 20 runs as there were no “outliers” in the simulation results
• The simulation results were utilized to assist in designing the intersection for both level of service and to accommodate expected queues • Fehr & Peers updated the trip assignment information to/from the Piemonte to reflect the trip generation information noted above based on the locations of land use provided on the attached site plan.

Please note that the analysis for site access focused on the forecasts developed for the cumulative scenario. This provides the highest volume of traffic and is considered the most appropriate scenario for sizing infrastructure. 3486
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Appendix E
4Th Street Access Analysis Results
The level of service (LOS) was calculated for both the 4th Street/Cleveland Avenue and 4th Street/The Vine study intersections to evaluate traffic operations.

LOS is a qualitative measure of traffic operating conditions whereby a letter grade, from A (the best) to F (the worst), is assigned. These grades represent the perspective of drivers and are an indication of the comfort and convenience associated with driving. Table E-4: Intersection HCM LOS Criteria describes the LOS thresholds for signalized intersections identified in the HCM. Table E-5:

Cumulative Plus Project Conditions Intersection LOS (2016) summarizes the AM and PM peak hour level of service results for the two study intersections. Table E-6: Cumulative Plus Project Left-Turn Queues (2016) summarizes the queues at the intersections.

Table E-4: Intersection HCM LOS Criteria
LOS Description Signalized Delay
(Seconds)
A Operations with very low delay occurring with favorable progression and/or short cycle length. < 10.0
B Operations with low delay occurring with good progression and/or short cycle lengths. > 10.0 to 20.0
C Operations with average delays resulting from fair progression and/ or longer cycle lengths. Individual cycle failures begin to appear. > 20.0 to 35.0 D
Operations with longer delays due to a combination of unfavorable progression, long cycle lengths, or high V/C ratios. Many vehicles stop and individual cycle failures are noticeable.
> 35.0 to 55.0
E
Operations with high delay values indicating poor progression, long cycle lengths, and high V/C ratios. Individual cycle failures are frequent occurrences.
> 55.0 to 80.0
F Operation with delays unacceptable to most drivers occurring due to over saturation, poor progression, or very long cycle lengths. > 80.0 Source: Highway Capacity Manual (Transportation Research Board, 2010). 3487
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Table E-5: Cumulative Plus Project Conditions Intersection LOS (2016) Intersection Traffic
Control
Peak
Hour Delay LOS
19 4th Street/Cleveland Avenue Signal
AM 16.0 B
PM 20.8 C
20 4th Street/The Vine (Project Access) Signal
AM 14.8 B
PM 16.7 B
Notes:

1. Delay is calculated using SimTraffic Micro-Simulation using HCM 2010 Methodology Source: Fehr & Peers, 2016
Table E-6: Cumulative Plus Project Left-Turn Queues (2016) Location AM PM
4th Street/Cleveland Avenue Intersection
Eastbound Left-Turn (225’) 225’ 77’
Westbound Left-Turn (142’
Storage)
140’ 133’
4th Street/The Vine Intersection
Eastbound Left-Turn1 (310’
Storage)
106’ 257’
Westbound Left-Turn1 (250’
Storage)
191’ 206’
Notes:

Queues reported from Synchro and represent the 95th-percentile queue.

Bold indicates where queue exceeds available storage.

1. Proposed Configuration has dual lanes. Total queue in both lanes reported Source: Fehr & Peers, 2016
As shown in Table E-5: Cumulative Plus Project Conditions Intersection LOS (2016), both study intersections are projected to operate at acceptable levels of service during both peak hours. Additionally, as shown in Table E-6: Cumulative Plus Project Left-Turn Queues (2016), the queues are accommodated in the proposed turn pockets.
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Appendix F
RK Engineering Group, Inc. completed a draft Transportation Impact Analysis (TIA) for the proposed mixed-use development . That study documented potential transportation impacts associated with the proposed project.

The purpose of this memorandum is to document the methodology, recommendations, and results of the project access assessment.

Mixed-Use Trip Generation Estimates
The mixed-use development capacity and trip generation associated with the 2022 Piemonte Overlay Specific Plan Amendment has been analyzed. Table F-1: OCSP Trip Generation Cmoparison with Proposed Mixed-Use Land Uses (SA 8, 11, 16 & 17) summarizes the trip generation estimate used in the traffic analysis:

Table F-1: OCSP Trip Generation Comparison with Proposed Mixed-use Land Uses (SA 8, 11, 16 & 17)
Daily AM Peak Hour PM Peak Hour
Allowable trips per OCSP 98,837 1,961 7,556
Total Net Adept-Piemonte Trips 5,691 300 458
Trip Generation Difference Between OCSP and
proposed Overlay Amendment
93,146 1,661 7,098
Percent of Trips Use by proposed Overlay
Amendment

6.1% 18% 6.4%
The Traffic Impact Analysis compared the proposed Mixed-use Land use trip generation to the available trip counts allowed under the Ontario Center Specific Plan. In summary, the OCSP has a remaining trip capacity of 98,837 daily trips, and the proposed Mixed-use is anticipated to generate a net trip count of 5,691, which is well within the remaining capacity established for the OCSP area. In addition, the peak hour trip counts for the proposed Mixed-use land uses, 300

APPENDIX F - TOYOTA ARENA

MIXED-USE DEVELOPMENT

TRAFFIC IMPACT ANALYSIS - RK
Engineering Group (September 17, 2021)
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trips in the AM and 458 trips in the PM, are also within the peek hour Allowable trips per OCSP.

CEQA Vehicle Miles Traveled Analysis
Development projects within the Piemonte Overlay are subject to a Vehicle Miles Traveled (VMT) analysis, purupsant to the recommendations and practices described in Planning Commission Resolution No. PC20-021.

According to City guidelines, land use projects located within a Transit Priority Area (TPA) and have the following project characteristics are presumed to have a less than significant impact absent substantial evidence to the contrary:
• Has a Floor Area Ratio of 0.75 or higher;
• Includes no more parking for residents, customers or employees than the City Development Code mandades;
• Is consisten with the Sustainable Communitys Strategy (SCS) as determined by the City with input from SCAG or SBCTA; and
• If there are existing affordable residential units, replaces those residential units with at least as many similarly affordable units and not with a smaller number of moderate or hight-income residential units.

Certain areas within the Piemonte Overlay are within the TPA and may qualify to be presumed to have a less than significant impact.
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Appendix G
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Table G.1: Applicable OCSP Planting Matrix

APPENDIX G - OCSP PLANTING MATRIX
Species
(Latin name - Common name)
Concours
Street
Fourth
Street
Haven
Avenue
Primary
Entrance
Statement
Secondary
Entrance
Statement
TREES (P = Primary Tree, S = Secondary Tree)
Acacia saligna – Willow Acacia S
Arbutus unedo – Strawberry Tree X
Bauhinia variegata – Orchid Tree X
Brachychiton acerfolius – Flame Tree S
Brachychiton populneum – Bottle Tree S S
Celtis australis – European Hackberry X
Chorisia speciosa – Floss-silk Tree P P X X
Cinnamomum camphora – Camphor Tree P X X
Cupaniopsis anacardiodes – Carrotwood X X
Eriobotrya deflexa – Loquat X
Ficus nitida – Ficus S P X
Ficus religiosa – Bo Tree X
Ficus rubiginosa – Rusty Leaf Fig X X
Fraxinus velutina ‘Modesto’ –
Modesto Ash
X
Geijera parvifolia – Australian Willow X
Quercus kelloggii – California Black Oak X
Quercus rubra – Red Oak S
Quercus suber – Cork Oak P
Schinus Molle – California Pepper * S
Sophora japonica – Japanese Pagoda Tree X X
Ulmus parvifolia – Chinese Evergreen Elm S X
Washingtonia robusta – Mexican Fan Palm X X
Washingtonia filifera – California Fan Palm S S X X
SHRUBS
Acacia spp. – Wattle X
Abelia grandiflora – Glossy Abelia X X
Abelia grandiflora ‘Edward Goucher’ –
Dwarf Glossy Abelia
X
Agapanthus spp. – Lily of the Nile X X
Callistemon spp. – Bottlebrush X
Carissa spp. – Natal Plum X X
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Table G.1: Applicable OCSP Planting Matrix (Continued)
Species
(Latin name - Common name)
Concours
Street
Fourth
Street
Haven
Avenue
Primary
Entrance
Carissa grandiflora ‘Tuttlei’ –
Dwarf Natal Plum
X
Cercis occidentalis – Western Redbud X
Clivia Miniata – Clivia X X
Cotneaster spp. – Cotoneaster X
Dietes vegeta – Fortnight Lily X X
Grevillea noellii – NCN X X
Hemerocallis spp. – Daylily X X
Hypericum Calycinum – Aaron’s Beard X
Ilex spp. – Holly X X
Iris spp. – Iris X
Juniperus spp. – Juniper X X
Kniphofia uvaria – Red Hot Poker X
Lantana camara X X
Nandina domestica – Heavenly Bamboo X X
Nandina ‘Harbor Dwarf’ – Dwarf Bamboo X X
Nerium oleander – Oleander X X
Pennisetum setaceum – Fountain Grass
Photinia spp. – Photinia X X
Pittosporum spp. – Pittosporum X X
Pittosporum tobira ‘Wheeleri’ –
Dwarf Pittosporum
X X
Plumbago auriculata – Cape Plumbago X
Podocarpus macrocarpa – Yew Pine X X
Potentilla fruticosa – Cinquefoil X X
Prunus Caroliniana –
Carolina Laurel Cherry
X
Pyracanthus spp. – Pyracantha X
Raphiolepis spp – Indian Hawthorn X X
Viburnum spp. – Viburnum
Xylosma congestum – Shiny Xylosma X X
Yucca schottii
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Appendix G
April 2022 Page G-3
Table G.1: Applicable OCSP Planting Matrix (Continued)
Species
(Latin name - Common name)
Concours
Street
Fourth
Street
Haven
Avenue
Primary
Entrance

GROUNDCOVER
Ajuga reptans – Bronze Ajuga X X
Anigozanthos spp. – Kangaroo Paw X
Bouganvillea spp. X X
Carissa grandiflora X X
Carpobrotus edulis – Hottentot Fig X X
Cerastium tomentosum – Snow-in-Summer X
Delosperma alba – White Iceplant X X
Drosanthemum hispidum – Rosea Iceplant X X
Fragaria chiloensis – Wild Strawberry X
Gazania spendens – Clumping Gazania X X
Hedera helix ‘ Needlepoint’ –
Needlepoint Ivy
X
Jasminum humile – Italian Jasmine X X
Lantana spp. X X
Oenothera berlandieri –
Mexican Evening Primrose
X
Pelargonium peitatum – Ivy Geranium X X
Potentilla verna – Spring Clinquefoil X
Rosmarinus officinalis – Rosemary X X
Santolina spp. – Lavender Cotton X X
Sedum spp. – Sedum X X
Tracheiospenium jasminoides – Star Jasmine X X
Verbena peruviana – Verbena X
Vinca minor – Dwarf Periwinkle X X
Vinca rosea – Madagascar Periwinkle X X
VINES
Anemopaigma chamberlaynii –
Yellow Trumpet Vine
X
Bougainvillea – NCN X X
Clytostoma callistegiodes –
Violet Trumpet Vine
X
Gelsemium – Carolina Jessamine X X
Macfadyena unguis-cati – Cat’s Claw X
Parthenocissus tricuspidata – Boston Ivy X X
Tecomaria capensis – Cape Honeysuckle X X
Source: The Ontario Center Specific Plan (P&D Technologies) Updated April 2005. 3493
Department: Planning
Prepared By: Luis Batres
Staff Member Presenting:

Scott Murphy, Executive Director Community
Development
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 20
SUBJECT: A PUBLIC HEARING TO CONSIDER FILE NO. PCUP21-009, A CONDITIONAL USE PERMIT TO ESTABLISH A 128-ROOM LIMITED-SERVICE HOTEL ON 1.83 ACRES OF LAND LOCATED AT 5060 EAST FOURTH STREET, WITHIN THE FREEWAY COMMERCIAL LAND USE DISTRICT OF THE EXCHANGE SPECIFIC PLAN (APN: 0238- 012-30)

CITY OF ONTARIO
Agenda Report
April 19, 2022
SECTION:

PUBLIC HEARINGS
RECOMMENDATION: That the City Council consider and adopt a Resolution approving the Conditional Use Permit, File No. PCUP21-009, establishing a 128-room limited-service hotel located at 5060 East Fourth Street.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Invest in the Growth and Evolution of the City's Economy Operate in a Businesslike Manner
Focus Resources in Ontario's Commercial and Residential Neighborhoods FISCAL IMPACT: The proposed hotel is expected to open in the Summer of 2024 and is projected to have an occupancy rate of 83 percent. The hotel is estimated to generate approximately $3.5 million dollars in revenue the first year and $4.5 million by the fifth year. Based on the projected revenues, the project will generate approximately $411,250 in estimated transient occupancy tax revenue the first year and $528,750 by the fifth year. In addition, the project will generate approximately $ 2.1 million in Development Impact Fees. Moreover, the project will also result in increased property tax revenues.

BACKGROUND & ANALYSIS: On June 4, 2021, the Applicant submitted a Conditional Use Permit application (File No. PCUP21-009) requesting approval to establish and operate a 128-room limitedservice hotel on 1.83 acres of land located at 5060 East Fourth Street, within the Freeway Commercial land use district of The Exchange Specific Plan. The Conditional Use Permit was filed in conjunction with a Development Plan application (File No. PDEV21-021) requesting approval to construct a 4-story, 128-room Extended Stay hotel on the Project site.

On February 22, 2022, the Planning Commission conducted a duly noticed public hearing to consider the proposed Conditional Use Permit and Development Plan and upon conclusion of the 3494
hearing, voted unanimously (7-0) to approve the Development Plan and recommend that the City Council approve the Conditional Use Permit.

The City’s Development Code requires that all new hotels must be reviewed under concurrently filed Conditional Use Permit and Development Plan applications and that the Conditional Use Permit requires City Council action. The purpose of the Conditional Use Permit application and review is to confirm compliance with the City's Development Code required minimum amenity package for hotels, and to ensure the project’s market feasibility.

Minimum Amenity Package. The Development Code provides that no Conditional Use Permit shall be approved for a hotel, motel, residence inn, or other similar traveler accommodation, unless certain specific amenities are provided, as follows:

Each guestroom must include voicemail, wired or wireless internet access, desk with chair, hairdryer, retractable magnifying (10X) and lighted makeup mirror, iron and ironing board, high definition television, and alarm clock or wake-up service. Compliance with these requirements will be verified by the Planning Department during building plan check and at time of final building inspection.

For limited-service hotels, meeting space equal to 15 square feet per guestroom must be provided, requiring the Project provide a minimum of 1,920 square feet of meeting/gathering area. The Project exceeds the minimum requirement, incorporating a total of 2,250 square feet of available meeting/gathering area.

Both active and passive leisure amenities are required. At a minimum, the Project must provide a swimming pool, whirlpool/spa or furnished cabana, and fitness room. The Project exceeds the minimum requirement, providing a pool and spa, poolside cabana, outdoor seating areas, and a fitness room.

A guest courtesy lounge for the serving of light meals and snacks is required to be provided in conjunction with limited-service hotels. The Project has provided a 331-square-foot café/snack room for hotel guests, meeting the minimum requirement.

In reviewing the proposed Project, the Planning Commission determined that all of the minimum amenity package requirements stipulated by Section 5.03.250.D (Minimum Amenity Package) of the City’s Development Code, have been met or exceeded.

Market Demand. As a requirement of Conditional Use Permit submittal, the developer of a hotel must submit a Market Feasibility Study, which demonstrates that the local market can support the development of a new hotel. Veritas Development Advisors has prepared a Market Feasibility Study (dated October 21, 2021), which includes analysis and market research related to the proposed Project. The study found that the local market can support a limited-service hotel on the Project site. The study’s conclusions are based primarily upon the growth in the Inland Empire, the area’s proximity to the Los Angeles area, the Ontario Convention Center, the Ontario International Airport, California Speedway in Fontana, and the Project’s proximity to the Ontario Mills Mall (see Exhibit K - Hotel Market Study, of the attached Planning Commission Staff Report). The Market Study includes an analysis of other similar hotels in the area, long-term viability, and overall demand due to new businesses and activities in and around the City.
3495
HOUSING ELEMENT COMPLIANCE: The Project is consistent with the Housing Element of the Policy Plan (General Plan) component of The Ontario Plan, as the Project site is not one of the properties in the Available Land Inventory contained in Table A-3 (Available Land by Planning Area) of the Housing Element Technical Report Appendix.

AIRPORT LAND USE COMPATIBILITY PLAN (ALUCP) COMPLIANCE: The project site is located within the Airport Influence Area of the Ontario International Airport and has been found to be consistent with the policies and criteria set forth within the Ontario International Airport Land Use Compatibility Plan.

ENVIRONMENTAL REVIEW: The Project is categorically exempt from the requirements of the California Environmental Quality Act (“CEQA”) pursuant to Section 15332 (Class 32, Infill Development Projects) of the CEQA Guidelines, which consists of projects characterized as infill development projects. Furthermore, the Project meets all of the following conditions: (a) the Project is consistent with the applicable general plan designation and all applicable general plan policies, as well as the applicable zoning designation and regulations; (b) the proposed development occurs within city limits, on a project site of no more than five acres, and is substantially surrounded by urban uses; (c) the Project site has no value as habitat for endangered, rare, or threatened species; (d) approval of the Project will not result in any significant effects relating to traffic, noise, air quality, or water quality; and (e) the Project site is adequately served by all required utilities and public services.
3496
Case Planner: Luis E. Batres Hearing Body Date Decision Action Planning Director
Approval:

DAB 2/7/22 Approved Recommend
PC 2/22/22 Final
/Recommend
Submittal Date: 6/4/21 CC CUP- Final
FILE NOS: PCUP21-009 and PDEV21-021
SUBJECT: A Conditional Use Permit (File No. PCUP21-009) to establish and operate a limited-service hotel and a Development Plan (File No. PDEV21-021) to construct a 4-story, 128-room Extended Stay hotel on 1.83 acres of land located at 5060 East Fourth Street, within the Freeway Commercial land use district of The Exchange Specific Plan (APN:
0238-012-30); submitted by Roger Barbosa. City Council action is required for File No.

PCUP21-009.

PROPERTY OWNER: Jara Hospitality
RECOMMENDED ACTION: That the Planning Commission consider and approve File No.

PDEV21-021, and recommend approval to City Council for File No. PCUP21-009, pursuant to the facts and reasons contained in the staff report and attached resolutions, and subject to the conditions of approval contained in Attachment A to each resolution.

PROJECT SETTING: The Project site is comprised of 1.83 acres of land located at 5060 East Fourth Street, within the Freeway
Commercial land use district of The
Exchange Specific Plan and is depicted
in Figure 1: Project Location. The site is
bounded by Interstate 15 to the west,
Fourth Street to the north, Southern
California Edison (“SCE”) transmission
lines to the east and Ontario Mills Parkway
to the south. The surrounding area is
currently developed with Arizona Tile,
Baker’s Drive-Thru Restaurant, AM/PM
Service Station, a multi-tenant retail
building that includes WaBa Grill, and a
four-building industrial business park
located within the southern portion of the
specific plan. The existing surrounding
land uses, zoning, and general plan and
specific plan land use designations are
summarized in the “Surrounding Zoning &
Figure 1: Project Location
303 East B Street, Ontario, California 91764 Phone: 909.395.2036 / Fax: 909.395.2420

PLANNING COMMISSION

STAFF REPORT
February 22, 2022
Approved
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February 22, 2022

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Land Uses” table located in the Technical Appendix of this report.

PROJECT ANALYSIS:
(1) Background — In 2003, the City approved The Exchange Specific Plan, a 23.60- acre master plan for the Project area. The Exchange Specific Plan is composed of two land use districts, including the Freeway Commercial land use district, which comprises the northerly 12.03 acres of the Specific Plan, and the Industrial Park land use district, which comprises the southerly 11.57 acres of the Specific Plan (see Exhibit B—The Exchange Specific Plan Land Use Plan, attached).

In 2007, two development plans were approved within The Exchange Specific Plan master plan area, including a 15,705 square foot sit-down restaurant (Blue Sandias) and a 74-room, 3-story hotel (Candlewood Suites). Blue Sandias and Candlewood Suites were never constructed due to a downturn in the economy.

On June 4, 2021, the Applicant submitted a Conditional Use Permit application (File No.

PCUP21-009) requesting approval to establish and operate a limited-service hotel land use, together with a Development Plan application (File No. PDEV21-021) requesting approval to construct a 4-story, 128-room Extended Stay hotel on the Project site.

Guest amenities proposed for the Project include:
▪ Swimming pool with an accompanying pool side cabana;
▪ Outdoor seating area;
▪ Porte-cochere for arriving guests;
▪ Meeting rooms (two rooms totaling 1,850 square feet) and adjacent outdoor gathering area (400 square feet);
▪ Fitness room (331 square feet);
▪ Café/Snack room (331 square feet);
▪ Guest laundry facilities (437 square feet); and
▪ On-site business center, including office equipment (copying, printer, and scanner) and supplies
Guestrooms range from 277 square feet (Queen Suites) to 432 square feet (Double Queen Suites) in area. Four room configurations are proposed:
▪ Queen Suites (61 rooms)
▪ Double Queen Suites (61 rooms)
▪ ADA Queen Suites (3 rooms)
▪ ADA Double Queen Suites (3 rooms)
(2) Conditional Use Permit — The City’s Development Code requires that all new hotels must be reviewed under concurrently filed Conditional Use Permit and Development Plan applications. The purpose of the Conditional Use Permit application 3498
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and review is to ensure that the proposed use will be operated in a manner consistent with all local regulations, and to ensure the use will not be detrimental to the public health, safety, or welfare, or materially injurious to uses, properties or improvements in the vicinity. More specifically, in the case of hotels, the Conditional Use Permit is required to establish the Project’s market feasibility and ensure on-going compliance with the minimum amenity package required by the Development Code. (a) Market Demand — As a requirement of Conditional Use Permit submittal, the developer of a hotel must submit a Market Feasibility Study, which demonstrates that the local market can support the development of a new hotel. For this Application, Veritas Development Advisors has prepared a Market Feasibility Study (dated October 21, 2021), which includes analysis and market research related to the proposed Project.

The study found that the local market can support a limited-service hotel on the Project site. The study’s conclusions are based primarily upon the growth in the Inland Empire, the area’s proximity to the Los Angeles area, the Ontario Convention Center, the Ontario International Airport, California Speedway in Fontana, and the Project’s proximity to the Ontario Mills Mall (see Exhibit K—Hotel Market Study, attached). The Market Study includes an analysis of other similar hotels in the area, long-term viability, and overall demand due to new businesses and activities in and around the City. (b) Minimum Amenity Package —The Development Code provides that no Conditional Use Permit shall be approved for a hotel, motel, residence inn, or other similar traveler accommodation, unless certain specific amenities are provided, as follows ▪ Each guestroom must include voicemail, wired or wireless internet access, desk with chair, hairdryer, retractable magnifying (10X) and lighted makeup mirror, iron and ironing board, high definition television, and alarm clock or wake-up service.

Compliance with these requirements will be verified by the Planning Department during Building Department plan check and at time of final building inspection. ▪ For limited-service hotels, meeting space equal to 15 square feet per guestroom must be provided, requiring that a minimum of 1,920 square feet of meeting/gathering area must be provided for the Project. The Project exceeds the minimum requirement, incorporating a total of 2,250 square feet of available meeting/gathering area.
▪ Both active and passive leisure amenities are required, at a minimum, a swimming pool, whirlpool/spa or furnished cabana, and fitness room. The Project exceeds the minimum requirement, providing a pool/spa, poolside cabana, outdoor seating areas, and a fitness room.
▪ A guest courtesy lounge for the serving of light meals and snacks is required to be provided in conjunction with limited-service hotels. A 331-square-foot café/snack room is provided for hotel guests, meeting the minimum requirement.

It is the determination of Planning Department staff that the proposed Project has met or exceeded the minimum amenity package requirements, as stipulated by Section

5.03.250.D (Minimum Amenity Package) of the City’s Development Code. 3499
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(3) Development Plan —
(a) Site Design/Building Layout. The proposed hotel is located approximately 1,000 feet south of Fourth street, with the building’s primary entrance facing north. The building is in a L-shaped configuration, which wraps around an outdoor amenity area containing the pool/spa and outdoor gathering/seating areas (see Exhibit A—Project Location Map, attached).
(b) Site Access/Circulation. Off-street parking is distributed along the north and west sides of the building and a guest drop-off area under a porte-cochere has been provided at the front of the building. Ample landscaped areas have been provided immediately adjacent to the hotel and throughout the off-street parking areas.

Additionally, decorative hardscape treatments have been provided at the main building entrance, throughout the pool/spa and outdoor gathering/seating areas and at the vehicle turn-around area in front of the hotel (see Figure 2: Site Plan, above). (c) Site Access/Circulation. Primary vehicular access to the proposed hotel is provided from an existing common drive aisle that intersects Fourth Street at a fully signalized intersection that is common with the Interstate 15 southbound exit to Fourth Street. Secondary access is provided from Ontario Mills Parkway via a common drive aisle through the industrial park to the south. Additionally, ample maneuvering space has been provided for service. Service vehicles will be able to access the hotel along the east side of the building via a 24-foot-wide service drive.

Figure 2: Site Plan
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(d) Parking. The Project is required to provide a total of 128 off-street parking spaces, at the rate of one space per guestroom, and the Project is proposing a total of 118 spaces. The Exchange Specific Plan and the Ontario Development Code allow the Planning Commission to approve a reduction in parking, if the reduction is validated by a parking study. To support the requested reduction in parking, a parking study was prepared by Trames Solutions Inc. (see Exhibit L—Parking Study, attached). The parking study concluded that the number of parking spaces provided is adequate. The study found that the hotel will have a peak demand of 94 spaces at 8 AM on weekdays and 105 spaces at 8 AM on weekends (see Table 1: Parking Study Peak Demand, below). In addition, the City’s Traffic Manager has reviewed the parking study and is in support of the study’s findings. However, to mitigate any potential parking shortages in the future, staff has conditioned the Project so that, if additional parking is found to be necessary, the Applicant must enter into a reciprocal parking agreement with adjacent developments to provide additional parking.

Table 1: Parking Study Peak Demand
Demand Peak Time Required Parking Parking Provided
Weekdays: 8 AM 94 118
Weekends: 8 AM 105 118
(e) Architecture. The Extended Stay hotel will be a signature building. The hotel will feature a contemporary architecture style that exemplifies the high-quality architecture promoted by The Exchange Specific Plan and the Ontario Plan. Since the Project will be visible from all four sides, staff has worked closely with the architect to provide 360-degree architecture. Special attention has been given to the use of colors, massing, building form, materials, and architectural details (see Figure 3: Front Elevation, below, and Exhibit F—Building Elevations, attached).

This is exemplified by the use of:
▪ Decorative architectural towers on all four building sides; ▪ Articulated roof line;
▪ Articulated footprint;
▪ Decorative cornice treatment along the edge of the architectural towers; ▪ Vertical and horizontal reveal lines;
▪ Variation in building massing;
▪ Cantilevered building elements;
▪ Incorporation of insets and pop-outs;
▪ Extensive use of glass;
▪ Smooth-painted walls;
▪ Decorative lighting fixtures;
▪ Fiber cement vertical siding panels;
▪ Decorative metal wall panels;
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▪ Decorative painted steel canopies along the north elevation; ▪ Incorporation of a stone veneer along the full height of the first floor (French Limestone);
▪ Incorporation of decorative eyebrows over key windows; and ▪ Color blocking implementing exterior colors of varying tone, shade, and brightness.
(f) Landscaping. The Exchange Specific Plan requires 15 percent of the site to be landscaped and the Applicant proposes to landscape 15.5 percent of the Project site. Palm trees, accent trees, and ground cover have been selected to enhance the Project site, along with Australian Willow, Brisbane Box, Coast Live Oak, Date Palms, Agave Blue Clone, Dwarf Myrtle, Amazing Red Flax, Indian Hawthorn, Texas Privet, and Orange Drop Lily. To enhance the Project at night, staff has worked with the Applicant to also provide enhanced lighting at key landscape areas.
(g) Utilities (drainage, sewer). Public utilities (water and sewer) are available to serve the Project site. Additionally, the applicant has submitted a Preliminary Water Quality Management Plan (“PWQMP”), which establishes the Project’s compliance with storm water discharge/water quality requirements. The PWQMP includes site design measures that capture runoff and pollutant transport by minimizing impervious surfaces and maximizes low impact development (“LID”) best management practices (“BMPs”), such as retention and infiltration, bio treatment, and evapotranspiration. The PWQMP proposes an underground infiltration basin located beneath the parking lot, along the west of the hotel structure. The basin is designed to accept runoff from the building’s roof and parking lot.

COMPLIANCE WITH THE ONTARIO PLAN: The proposed Project is consistent with the principles, goals and policies contained within the Vision, Governance, Policy Plan (General Plan), and City Council Priorities components of The Ontario Plan (TOP). More specifically, the goals and policies of TOP that are furthered by the proposed Project are as follows:

Figure 3: Front (North) Elevation
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(1) City Council Goals.
▪ Invest in the Growth and Evolution of the City’s Economy ▪ Operate in a Businesslike Manner
▪ Focus Resources in Ontario’s Commercial and Residential Neighborhoods (2) Vision.

Distinctive Development:
▪ Commercial and Residential Development
➢ Development quality that is broadly recognized as distinctive and not exclusively tied to the general suburban character typical of much of Southern California. (3) Governance.

Decision Making:
▪ Goal G1: Sustained decision-making that consistently moves Ontario towards its Vision by using The Ontario Plan as a framework for assessing choices. ➢ G1-2 Long-term Benefit. We require decisions to demonstrate and document how they add value to the community and support the Ontario Vision (4) Policy Plan (General Plan)
Land Use Element:
▪ Goal LU2: Compatibility between a wide range of uses. ➢ LU2-6: Infrastructure Compatibility: We require infrastructure to be aesthetically pleasing and in context with the community character.

Community Economics Element:
▪ Goal CE2: A City of distinctive neighborhoods, districts, and corridors, where people choose to be.
➢ CE2-1 Development Projects. We require new development and redevelopment to create unique, high-quality places that add value to the community. ➢ CE2-2 Development Review. We require those proposing new development and redevelopment to demonstrate how their projects will create 3503
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February 22, 2022

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appropriately unique, functional, and sustainable places that will compete well with their competition within the region.
➢ CE2-4 Protection of Investment. We require that new development and redevelopment protect existing investment by providing architecture and urban design of equal or greater quality.
➢ CE2-5 Private Maintenance. We require adequate maintenance, upkeep, and investment in private property because proper maintenance on private property protects property values.
▪ Goal CE3: Decision-making deliberations that incorporate the full short-term and long-term economic and fiscal implications of proposed City Council actions. ➢ CE3-1 Fiscal Impact Disclosures. We require requests for City Council action to disclose the full fiscal impacts, including direct and indirect costs.

Safety Element:
▪ Goal S1: Minimized risk of injury, loss of life, property damage and economic and social disruption caused by earthquake-induced and other geologic hazards. ➢ S1-1 Implementation of Regulations and Standards. We require that all new habitable structures be designed in accordance with the most recent California Building Code adopted by the City, including provisions regarding lateral forces and grading.

Community Design Element:
▪ Goal CD1: A dynamic, progressive city containing distinct neighborhoods and commercial districts that foster a positive sense of identity and belonging among residents, visitors, and businesses.
➢ CD1-1 City Identity. We take actions that are consistent with the City being a leading urban center in Southern California while recognizing the diverse character of our existing viable neighborhoods.
➢ CD1-2 Growth Areas. We require development in growth areas to be distinctive and unique places within which there are cohesive design themes. ➢ CD1-3 Neighborhood Improvement. We require viable existing residential and non-residential neighborhoods to be preserved, protected, and enhanced in accordance with our land use policies.
▪ Goal CD2: A high level of design quality resulting in public spaces, streetscapes, and developments that are attractive, safe, functional, and distinct. 3504
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➢ CD2-1 Quality Architecture. We encourage all development projects to convey visual interest and character through:
• Building volume, massing, and height to provide appropriate scale and proportion;
• A true architectural style which is carried out in plan, section, and elevation through all aspects of the building and site design and appropriate for its setting; and
• Exterior building materials that are visually interesting, high quality, durable, and appropriate for the architectural style.
➢ CD2-8 Safe Design. We incorporate defensible space design into new and existing developments to ensure the maximum safe travel and visibility on pathways, corridors, and open space and at building entrances and parking areas by avoiding physically and visually isolated spaces, maintenance of visibility and accessibility, and use of lighting.
➢ CD2-9 Landscape Design. We encourage durable landscaping materials and designs that enhance the aesthetics of structures, create, and define public and private spaces, and provide shade and environmental benefits. ➢ CD2-10 Surface Parking Areas. We require parking areas visible to or used by the public to be landscaped in an aesthetically pleasing, safe and environmentally sensitive manner. Examples include shade trees, pervious surfaces, urban run-off capture and infiltration, and pedestrian paths to guide users through the parking field. ➢ CD2-11 Entry Statements. We encourage the inclusion of amenities, signage, and landscaping at the entry to neighborhoods, commercial centers, mixed use areas, industrial developments, and public places that reinforce them as uniquely identifiable places.
➢ CD2-12 Site and Building Signage. We encourage the use of sign programs that utilize complementary materials, colors, and themes. Project signage should be designed to effectively communicate and direct users to various aspects of the development and complement the character of the structures. ➢ CD2-13 Entitlement Process. We work collaboratively with all stakeholders to ensure a high degree of certainty in the efficient review and timely processing of all development plans and permits.
▪ Goal CD3: Vibrant urban environments that are organized around intense buildings, pedestrian and transit areas, public plazas, and linkages between and within developments that are conveniently located, visually appealing and safe during all hours.
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➢ CD3-1 Design. We require that pedestrian, vehicular, bicycle and equestrian circulation on both public and private property be coordinated and designed to maximize safety, comfort, and aesthetics.
➢ CD3-2 Connectivity Between Streets, Sidewalks, Walkways and Plazas. We require landscaping and paving be used to optimize visual connectivity between streets, sidewalks, walkways, and plazas for pedestrians.
➢ CD3-3 Building Entrances. We require all building entrances to be accessible and visible from adjacent streets, sidewalks, or public open spaces. ➢ CD3-5 Paving. We require sidewalks and road surfaces to be of a type and quality that contributes to the appearance and utility of streets and public spaces. ➢ CD3-6 Landscaping. We utilize landscaping to enhance the aesthetics, functionality and sustainability of streetscapes, outdoor spaces, and buildings. ▪ Goal CD5: A sustained level of maintenance and improvement of properties, buildings and infrastructure that protects the property values and encourages additional public and private investments.
➢ CD5-1 Maintenance of Buildings and Property. We require all public and privately-owned buildings and property (including trails and easements) to be properly and consistently maintained.
➢ CD5-2 Maintenance of Infrastructure. We require the continual maintenance of infrastructure.

HOUSING ELEMENT COMPLIANCE: The Project is consistent with the Housing Element of the Policy Plan (General Plan) component of The Ontario Plan, as the Project site is not one of the properties in the Available Land Inventory contained in Table A-3 (Available Land by Planning Area) of the Housing Element Technical Report Appendix.

AIRPORT LAND USE COMPATIBILITY PLAN (ALUCP) COMPLIANCE: The California State Aeronautics Act (Public Utilities Code Section 21670 et seq.) requires that an Airport Land Use Compatibility Plan be prepared for all public use airports in the State; and requires that local land use plans and individual development proposals must be consistent with the policies set forth in the adopted Airport Land Use Compatibility Plan. On April 19, 2011, the City Council of the City of Ontario approved and adopted the Ontario International Airport Land use Compatibility Plan (“ALUCP”), establishing the Airport Influence Area for Ontario International Airport, which encompasses lands within parts of San Bernardino, Riverside, and Los Angeles Counties, and limits future land uses and development within the Airport Influence Area, as they relate to noise, safety, airspace protection, and overflight impacts of current and future airport activity. The proposed Project is located within the Airport Influence Area of Ontario International Airport and was evaluated and 3506
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found to be consistent with the policies and criteria of the ALUCP. Any special conditions of approval associated with uses in close proximity to the airport are included in the conditions of approval provided with the attached Resolution.

CONDITIONS OF APPROVAL: See attached department reports. 3507
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TECHNICAL APPENDIX:

Surrounding Zoning and Land Use:

Existing Land Use General Plan
Designation Zoning Designation Specific Plan Land Use
Site Vacant Planned Commercial SP (Specific Plan) The Exchange SP / Freeway Commercial
North Multi-tenant retail &
Vacant Land Planned Commercial SP (Specific Plan) The Exchange SP /Freeway Commercial South Vacant Land Planned Commercial SP (Specific Plan) The Exchange SP / Freeway Commercial
East SCE Transmission Lines Non-Recreational Open
Space Open Space (OS) N/A
West I-15 Freeway Right-of-way Right-of-way N/A
General Site & Building Statistics
Item Proposed Min./Max. Standard
Meets
Y/N
Project Area: 1.83 Acres N/A Y
Lot/Parcel Size: 1.83 Acres N/A Y
Building Area: 56,406 Sq. Ft. N/A Y
Building Height: 53’ 55’ Y
Off-Street Parking:

Type of Use Building Area Parking Ratio Spaces
Required
Spaces
Provided
Hotel (128 Rooms) 56,406 Sq. Ft. 1 Space per Guest Room 128 118 Note: Per Parking Study Prepared 105 118
TOTAL 105 118
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Exhibit A—PROJECT LOCATION MAP
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Exhibit B—THE EXCHANGE SPECIFIC PLAN LAND USE PLAN
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Exhibit C—SITE PLAN
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Exhibit D—LANDSCAPE PLAN
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Exhibit E—POOL AREA
3513
Planning Commission Staff Report
File Nos.: PCUP21-009 and PDEV21-021
February 22, 2022

Page 18 of 23 ends

Exhibit F—EXTERIOR ELEVATIONS
North Elevation
South Elevation
3514
Planning Commission Staff Report
File Nos.: PCUP21-009 and PDEV21-021
February 22, 2022

Page 19 of 23 ends

Exhibit F—EXTERIOR ELEVATIONS (CONTINUED)
West Elevation
East Elevation
3515
Planning Commission Staff Report
File Nos.: PCUP21-009 and PDEV21-021
February 22, 2022

Page 20 of 23 ends

Exhibit G—FIRST FLOOR
3516
Planning Commission Staff Report
File Nos.: PCUP21-009 and PDEV21-021
February 22, 2022

Page 21 of 23 ends

Exhibit H—SECOND FLOOR
3517
Planning Commission Staff Report
File Nos.: PCUP21-009 and PDEV21-021
February 22, 2022

Page 22 of 23 ends

Exhibit I—THIRD FLOOR
3518
Planning Commission Staff Report
File Nos.: PCUP21-009 and PDEV21-021
February 22, 2022

Page 23 of 23 ends

Exhibit J—FOURTH FLOOR
3519
Planning Commission Staff Report
File Nos. PDEV21-021 and PCUP21-009
February 22, 2022
Exhibit K—HOTEL MARKET STUDY
(Document follows this page)
3520
for the planned construction and operation of a 128-room extended stay hotel to be located in Ontario, CA
Market Feasibility Study
October 21, 2021
3521
This report is for the use of the party to whom it is addressed only and no liability is accepted to any third party for the whole or any part of its contents. It may not be reproduced, either in whole or in part, nor altered in any way, without the prior written consent of Veritas Development Advisors, LLC. The information and analysis contained in this report has been obtained from or based on information from a variety of sources generally regarded to be reliable and assumptions which are considered reasonable, and which was current at the time of undertaking market research. However, no representation is made, or responsibility is accepted by Veritas Development Advisors, LLC, in respect of the accuracy or currency of this information. Potential investors or developers are encouraged to carry out their own assessment of market potential and development feasibility.

The report and analysis does not purport to represent a formal valuation of any land or property interest and must not be construed as such. Such analysis including forward looking statements are opinions and estimates only and are based on a wide range of variables which may not be capable of being determined with accuracy. Variation in any one of these variables can have a material impact on the analysis and we draw your attention to this.

It should be noted that the estimation of future sales prices, rental levels, development and investment returns and development viability is a very problematic exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute values. The process of making forward projections for such key elements involves assumptions which are acutely sensitive to changing conditions, variations in any one of which factors may significant effect the viability of a project and we draw your attention to this factor. Veritas Development Advisors, LLC does not accept any liability for negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this report other than as specified in the contract of engagement.

Effect of global and local economic conditions
The continued turmoil and instability in the financial markets is continuing to cause volatility and uncertainty in the world’s capital markets and real estate markets. In these circumstances the assessment or feasibility may be affected by rapidly changing global and local economic market conditions, socio-economic changes, political conditions and other risks.

Availability and Cost of Finance
Due to the current situation of the global and local capital markets, interest rates have been volatile there has been a significant reduction in the availability of and increase in the cost of debt to the real estate sector and the mortgage market.

Supply & Demand Analysis
The supply and demand analyses set out in the report are based on current and historic trends and may be impacted significantly by factors such as unforeseen delays in supply, decreasing demand levels and changes in investor, business and consumer sentiment as well as the outlook for economic growth at local, regional and global levels.

Demand in the Market Area
Currency volatility together with job security, economic growth changing oil prices and deteriorating employment conditions across much of the globe may impact the propensity to travel and affect the purchasing power of prospective visitors to the region. This is likely to materially impact the performance of the hospitality and retail sector in particular.

Veritas Development Advisors, LLC does not accept any liability for any changes in the market conditions which may have occurred in the time elapsed between the rendering of the report and the use of it. Nor can Veritas Development Advisors, LLC accept any liability for discrepancies between our assumptions, which lie at the basis of the report, and actual market conditions which are not available to any qualified real estate consultant as a result of the market’s inherent limited transparency. 2 Disclaimer
3522
The Great Smoky Mountains
Executive Summary
3523
October 21, 2021
Private and Confidential
Mr. Luis Batres, Senior Planner
City of Ontario (“Company”)
303 East B Street
Ontario, California 91764
Re: Market Feasibility Study for the planned construction and operation of a 128-room extended stay hotel to be located at 5060 East 4 th Street in
Ontario, CA 91764. (“Subject Project”).

Dear Mr. Batres:

The enclosed Market Feasibility Study is for the planned 128-room extended stay hotel to be located in Ontario, CA. Demand factors were analyzed in detail as presented herein. The Subject Project’s industry and its relevant leveraged structure indicates that the Company’s revenue should follow trends in the overall economy, including disposable income of end-users/consumers. Based on the analysis, the market area economy appears to be growing which indicates reasonable potential for the Subject Project.

The market area for the Subject Project appears stable. The Subject Project’s rooms are expected to be absorbed in the market area based on the STR report analysis conducted herein. Based on the supply and demand analysis (pre-COVID) within the market area, it appears as though occupancy will likely remain above 65 percent over the next five years. Analyses of the market appears to indicate that development of the Subject Project, as planned, would yield about a 0.8 percent market share in the Subject Project’s market area.

Primary and secondary research was used to carry out the analyses related to the Subject Project.

Steve Alves, Managing Partner
Veritas Development Advisors, LLC
4 Executive Summary
3524
5 Statement of Work
Scope of Work
// Market Feasibility Study //

1. A complete listing of proposed facilities, amenities, and services (i.e.: number and type of rooms, meeting space square footage, recreational amenities, business services such as data ports-workstations-etc., refrigerators in room, laundry service, restaurant-coffee shopfood service, etc.);

2. History of proposed developer and potential operators (i.e.: years in business, principals, capitalizing, experience, listing of projects, number of units owned, average rates charged, occupancy rates, etc.);

3. Analysis of economic environment projecting likely future economic conditions as they relate to the operation of the subject hotel;

4. Subjects competitive market (i.e.: identification of their market, 3 and 5 year history of occupancy- average daily rate-revenue per available room trends for that market, estimated share of the market the hotel will capture during the first five years of operation, etc.);

5. Analysis of the economic impacts on existing hotel markets within Ontario (i.e.: estimate of the dilution of the market due to addition of proposed hotel, etc.). Note: new hotel projects should only be approved if competitive market occupancy remains at or above 65 percent for a five year projection period;

6. Relationship to demand generators (i.e.: airport, convention center, corporate market, shopping and entertainment);

7. Public cost/revenue projections.
3525
The Great Smoky Mountains
Market Feasibility Study
3526
US Economy
Gross Domestic Product (GDP)
Current Numbers
• 2nd quarter 2019: 2.1 percent
• 1st quarter 2019: 3.1 percent
Real gross domestic product (GDP) increased
at an annual rate of 2.1 percent in the second
quarter of 2019, according to the "advance"
estimate released by the Bureau of Economic
Analysis. In the first quarter, real GDP increased

3.1 percent.

The Bureau emphasized that the third-quarter
advance estimate released today is based on
source data that are incomplete or subject to
further revision by the source agency. The
"second" estimate for the third quarter, based
Analysis. Disposable personal income (DPI)
increased $69.7 billion (0.4 percent) and
personal consumption expenditures (PCE)
increased $41.0 billion (0.3 percent).

Industry Economic Accounts
Finance and insurance; retail trade; and health
care and social assistance were the leading
contributors to the increase in U.S. economic
growth in the first quarter of 2019. Overall, 16 of
22 industry groups contributed to the 3.1
percent increase in real GDP in the first quarter.

According to gross domestic product (GDP) by
the Bureau of Economic Analysis, 16 of 22
industry groups contributed to the overall 3.1
percent increase in real GDP in the first quarter.
7 Market Feasibility
on more complete data, will be released on
August 29, 2019.

Personal Income
• June 2019: 0.4 percent
• May 2019: 0.4 percent
Personal income increased 0.4 percent in June,
the same increase as in May. Wages and
salaries, the largest component of personal
income, increased 0.5 percent in June after
increasing 0.2 percent in May.

Personal income increased $83.6 billion (0.4
percent) in June according to estimates
released today by the Bureau of Economic
3527
Retail trade increased 11.9 percent in the first
quarter, after decreasing 2.5 percent in the
fourth. This primarily reflected an increase in
other retail, which includes gasoline stations
and pharmacies and drug stores.

U.S. Balance of Payments (International
Transactions)
Current Account Balance:
• 1st quarter 2019: -$130.4 billion
• 4th quarter 2018: -$143.9 billion
• Annual 2017: -$466.2 billion
• Annual 2016: -$451.7 billion
The U.S. current-account deficit decreased to
$130.4 billion (preliminary) in the first quarter of
2019 from $143.9 billion (revised) in the fourth
quarter of 2018.

International Investment Position
Net International Investment Position at End of
Period:
• End of 1st quarter 2019: -$9.93 trillion
• End of 4th quarter 2018: -$9.55 trillion
May to $76.1 billion. The services surplus
increased $0.1 billion in May to $20.6 billion.

New Foreign Direct Investment in the United
States
Annual Data: Expenditures by foreign direct
investors to acquire, establish, or expand U.S.
businesses totaled $296.4 billion (preliminary) in
2018. Expenditures were up 8.7 percent from
$272.8 billion (revised) in 2017 but were below
the annual average of $338.1 billion for 2014–
2017.

As in previous years, acquisitions of existing
businesses accounted for a large majority of
total expenditures.

In 2018, expenditures for acquisitions were
$287.3 billion, expenditures to establish new U.S.
businesses were $5.3 billion, and expenditures
to expand existing foreign-owned businesses
were $3.8 billion. Planned total expenditures,
which include both first-year and planned
future expenditures, were $318.1 billion.
8 Market Feasibility
• End of year 2018: -$9.55 trillion
• End of year 2017: -$7.74 trillion
Quarterly data: The U.S. net international
investment position decreased to -$9.93 trillion
(preliminary) at the end of the first quarter of
2019 from -$9.55 trillion (revised) at the end of
the fourth quarter of 2018, according to
statistics released by the Bureau of Economic
Analysis (BEA).

International Trade in Goods and Services
Trade Balance:
• May 2019: -$55.5 billion
• April 2019: -$51.2 billion
The U.S. monthly international trade deficit
increased in May 2019 according to the U.S.

Bureau of Economic Analysis and the U.S.

Census Bureau. The deficit increased from $51.2
billion in April (revised) to $55.5 billion in May, as
imports increased more than exports. The
previously published April deficit was $50.8
billion. The goods deficit increased $4.4 billion in
3528
California
Economy
California has an unemployment rate of 8.2%.

The US average is 6.3% (Jan 2021).

California has seen the job market increase by

1.3% over the last year. Future job growth over
the next ten years is predicted to be 34.0%,
which is higher than the US average of 33.5%.

Tax Rates for California
– The Sales Tax Rate for California is 8.5%. The
US average is 7.3%.
- The Income Tax Rate for California is 9.3%. The
US average is 4.6%.
- Tax Rates can have a big impact when
Comparing Cost of Living.

Income and Salaries for California
- The average income of a California resident is
$29,906 a year. The US average is $28,555 a
year.
9 Market Feasibility
San Bernardino
County Economy
San Bernardino County has an unemployment
rate of 7.8%. The US average is 6.3% (Jan 2021).

San Bernardino County has seen the job
market increase by 2.3% over the last year.

Future job growth over the next ten years is
predicted to be 38.7%, which is higher than the
US average of 33.5%.

Tax Rates for San Bernardino County
- The Sales Tax Rate for San Bernardino County is

7.8%. The US average is 7.3%.
- The Income Tax Rate for San Bernardino
County is 9.3%. The US average is 4.6%.
- Tax Rates can have a big impact when
Comparing Cost of Living.

Income and Salaries for San Bernardino
County
- The average income of a San Bernardino
County resident is $21,384 a year. The US
average is $28,555 a year.

Ontario
Economy
Ontario has an unemployment rate of 6.9%.

The US average is 6.3% (Jan 2021).

Ontario has seen the job market increase by -

2.3% over the last year. Future job growth over
the next ten years is predicted to be 40.6%,
which is higher than the US average of 33.5%.

Tax Rates for Ontario
- The Sales Tax Rate for Ontario is 7.8%. The US
average is 7.3%.
- The Income Tax Rate for Ontario is 9.3%. The
US average is 4.6%.
- Tax Rates can have a big impact when
Comparing Cost of Living.

Income and Salaries for Ontario
- The average income of a Ontario resident is
$17,137 a year. The US average is $28,555 a
year.

Source: Best Places to Live | Compare Cost of Living, Crime, Cities, Schools and More. Sperling's BestPlaces, https://www.bestplaces.net/. 3529 10 Market Feasibility
Economy At Glance California Mar 2021 Apr 2021 May 2021 June 2021 July 2021 Aug 2021 Labor Force Data
Civilian Labor Force(1) 18920.6 18895.2 18863.2 18877.2 18927.5 (p)18,982.8 Employment(1) 17341.3 17378.5 17417.3 17437.6 17493.6 (p)17,551.1 Unemployment(1) 1579.3 1516.7 1445.9 1439.6 1433.8 (p)1,431.6 Unemployment Rate(2) 8.3 8 7.7 7.6 7.6 (p)7.5
Nonfarm Wage and Salary Employment
Total Nonfarm(3) 16146.4 16248.4 16343.1 16414.6 16527.8 (p)16,632.1 12-month % change -7.7 8.7 8 5.1 5.5 (p)5.5
Mining and Logging(3) 19.2 19 18.7 18.6 18.8 (p)18.9
12-month % change -13.9 -6.9 -1.6 0 0.5 (p)-0.5
Construction(3) 886.3 884.1 879.8 877.1 877.8 (p)878.4
12-month % change -0.8 19.7 6.3 3.2 4.7 (p)4.3
Manufacturing(3) 1250.7 1253.7 1256.6 1258.3 1255.7 (p)1,258.6 12-month % change -5.4 3.9 2.4 0.8 1.2 (p)1.1
Trade, Transportation, and Utilities(3) 2982.5 2982.6 2987.7 2988.4 2991.3 (p)2,990.5 12-month % change -2.3 13.4 12.2 5.9 5.3 (p)3.8
Information(3) 529.2 527.3 538.6 539.6 545 (p)547.2
12-month % change -8.9 3.4 6.1 7.6 7.7 (p)7.7
Financial Activities(3) 809.5 810.7 811.8 808.8 806.6 (p)809.8 12-month % change -4.3 1.3 1.2 0.8 0.5 (p)0.7
Professional & Business Services(3) 2643.9 2662.4 2669.7 2672.2 2680.6 (p)2,694.6 12-month % change -3.3 7.6 6.5 5.9 6.1 (p)6.2
Education & Health Services(3) 2747.5 2762.5 2772.9 2782.1 2793.3 (p)2,787.0 12-month % change -3.8 7.2 5.9 3.6 3.4 (p)2.6
Leisure & Hospitality(3) 1418 1478.4 1531.1 1574.6 1627.4 (p)1,660.5 12-month % change -28.6 37.8 36.7 20.2 24.8 (p)27.7
Other Services(3) 458.7 466.6 471 482 491.9 (p)500.3
12-month % change -20.8 18 14.7 10.1 10.3 (p)17.4
Government(3) 2400.9 2401.1 2405.2 2412.9 2439.4 (p)2,486.3 12-month % change -8.1 -4.7 -1.1 0 0 (p)0.3
Footnotes
(1) Number of persons, in thousands, seasonally adjusted. (2) In percent, seasonally adjusted.
(3) Number of jobs, in thousands, seasonally adjusted.
(P) Preliminary
(r) Revised 3530
11 Market Feasibility
California Demographics Summary
3531
12 Market Feasibility
San Bernardino County Demographics Summary
3532
San Bernardino County │Demographic Tables
13 Market Feasibility
San Bernardino County, California Estimate Margin of
Error Percent
Percent
Margin of
Error

SEX AND AGE
Total population 2,180,085 ***** 2,180,085 (X)
Male 1,086,226 ±637 49.8% ±0.1
Female 1,093,859 ±637 50.2% ±0.1
Sex ratio (males per 100 females) 99.3 ±0.1 (X) (X)
Under 5 years 151,731 ±767 7.0% ±0.1
5 to 9 years 155,183 ±5,575 7.1% ±0.3
10 to 14 years 167,305 ±5,539 7.7% ±0.3
15 to 19 years 155,930 ±671 7.2% ±0.1
20 to 24 years 159,148 ±594 7.3% ±0.1
25 to 34 years 336,303 ±942 15.4% ±0.1
35 to 44 years 283,746 ±873 13.0% ±0.1
45 to 54 years 262,434 ±1,127 12.0% ±0.1
55 to 59 years 131,001 ±4,218 6.0% ±0.2
60 to 64 years 116,492 ±4,317 5.3% ±0.2
65 to 74 years 160,976 ±331 7.4% ±0.1
75 to 84 years 72,827 ±2,680 3.3% ±0.1
85 years and over 27,009 ±2,622 1.2% ±0.1
Median age (years) 33.8 ±0.1 (X) (X)
Under 18 years 569,638 ***** 26.1% *****
16 years and over 1,675,554 ±2,740 76.9% ±0.1
18 years and over 1,610,447 ***** 73.9% *****
21 years and over 1,516,148 ±3,660 69.5% ±0.2
62 years and over 325,655 ±3,200 14.9% ±0.1
65 years and over 260,812 ±181 12.0% ±0.1
18 years and over 1,610,447 ***** 1,610,447 (X)
Male 794,408 ±248 49.3% ±0.1
Female 816,039 ±247 50.7% ±0.1
Sex ratio (males per 100 females) 97.3 ±0.1 (X) (X)
65 years and over 260,812 ±181 260,812 (X)
Male 117,464 ±303 45.0% ±0.1
Female 143,348 ±247 55.0% ±0.1
Sex ratio (males per 100 females) 81.9 ±0.3 (X) (X)
RACE
Total population 2,180,085 ***** 2,180,085 (X)
One race 2,065,464 ±10,275 94.7% ±0.5
Two or more races 114,621 ±10,275 5.3% ±0.5
One race 2,065,464 ±10,275 94.7% ±0.5
White 1,351,926 ±19,123 62.0% ±0.9
Black or African American 181,122 ±6,792 8.3% ±0.3
American Indian and Alaska Native 17,061 ±2,855 0.8% ±0.1 San Bernardino County, California Estimate Margin of
Error Percent
Percent
Margin of
Error
Asian 160,336 ±3,361 7.4% ±0.2
Asian Indian 12,729 ±3,707 0.6% ±0.2
Chinese 46,366 ±6,124 2.1% ±0.3
Filipino 45,503 ±6,076 2.1% ±0.3
Korean 16,352 ±3,171 0.8% ±0.1
Vietnamese 13,759 ±3,622 0.6% ±0.2
Other Asian 21,927 ±3,830 1.0% ±0.2
Native Hawaiian and Other Pacific
Islander 8,247 ±1,747 0.4% ±0.1
Some other race 346,772 ±19,715 15.9% ±0.9
Two or more races 114,621 ±10,275 5.3% ±0.5
White and Black or African American 23,047 ±5,659 1.1% ±0.3 White and American Indian and Alaska
Native 15,701 ±4,414 0.7% ±0.2
White and Asian 18,340 ±3,382 0.8% ±0.2
Race alone or in combination with one
or more other races
Total population 2,180,085 ***** 2,180,085 (X)
White 1,443,800 ±21,302 66.2% ±1.0
Black or African American 218,705 ±4,427 10.0% ±0.2
American Indian and Alaska Native 42,582 ±5,350 2.0% ±0.2 Asian 193,095 ±3,808 8.9% ±0.2
Native Hawaiian and Other Pacific
Islander 18,578 ±3,520 0.9% ±0.2
Some other race 386,752 ±19,791 17.7% ±0.9

HISPANIC OR LATINO AND RACE
Total population 2,180,085 ***** 2,180,085 (X)
Hispanic or Latino (of any race) 1,186,808 ***** 54.4% ***** Mexican 1,019,547 ±12,689 46.8% ±0.6
Puerto Rican 18,118 ±5,000 0.8% ±0.2
Cuban 5,076 ±1,669 0.2% ±0.1
Other Hispanic or Latino 144,067 ±12,471 6.6% ±0.6
Not Hispanic or Latino 993,277 ***** 45.6% *****
White alone 591,879 ±1,432 27.1% ±0.1
Black or African American alone 168,946 ±5,476 7.7% ±0.3 Asian alone 157,172 ±3,372 7.2% ±0.2
Two or more races 56,208 ±6,563 2.6% ±0.3
Two races excluding Some other race,
and Three or more races 53,338 ±6,419 2.4% ±0.3
Total housing units 731,393 ±941 (X) (X)

CITIZEN, VOTING AGE POPULATION
Citizen, 18 and over population 1,399,650 ±11,326 1,399,650 (X) Male 690,022 ±7,363 49.3% ±0.3
Female 709,628 ±5,924 50.7% ±0.3
3533
14 Market Feasibility
Ontario Demographics Summary
3534
Ontario │ Demographic Tables
15 Market Feasibility
Ontario, California Estimate Margin of
Error Percent
Percent
Margin of
Error

SEX AND AGE
Total population 184,999 ±52 184,999 (X)
Male 90,016 ±2,978 48.7% ±1.6
Female 94,983 ±2,979 51.3% ±1.6
Sex ratio (males per 100 females) 94.8 ±6.2 (X) (X)
Under 5 years 13,807 ±2,207 7.5% ±1.2
5 to 9 years 13,395 ±2,197 7.2% ±1.2
10 to 14 years 14,699 ±2,234 7.9% ±1.2
15 to 19 years 11,933 ±1,926 6.5% ±1.0
20 to 24 years 12,797 ±2,017 6.9% ±1.1
25 to 34 years 36,105 ±2,930 19.5% ±1.6
35 to 44 years 23,624 ±2,617 12.8% ±1.4
45 to 54 years 21,931 ±2,607 11.9% ±1.4
55 to 59 years 10,116 ±1,566 5.5% ±0.8
60 to 64 years 10,241 ±1,799 5.5% ±1.0
65 to 74 years 9,450 ±1,706 5.1% ±0.9
75 to 84 years 5,685 ±1,147 3.1% ±0.6
85 years and over 1,216 ±612 0.7% ±0.3
Median age (years) 32.1 ±1.0 (X) (X)
Under 18 years 49,419 ±3,954 26.7% ±2.1
16 years and over 140,404 ±3,957 75.9% ±2.1
18 years and over 135,580 ±3,957 73.3% ±2.1
21 years and over 128,868 ±3,898 69.7% ±2.1
62 years and over 21,918 ±2,316 11.8% ±1.3
65 years and over 16,351 ±2,133 8.8% ±1.2
18 years and over 135,580 ±3,957 135,580 (X)
Male 67,143 ±3,245 49.5% ±1.8
Female 68,437 ±2,965 50.5% ±1.8
Sex ratio (males per 100 females) 98.1 ±7.0 (X) (X)
65 years and over 16,351 ±2,133 16,351 (X)
Male 7,032 ±1,287 43.0% ±4.8
Female 9,319 ±1,357 57.0% ±4.8
Sex ratio (males per 100 females) 75.5 ±14.7 (X) (X)
RACE
Total population 184,999 ±52 184,999 (X)
One race 174,511 ±2,287 94.3% ±1.2
Two or more races 10,488 ±2,290 5.7% ±1.2
One race 174,511 ±2,287 94.3% ±1.2
White 114,932 ±6,968 62.1% ±3.8
Black or African American 8,225 ±3,180 4.4% ±1.7
American Indian and Alaska Native 1,010 ±716 0.5% ±0.4
Ontario, California Estimate Margin of
Error Percent
Percent
Margin of
Error
Asian 12,600 ±3,018 6.8% ±1.6
Asian Indian 599 ±952 0.3% ±0.5
Native Hawaiian and Other Pacific Islander 1,278 ±1,300 0.7% ±0.7 Some other race 36,466 ±5,923 19.7% ±3.2
Two or more races 10,488 ±2,290 5.7% ±1.2
White and Black or African American 2,137 ±1,513 1.2% ±0.8 White and American Indian and Alaska
Native 1,026 ±699 0.6% ±0.4
White and Asian 949 ±607 0.5% ±0.3
Black or African American and American
Indian and Alaska Native 172 ±282 0.1% ±0.2
Race alone or in combination with one or
more other races
Total population 184,999 ±52 184,999 (X)
White 123,478 ±6,651 66.7% ±3.6
Black or African American 11,048 ±3,643 6.0% ±2.0
American Indian and Alaska Native 3,080 ±1,145 1.7% ±0.6 Asian 14,468 ±3,225 7.8% ±1.7
Native Hawaiian and Other Pacific Islander 2,206 ±1,656 1.2% ±0.9 Some other race 42,377 ±5,894 22.9% ±3.2

HISPANIC OR LATINO AND RACE
Total population 184,999 ±52 184,999 (X)
Hispanic or Latino (of any race) 132,110 ±6,159 71.4% ±3.3 Mexican 114,053 ±6,540 61.7% ±3.5
Puerto Rican 1,793 ±1,419 1.0% ±0.8
Cuban 813 ±716 0.4% ±0.4
Other Hispanic or Latino 15,451 ±4,228 8.4% ±2.3
Not Hispanic or Latino 52,889 ±6,164 28.6% ±3.3
White alone 27,667 ±4,260 15.0% ±2.3
Black or African American alone 7,443 ±3,037 4.0% ±1.6
American Indian and Alaska Native alone 363 ±373 0.2% ±0.2 Asian alone 12,472 ±3,039 6.7% ±1.6
Native Hawaiian and Other Pacific Islander
alone 1,049 ±1,246 0.6% ±0.7
Some other race alone 123 ±199 0.1% ±0.1
Two or more races 3,772 ±1,632 2.0% ±0.9
Two races including Some other race 350 ±401 0.2% ±0.2
Two races excluding Some other race, and
Three or more races 3,422 ±1,541 1.8% ±0.8
Total housing units 52,886 ±2,128 (X) (X)

CITIZEN, VOTING AGE POPULATION
Citizen, 18 and over population 108,478 ±5,132 108,478 (X) Male 53,030 ±3,426 48.9% ±2.1
Female 55,448 ±3,429 51.1% ±2.1 3535
16 Market Feasibility
rate of about 14.5 percent in July 2010. Based on the current unemployment rate, the County retains about 74,303 job seekers.

The Company intends to manage the Subject Project with the years of operations and management experience that principals of the Company has. This item does not appear to be a risk for the Subject Project.

Availability of Trained or Trainable
Labor
According to the Federal Reserve Bank of St. Louis Economic Data, the unemployment rate for San Bernardino County (latest data) was recorded at about 7.6 percent.

The civilian Labor Force in the subject County according to the Federal Reserve Bank of St. Louis Economic Data and US Bureau of Labor and Statistics was about 977,677. The unemployment rate reached its highest 820,000
840,000
860,000
880,000
900,000
920,000
940,000
960,000
980,000
1,000,000
1/1/20106/1/2010
11/1/2010
4/1/20119/1/20112/1/20127/1/2012
12/1/2012
5/1/2013
10/1/2013
3/1/20148/1/20141/1/20156/1/2015
11/1/2015
4/1/20169/1/20162/1/20177/1/2017
12/1/2017
5/1/2018
10/1/2018
3/1/20198/1/20191/1/20206/1/2020
11/1/2020
4/1/2021
Civilian Labor Force
0 2
4 6
8 10
12 14
16 1/1/20106/1/2010
11/1/2010
4/1/20119/1/20112/1/20127/1/2012
12/1/2012
5/1/2013
10/1/2013
3/1/20148/1/20141/1/20156/1/2015
11/1/2015
4/1/20169/1/20162/1/20177/1/2017
12/1/2017
5/1/2018
10/1/2018
3/1/20198/1/20191/1/20206/1/2020
11/1/2020
4/1/2021
Unemployment Rate
COVID-19 Impact
3536
17 Market Feasibility
Gross Domestic Product: Accommodation and Food Services in California 30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
The industry and its relevant leveraged structure indicates that the Company’s revenue should follow trends in the overall economy, including disposable income of end-users/consumers. Based on the analysis, the market area economy appears to be growing which indicates reasonable potential for the Subject Project.

Source: Veritas Development Advisors Secondary Research Analysis 1,500,000
1,700,000
1,900,000
2,100,000
2,300,000
2,500,000
2,700,000
2,900,000
3,100,000
3,300,000
Gross Domestic Product: All Industry Total in California 3537
The Great Smoky Mountains
Hotel Market Overview
Hotels & Motels in the US
• IBISWorld's analysts constantly monitor the industry impacts of current events in real-time – here is an update of how this industry is likely to be impacted as a result of the global COVID-19 pandemic:
• Recovery for the Hotels and Motels industry is anticipated to be skewed toward domestic, leisure markets where COVID-19 (coronavirus) restrictions have been lifted. • Operators that cater to business customers such as, truckers, contractors, construction workers, healthcare workers and others that must travel for work and do not have the ability to conduct their work remotely are anticipated to experience an increase in demand.
• International travel to the United States has remained subdued, as restrictions remain in place on travelers from key markets such as, Canada and the European Union. This is anticipated to decelerate revenue growth for the industry in 2021.
3538
Hotels & Motels in the US
Checking in: Industry players will likely continue expanding abroad into emerging economies. The Hotels and Motels
industry is highly susceptible to changes in the domestic and global economic environments, which has caused the industry to experience substantial volatility due to the onset of the COVID-19 (coronavirus) pandemic in 2020. Over most of the five years to 2021, the industry has benefited from increases in travel spending, corporate profit and general consumer
spending. These factors were all affected substantially by the coronavirus pandemic. IBISWorld expects industry revenue to fall at an annualized rate of 7.6% to $133.0 billion over the five years to 2021, despite an anticipated increase of 42.9% in 2021 amid a strong recovery in domestic leisure travel.
19 Market Feasibility
Growth,21-26

10.8% (Annual)
Revenue
$133.0 bn
Profit Margin

3.1%
Wages Share
$43.0 bn
Growth,14-19
--15.3% (Annual)
Growth,21-26

7.8%
• Over the past five years, rising external competition has increased pressure on many hotel and motel operators, leading to competitive room rates. While some operators have shifted to offer premium services and accommodations to increase their rates or diversify revenue streams, not all operators have been able to make this shift. This has led to declines in industry profit.
• Additionally, the industry has been substantially affected by the onset and spread of coronavirus.
• Although domestic leisure travel has rebounded strongly in 2021, both international and business travel remain significantly below prepandemic levels amid the emergence of the Delta variant.
• Over the five years to 2026, IBISWorld projects that the industry will rebound and expand, with particularly strong growth in extended-stay hotels, boutique hotels, spa and health retreats and resorts segments.
• As demand for these auxiliary services picks up, industry employment is anticipated to recover and rise over the next five years. Industry players are also expected to continue expanding abroad into emerging economies, such as Asia, Eastern Europe and South America.
• These foreign markets are expected to somewhat detract from domestic investment, as they offer higher growth prospects for industry operators. • Nonetheless, industry revenue is estimated to increase at an annualized rate of

10.8% to $222.0 billion over the five years to 2026.

Key Points
Source: IBISWorld, US Industry (NAICS) Report 72111, September 2021 3539 Key External Drivers
Domestic trips by US residents
Trends in domestic travel, especially business
travel, and total nights spent away from home
directly affect demand for accommodation.

As the number of trips made by US citizens rises,
demand for hotels and models increases, while
the inverse is also true. The number of domestic
trips by US residents is expected to increase in
2021, representing a potential opportunity for
the industry.

Consumer spending
Consumer spending levels have a direct effect
on travel demand. When consumers spend
more overall, they are more likely to spend on
travel and accommodations. Therefore, a rise
in consumer spending benefits demand for
hotels and motels. Conversely, as consumers
reduce spending, they decrease excess
spending on travel, reducing demand for
hotels and motels. Consumer spending is
expected to increase in 2021.

External competition for the Hotels and Motels
Industry
The Hotels and Motels industry experiences
competition from lodging alternatives, such as
RV parks, bed-and-breakfast establishments,
room rental services and hostels. Travelers are
increasingly comparing prices across these
alternatives when booking travel arrangements.

External competition for the Hotels and Motels
industry is expected to increase in 2021, posing
a potential threat to the industry.
20 Inbound trips by non-US residents
Trends in international visitor arrivals and their
lengths of stay influence demand for
accommodation. A rise in inbound trips
positively affects demand for hotels and motels.

The number of inbound trips by non-US residents
is expected to increase in 2021.

Consumer confidence index
The Consumer Confidence Index measures
consumer sentiment regarding the current
economic outlook. Changes in consumer
confidence influence decisions that individuals
make concerning current and future
expenditure on entertainment and travel.

When consumers feel optimistic regarding the
economic outlook, they are more likely to plan
travel arrangements and book nights at hotels
or motels. However, as consumers grow
increasingly skeptical of the economic outlook,
they forego spending on travel and
accommodations. The Consumer Confidence
Index is expected to increase in 2021.

Market Feasibility
3540
Key External Drivers
21 Market Feasibility
-100
-50
0 50
100
150
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Key External Drivers % Change 2013 - 2026
Consumer confidence index
Consumer spending
Domestic trips by US residents
Inbound trips by non-US residents
Industry revenue is expected industry revenue to fall at an annualized rate of 7.6% to $133.0 billion over the five years to 2021, despite an anticipated increase of 42.9% in 2021 amid a strong recovery in domestic leisure travel.
3541
Current Performance
The Hotels and Motels industry has
experienced elevated volatility over the five
years to 2021.

Hotels and motels primarily provide short-term
lodging to consumers; however, many also
offer other services and accommodations as a
way to diversify revenue. During most of the
period, industry revenue grew at a steady rate,
driven by positive economic factors that were
favorably affecting the domestic economy as
a whole. However, in early 2020, as the COVID19 (coronavirus) pandemic spread across the globe, this trend sharply reversed, resulting in a
sharp decline in industry revenue that year
overall.

Economic indicators, such as per capita
disposable income and consumer confidence,
rose early during the period, only to
experience sharp decline later during the
period. Thus, all forms of short-term
accommodation have experienced a
most of the period, the United States has been
negatively affected by the coronavirus
outbreak.

The coronavirus spread rapidly within the
United States, forcing many state and local
governments, with the aid of the federal
government, to take action.

Many state and local governments
implemented stay-at-home orders, mandating
the closure of nonessential businesses. This
caused a shock to the US economy, and many
companies were forced to lay off employees
and temporarily shut down, while consumer
sentiment declined, causing a near halt to
domestic travel. The federal government also
banned travel from international visitors
originating from countries and regions that
were drastically affected by the virus.

Consequently, demand for hotels and motels
has decreased, eliminating all growth
experienced between 2016 and 2019. However,
in 2021 domestic travel is estimated to sharply
22 Market Feasibility
substantial decrease in demand. Consumers
that had previously increased spending on
travel for both business and leisure purposes
have abruptly curbed that, causing industry
revenue to decline. Since destination hotels
and motels rely heavily on domestic and
foreign tourism, any changes in domestic and
international travel substantially contribute to
the industry's bottom line. Industry revenue is
expected to decrease an annualized 7.6% to
$133.0 billion over five years to 2021, despite an
estimated increase of 42.9% in 2021 alone due
to the expulsion pent-up domestic travel
demand.

Changing Direction And The Coronavirus
The industry is particularly sensitive to
macroeconomic factors, which can negatively
affect consumers' tendency to travel.

Unexpected changes in geopolitical order can
potentially affect revenue growth should travel
restrictions arise or consumer sentiment sour.

Although the US economy has improved during
3542
rise, in line with the cessation of government
restrictions on businesses and travel.

Furthermore, the coronavirus vaccination
campaign has resulting in a rising percentage
of the population successfully vaccinated,
which has contributed to a surge in domestic
leisure travel during summer 2021, benefiting
industry operators. However, restrictions
regarding international visitors entering the
United States remain in place for several key
markets such as the European Union and
Canada.

Consequently, demand from international
travelers is anticipated to rise at a much slower
rate than demand from domestic travelers.

Moreover, although business travel has
rebounded somewhat from lows endured
during the coronavirus pandemic, the spread
of the Delta variant has delayed the return to
the office for many employees as well as
business conferences and trips.
property value cycles and economic
conditions, in addition to any imbalances in
hotel room demand and supply influences.

Similarly, Wyndham Worldwide Corporation
separated into two separate holdings,
Wyndham Hotels and Resorts Inc. and
Wyndham Destinations. This separation aimed
to enable each segment to grow and operate
independently. Nevertheless, the industry is still
largely property-based, with hotels and motels
owning or leasing property specifically for hotel
and motel operation.

Declining Profit
Profit has fallen over the past five years,
partially because many operators have been
unable to increase room rates amid increased
competition.

While the rate of construction and
development to get new rooms on the market
has not kept up with increased demand,
operators have experienced substantial
external competition from companies such as
23 Market Feasibility
Industry Structure
Over the past five years, the structure of the
industry has shifted.Many major operators have
altered their business structure, through actions
such as forming real estate investment trusts to
raise funds.

Additionally, major operators have restructured
operations to solely provide specialist services
in hotel management through increased
franchising opportunities. While revenue from
hotel management has declined, such services
have provided an opportunity to generate
higher profit due to the elimination of many
property-related costs. In 2017,
Hilton Worldwide Holdings Inc. separated into
three separate entities to capitalize on growth
opportunities and increase its competitiveness.

The company spun-off its domestically owned
and leased properties into a real estate
investment trust.

Ultimately, owners are subject to changes in
3543
Airbnb Inc. and VRBO. These services permit
consumers to rent rooms, apartments or whole
houses online rather than a traditional hotel
room. Such services provide a wide range of
options to consumers and can play into a
variety of different price points.

This has forced many operators to offer
competitive pricing to maintain high demand
or to provide upscale amenities to compensate
for the price difference.

Furthermore, the crippling effect on the industry
from the coronavirus pandemic, which caused
rapid declines in occupancy rates and revenue
per available room, coupled with rising
operating costs due to the implementation of
pandemic-related sanitation measures, has
also contributed to a sharp decline in profit.

Consequently, profit, measured as earnings
before interest and taxes, is estimated to
account for 3.1% of revenue in 2021, down from

18.4% in 2016.

The decline in establishments resulting from the
pandemic in 2020 is anticipated to outweigh
strong establishment growth early during the
period. Similarly, industry employment has
decreased an annualized 3.3% to 1.4 million
workers over the five years to 2021. IBISWorld
estimates that industry employment declined

34.5% in 2020 alone.
24 Market Feasibility
Declining revenue and profit have led many
small operators to close locations either
temporarily or permanently.

Consequently, the number of industry
establishments has decreased an annualized

0.4% to 92,746 locations over the five years to
2021.
3544
Products & Services (Market Share)
25 Market Feasibility

20.2%

44.4%

6.9%

8.4%

9.3% 10.8%
Guest room rentals from properties with under 75 rooms Guest room rentals from properties with between 75 and 299 rooms Guest room rentals from properties with between 300 and 500 rooms Guest room rentals from properties with over 500 rooms Restaurants and bars Other services
3545
Demand
Determinants
Domestic travel
Demand for hotel and motel accommodation
is dependent on factors that affect travel, such
as disposable income, which is influenced by
changes in general employment growth and
movements in interest and tax rates.

Changes in disposable income affect the
number of trips a household takes and its
expenditures while traveling, which, in turn,
affects the growth and economic effect of the
hospitality tourism industry.

The COVID-19 (coronavirus) pandemic in 2020
resulted in a surge in the unemployment rate,
widespread economic uncertainty and
restrictions on domestic travel. These factors
resulted in a decline in domestic travel in 2020.

Nonetheless, in 2021, demand from domestic
travel is anticipated to rise from 2020 lows, as
individuals seek to travel after a year where
movements, the availability of inexpensive
airfares and holiday packages and the supply
of airline seats. If traveling domestically
becomes more expensive relative to
international trips, individuals may choose to
travel internationally, affecting the growth of
domestic industry operators.

Finally, tourism promotions by private operators
and federal and state governments, including
through TV programs and special sporting
events, also stimulates travel. However,
individual state government promotions
typically influence domestic travel patterns to
favor only their state, rather than the entire
industry.

Business travel
Business travel is greatly influenced by changes
in economic growth, business confidence and
corporate profit. Economic conditions directly
affect the number of business trips taken, the
length of stay and budgeted travel spending.
26 Market Feasibility
Consequently, demand for these products has
increased among both nontraditional and
travel was largely restricted.

The price of fuel is also important, which affects
disposable income and general travel demand.

When fuel prices increase, it reduces
disposable income and consumers' willingness
to spend on long car trips.

Changes in the availability of leisure time also
affects the industry. As the unemployment rate
falls, time available for leisure activities, such as
travel also declines, despite the increased
disposable income. It also adds more tradeoffs
to consumers who have to use limited paid
vacation days to travel. Holiday expenditure
also competes with other leisure and
recreational industries and competes for a
share of household disposable income.

A longer-term influence on travel patterns is the
cost of taking a domestic trip compared with
an international one. The difference between
the two is influenced by exchange rate
3546
Business travel has experienced growth
throughout most of the five years to 2021 as
many corporations have benefited from the
growth in the domestic economy.

However, the spread of the coronavirus
throughout the United States in 2020 has
resulted in a sharp contraction in business travel,
as employees increasingly work from home and
avoid nonessential travel.

Additionally, technology such as
teleconferencing and conference calling has
replaced business travel during the pandemic,
as it is cost-effective and safer. In 2021 business
travel levels have remained subdued due to
the spread of the delta variant of the
coronavirus and a continuation of many
employees working from home.

This trend of companies restricting travel
spending and conference attendance to focus
more technology-based alternatives in an
effort to preserve capital is likely to be
United States in 2020. Widespread global
economic uncertainty has also limited
international tourism.

Although restrictions have been somewhat
eased in 2021, international travel demand is
anticipated to return at a slower rate
compared with domestic travel.

Other factors, such as heightened geopolitical
tensions including wars and terrorism, whether
feared or actual, affect international travel
plans. Many of the top tourist locations have
struggled to regain traction for industry
operators following terrorism or other negative
events or geopolitical issues.

Promotional expenditures and activities, such
as major or special events, on the part of
governments and other organizations, can
raise awareness and interest in travel. Finally,
supply factors are also of critical importance,
including the availability of airline flights and
seats at the times people want to travel, and
accommodations to and at their selected
destination.
27 Market Feasibility
continued during the outlook period, however
at a decreasing rate.

International tourism
International tourism is one of the most
competitive industries. International tourism is
affected by factors similar to domestic travel
and global economic conditions, especially
changes in economic growth.

Furthermore, international tourism is affected
by changes in the US dollar against other major
currencies, which has an effect on the cost of
travel and the relative attractiveness of
traveling to competing destinations. The
coronavirus pandemic has resulted in a sharp
decline in international tourism. There are still
restrictions placed on individuals attempting to
enter the United States who have been in
countries experiencing more severe outbreaks
of the coronavirus.

Additionally, many states implemented stay-athome mandates and restrictions on businesses, further reducing the allure of traveling to the
3547
External factors
Several external factors can severely affect the
industry either directly or indirectly. Such factors
include public health crises, government
regulation, geopolitical tensions and other
macroeconomic factors.

Global or national pandemics can cause
increased concern among US and international
travelers.

Traveling amid public health crises may place
consumers at further risk of catching the
ailment, especially when staying at shared
locations, such as hotels and motels, or
traveling by airplane or train and other shared
transportations.

Many hotel and motel guests are traveling far
distances, which is the reason they required
accommodation services.

As health concerns increase, consumers are
more inclined to stay closer to home, limiting
demand for travel. Similarly, government
28 Market Feasibility
regulations that effect travel indirectly
influences demand for hotels and motels.

When any government restricts travel for
individuals to or within the United States,
demand will likely be negatively affected, as it
reduces the volume of consumers needing
industry services.

This has been apparent with the effect of the
coronavirus. Hotels and motels experienced a
sharp decline in occupancy rates in 2020 as
consumers opted to forego travel and stay at
home.
3548
Major Markets (Market Share)
29 Market Feasibility

67.7%

17.1%

8.9% 6.3%
Domestic leisure travelers International leisure travelers Business travelers Meetings, events and incentive travelers 3549
Key Success Factors
30 Market Feasibility
•Access to multiskilled and well-trained staff is vital to success in the industry.

Access to multiskilled and flexible workforce:
•There are many benefits to being part of a chain or franchised group, namely brand recognition, national marketing and quality control.

Being part of a franchising chain:
•Good word-of-mouth recommendations are quite often the most successful promotional tool.

Receiving the benefit of word-of-mouth recommendations:
•The location, facilities and services offered to hotel and motel guests are very important.

Proximity to key markets:
•It is essential to be aware of the new technology available in this industry for information, promotions, bookings and general management control systems
Ability to quickly adopt new technology:
• Understanding the various room stock, availability and tariff mechanisms used in this industry is important.

Ability to control stock on hand:
3550
Cost Structure
Benchmarks
Profit
Profit, measured as earnings before interest
and taxes, is expected to account for 3.1%
of industry revenue in 2020, driven by the
economic damage of the COVID-19
(coronavirus) pandemic.

Purchases
In 2019, wages are expected to account
for 21.4% of industry revenue.

Wages
Wages represent 32.3% of industry revenue
in 2020.

Marketing
Marketing costs account for 2.1% of
industry revenue in 2021.

Depreciation
Depreciation represents an estimated 8.5%
of industry revenue in 2020.
31 Market Feasibility
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Industry Sector
Sector versus Industry Costs
Wages
Purchases
Profit
Depreciation
Marketing
Rent
Utilities
Other
3551
Major Companies
There are no major players in this industry.

Other Companies
Marriott International Inc.

Market Share: 0.4%
Marriott International Inc. (Marriott) is a lodging
company based in Bethesda, MD, with 7,797
global properties in 80 countries and territories.

The United States is home to 62.3% of Marriott's
rooms.

Marriott operates and franchises its hotels
under various brands, including Marriott, the
Ritz-Carlton, Renaissance, Courtyard,
TownePlace Suites and Bulgari. It also develops
and operates vacation ownership resorts under
the Marriott Vacation Club, Horizons, the RitzCarlton Club and Grand Residences brands, while also running Marriott Executive
Apartments. The company employs an
estimated 121,000 people worldwide across its
various hotels and other locations in 2020 (latest
data available).
fees, but enables individuals to take
advantage of the parent company's network,
branding and other features. While these
establishments are considered independent
enterprises, they have increased Marriott's
operations across the United States.

Due to the nature of Marriott's business
structure, with its focus on management,
franchising and licensing,
IBISWorld uses company reported revenue
from owned and leased locations to project
the company's market share.

However, IBISWorld also reports and estimates
total network sales. Network sales further
include revenue generated by the company's
franchise operations. In 2021,
Marriott is expected to generate $509.3 million
in industry-relevant revenue. This includes an
estimated decline in 2020 due to the COVID-19
(coronavirus) pandemic as domestic and
32 Market Feasibility
Marriott's operations extend over most
segments of the accommodation market,
including luxury, full service and limited service,
to suit a variety of travelers and budgets.

While such diversity typically provides some
insulation from economic downturns, many of
the company's hotels still endure severely cut
room rates to remain competitive and maintain
positive cash flow during difficult economic
periods.

Consequently, Marriott has significantly
expanded its US portfolio over the past five
years to further inoculate itself from downturns
and better position itself to compete with its
traditional competitors and also with newer,
nontraditional competitors, such as Airbnb Inc.

Most of this expansion has been through
franchise operations. Franchise agreements are
contracts that enable individuals to create a
business establishment under the branding of
an existing company. This often requires upfront
3552
international travel sharply contracted amid
travel restrictions and stay-at-home mandates.

In 2021, the company is anticipated to
experience a rebound in demand, driven
primarily by robust leisure demand.

Hilton Worldwide Holdings Inc.

Market Share: 0.2%
Brand Names: Hilton, Hilton Garden Inn,
Doubletree, Embassy Suites, Hampton,
Homewood Suites by Hilton, Conrad
Hilton Worldwide Holdings Inc. (Hilton), formerly
Hilton Hotels Corporation, is a McLean, VAbased lodging company that owns, manages or franchises more than 6,500 hotels with over

1.0 million rooms worldwide.

An estimated 71.0% of Hilton's rooms are based
in the United States, which has increased over
the five years to 2021. Hilton employs 141,000
people worldwide at its managed, owned,
leased and corporate locations, while 173,000
individuals work in the company's franchised
locations.
its core segments to act on opportunities faster
than before. These spin-offs were completed in
early 2017. The two new segments include Park
Hotels & Resorts Inc. and Hilton Grand
Vacations Inc. These segments comprised the
company's previous timeshare rentals and
various resorts segments. The company's
remaining portfolio is focused on luxury and
lifestyle hotel brands, with global properties
remaining within the traditional company
structure.

In 2021, Hilton is estimated to generate $219.5
million in industry-relevant revenue. This does
not include revenue from its franchised
operations, as Hilton does not release revenue
figures for its franchised and managed
locations in its publicly available financials.

The company's continued shift toward
franchising has been a large driver behind its
declining industry-relevant revenue. The
company's revenue is expected to decline in
2020 due to the negative effect of COVID-19
(coronavirus) pandemic. However, based on
33 Market Feasibility
Hilton has undergone a series of ownership
changes since it was first listed on the New York
Stock Exchange in 1970. Most recently, the
company was purchased by private equity firm
Blackstone Group Inc. (Blackstone) in 2007 for
$26.0 billion, initially pulling it off of public
exchanges.

Blackstone took Hilton public again in late 2015,
listing the company on the New York Stock
Exchange under the name of Hilton Worldwide
and using the proceeds to pay down the
substantial debt the group had taken on during
the initial purchase of Hilton. During its
ownership tenure,
Blackstone increased the chain's room count,
which was mainly achieved through franchised
and managed hotels, which require limited
capital investment. In February 2016, the
company announced plans to break into three
separate entities to capitalize on growth
opportunities, increase its competitiveness
within the Hotels and Motels industry and
create internal efficiencies that would enable
3553
RevPAR figures and the company's reported
number of rooms to determine its total systemwide sales, IBISWorld estimates that Hilton's US system-wide sales have grown throughout most
of the five years to 2021, prior to the
coronavirus pandemic, and system-wide sales
remain important to Hilton's growth postpandemic.

Moreover, Hilton is anticipated to experience
an increase in demand in 2021 amid the easing
of travel restrictions and anticipated pent-up
travel demand amid the broader distribution of
the coronavirus vaccination.

InterContinental Hotels Group PLC
Brand Names: InterContinental
InterContinental Hotels Group PLC (IHG) is a UKbased company and one of the largest hotel chains in the world as measured by total
number of rooms. IHG owns, manages and
franchises 5,964 hotels throughout 100 countries
under major brands, including Holiday Inn,
Kimpton Hotels, Crowne Plaza and
targets travelers with a preference for edgy art
and design. These locations are predominantly
located in urban areas and target high-end
consumers between the ages of 20 and 50.

RevPAR for all of IHG's brands has increased
strongly during most of the period, as travel
across all major markets has increased.

Similar to other service industries, IHG was
heavily affected by the onset of the COVID-19
(coronavirus) pandemic in the United States
and throughout the globe.

As people self-isolated and sheltered in place,
they canceled travel plans, and thus, did not
book stays at hotels and motels, causing sharp
declines in occupancy rates in 2020.

However, in 2021 IHG has experienced a
recovery in its occupancy rates, which has
been skewed toward domestic leisure markets
where restrictions have been lifted. IHG's
business market occupancy levels have
remained an estimated 30.0% below prepandemic levels.
34 Market Feasibility
InterContinental. It also employs more than
400,000 individuals across all hotels and
countries. IHG divides its hotels into segments
based on ownership and management
structures. Hotels are either franchised,
managed or owned.

Consistent with IHG's low-asset business model,
most of the company's hotels operate under a
franchise agreement or are managed by IHG
on behalf of the owner. Due to the low capital
investment and minimal wage costs required
for franchising, the company's franchise
business is its most profitable segment.

IHG's portfolio of brands covers a wide range of
key consumer segments active in the Hotels
and Motels industry. High-end luxury travelers
visiting major cities are catered to by IHG's fivestar InterContinental locations, while its Holiday Inn brand accommodates mid-market
consumers traveling for business or leisure.

IHG's most recent project, Hotel Indigo, is a
boutique hotel concept with 50 locations that
3554
IHG's industry-relevant hotels are located within
the company's Americas segment, which
includes all properties located in North, South
and Central America. The Americas segment
represents over 4,200 hotels and 514,000 rooms.

Properties located in the United States
represent an estimated 58.0% of total
properties.

While the United States still accounts for the
majority of revenue within the Americas
segment, Canada, Mexico and the Caribbean
are also key players that significantly contribute
to the company's profit, mainly because more
than 90.0% of rooms in the Americas segment
operate under a franchise business model.

IHG's asset-light business model means it owns
nine hotels, as most hotels operate under a
franchise agreement or are managed by IHG
on behalf of owners. Additionally, the global
effect of coronavirus is forecast to substantially
affect the industry, further reducing growth.

Nonetheless, IHG experienced significant
based in Parsippany, NJ, but operates globally.

Wyndham is one of the largest franchised-hotel
operators in the United States. In 2006, its
parent company, Cendant Corporation, split
into discrete companies operating in specific
industries, and its hotel operation was renamed
Wyndham Worldwide.

During the second quarter of 2017, the
company decided to further divide the
company, and announced its intent to spin-off
of the hotel business segment. This spin-off was
completed in June 2018 and resulted in the
hotel business operation being held as its own
publicly traded entity named Wyndham Hotel
and Resorts. Wyndham states that the spin-off
aimed to enable a greater focus on the
individual functions of each business segment,
enhancing their potential for success and
growth.

In the United States, Wyndham has 8,941
properties with a total of 484,800 rooms. In 2021,
IBISWorld estimates that Wyndham will derive

60.8% of its revenue in the United States.
35 Market Feasibility
growth during the most of the period, which is
expected to somewhat mitigate loss that has
been incurred in 2020.

Therefore, the company is expected to
generate $4.5 million in industry-relevant
revenue in 2021. The figure is relatively low
because industry-relevant revenue does not
include franchise revenue, as franchises are
considered independent operators, according
to the Bureau of Labor Statistics.

Nonetheless, IHG's total network sales in the
United States, which includes sales garnered
from owned, leased and managed hotels and
sales earned by third-party-owned franchised
hotels, are estimated to fall over the five years
to 2021 due to the coronavirus pandemic
induced decline in 2020.

Wyndham Hotel and Resorts
Brand Names: Super 8 Motels, Knights Inn,
Days Inn, Travelodge
Wyndham Hotels and Resorts (Wyndham),
previously Wyndham Worldwide Corporation, is
3555
Wyndham's brands include Days Inn, Knights
Inn, Ramada, RCI, Super 8 Motels, Travelodge,
Howard Johnson's and Wingate by Wyndham.

Its two largest brands, Super 8 and Days Inn,
have an estimated 2,000 locations each.

Wyndham's brands mainly cater to the
economy and midscale markets. It is also
involved in the timeshare market via its RCI and
Fairfield Communities brands.

Wyndham earns one of the lowest RevPARs in
the industry due to the budget-focused nature
of its lodgings.

In 2021, Wyndham is expected to generate
$2.9 million in industry-relevant revenue. This
does not include revenue generated by the
company's franchised establishments.

US-network sales have fallen over the five years
to 2021. This is largely due to an anticipated
decline in 2020, as many consumers throughout
the globe and in the United States were placed
under stay-at-home orders, and significantly
Consequently, the company's economy and
midscale brands have outperformed the
industry's higher-end brands during the
pandemic. Moreover, leisure travel demand
has recovered strongly in 2021, with
occupancy rates reaching 95.0% of their prepandemic levels during the second quarter of 2021.
36 Market Feasibility
reduced and canceled most traveling.

However, in 2021,
Wyndham has benefited from strong demand
from its business customers, which largely are
comprised of truckers, contractors, construction
workers, healthcare workers and others who
must travel for work and do not have the ability
to conduct their work remotely.
3556
Operating Conditions
The level of capital intensity is Medium
The Hotels and Motels industry is subject to a
moderate to level of capital intensity. In 2021,
for every $1.00 spent on wages, the average
industry operator is expected to spend an
estimated $0.26 on capital. Capital intensity is
expected to remain stable moving forward as
labor and capital both play an important role
in the industry.

As a service-based industry, hotel and resort
operators are highly dependent on direct labor
input across all areas of operation. Individuals
are needed in areas such as front-desk service,
reservations, room service and cleaning, food
preparation, liquor and beverage service and
back of house operational management. Due
to the service-based nature of the industry,
many of these labor-intensive functions cannot
be substituted by technology or machinery
and are a key foundation in the day-to-day
functions. To meet customers' expectations of
quality and provide a hospitable stay, trained
staff are required.
37 Market Feasibility
0 0.05

0.1 0.15

0.2 0.25

0.3 0.35

0.4 0.45
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Capital Intensity Ratio - Industry
3557
Revenue Volatility
The level of volatility is Very High
Over much of the five years to 2021, Hotels and
Motels industry revenue volatility has been
moderate to very high.

Volatility was low during most of the period due
to the consistent growth industry operators
have been able to capitalize on. However, with
the onset of the COVID-19 (coronavirus)
pandemic, industry revenue is anticipated to
rapidly decline in 2020 and strongly rebound in
2021, introducing greater volatility to the
industry.

Industry revenue grew as much as 42.9% in
2021 and declined as much as 55.8% in 2020.

Prior to 2020, there was little variability. However,
this new instability in revenue growth derived
from global economic and public health issues
has affected the United States in 2020.

This has led to steep declines in the previously
steady increase in inbound tourism, volumes of
38 Market Feasibility
domestic travel and general weakening of
economic conditions. The introduction and
spread of coronavirus in the United States
caused implementations of travel bans, limited
domestic travel and a downturn in the US
economy. However, revenue is estimated to
rebound in 2021 in line with the cessation of
domestic travel restrictions and an increase in
the percentage of the domestic population
which has been vaccinated. This moderate to
high level of volatility is still subject to change if
economic conditions change over the five
years to 2026, especially as the effect of the
virus is fully realized.

Regulation & Policy
The level of regulation is Medium and this trend
is Steady.

The Hotels and Motels industry is subject to a
medium and steady level of regulation at the
federal and state level.

Several states regulate the activities of
hospitality properties and restaurants, including
safety and health standards, and the sale of
liquor, by requiring licensing, registration,
disclosure statements and compliance with
specific standards of conduct. There are also
extensive state and federal laws and
regulations relating to selling and marketing
timeshare intervals for those hotels that offer
such arrangements.

LABOR RELATIONS
Operators of hotels and motels are also subject
to laws governing their relationship with
employees, including minimum wage
requirements, overtime, working conditions and
work permit requirements.

The industry employs a high number of young
and low-skilled workers at hourly rates, and
therefore, is subject to minimum wage and
employee benefits regulations.

Workers in the United States are entitled to be
paid no less than the statutory minimum wage,
which is $7.25 per hour in 2021. Each state also
formulates and regulates its own minimum
3558
wage, with most states implementing rates
higher than the federal rate. National operators
that have establishments in various states must
comply with each individual state's
requirements for each location.

Food Safety And Standards
As many hotels and motels prepare and sell
food on premises, the industry is subject to laws
and regulations relating to the preparation and
sale of food, including regulations regarding
product safety, nutritional content and menu
labeling.

The Food and Drug Administration (FDA) is the
main agency responsible for providing
guidance and regulation. The FDA's Model
Food Code, which is a best-practice guide to
food handling and presentation, applies to this
industry and is updated each year.

The FDA Nutritional Value applies as well. Since
1996, the FDA regulations have set standards
for nutritional values of individual foods and
meals. If claims such as “low-fat” or
39 Market Feasibility
“heart-healthy” are on a menu, an owner must
be able to demonstrate to officials that there is
a reasonable basis for the claim.

For instance, the meal may be based on a
recipe from a health association or a
recognized dietary group. Complete nutritional
information, however, is not required to be on
menus.

The Affordable Care Act requires restaurant
companies to disclose calorie information on
their menus.

The Food and Drug Administration has
proposed rules to implement this provision that
would require restaurants to post the number of
calories for most items on menus or menu
boards and to make available more detailed
nutrition information upon request. FDA
regulations require that restaurants and similar
retail food establishments that are part of a
chain with 20.0 or more locations are required
to provide nutrition information for standard
menu items on menus and menu boards.

However, during the coronavirus pandemic the
FDA has granted restaurants flexibility in
implementing these changes and will not
object if establishments do not meet labeling
requirements during the public health
emergency.

Liquor Licensing
A license is required to serve liquor and the
issuing of licenses may be restricted in some
states, such as limiting the number of licenses in
a given area or by population.

For example, in Wisconsin, there is a license
quota of one license per 500 people.

Additionally, states are able to mandate hours
of operation, the price of each drink, which
establishments are able to serve and how long
an unfinished bottle of wine may be used in the
bar. Hotel and motel operators must comply
with state and local service laws, commonly
called dram shop statutes. Dram shop statutes
generally prohibit serving alcoholic beverages
to certain persons such as an individual who is
3559
intoxicated or a minor. In the United States, a
person must be 21 years of age to be legally
served alcohol, which has been in place since
the passing of the National Minimum Drinking
Age Act of 1984
Cybersecurity
After Wyndham Hotels and Resorts
experienced a breach in its data systems, the
Federal Trade Commission (FTC) has increased
its powers and regulations on cybersecurity.

While no regulation has yet to be passed that
outlines exactly the level of cybersecurity a
hotel or motel must have, it has become
increasingly pertinent. The FTC can still fine an
operator if they experience a high-level
security breech. This increases the need for
hotels and motels to implement high level of
data security.

Smoking Bans
Smoking laws are generally enforced at the
state level as the US Congress has not
attempted to enact any nationwide federal
smoking ban.
40 Market Feasibility
Smoking is banned in restaurants, bars and non
hospitality workplaces in many states and some
local jurisdictions ban smoking in outdoor areas.

Each jurisdiction has developed legislation
separately; however, most laws are relatively
consistent.

There are some differences pertaining to the
circumstances in which ventilated smoking
rooms are permitted and the distance smoking
is banned outside a building.

A growing number of cities and states now
require hotels to be 100.0% smoke-free indoors,
including guest rooms. Currently, all hotels and
motels, including guest rooms, must be smokefree in Wisconsin, Michigan and Nebraska.

Over the past decade, smoke-free hotels have
gone from being almost nonexistent to the
national norm. The Westin, a Marriott
International Inc. (Marriott) brand, announced
the first national 100.0% smoke-free hotel policy
for all its properties in the United States in 2006
following a report from the Surgeon General
that exposure to secondhand smoke is
damaging to health. This marked a turning
point for the industry and a domino effect led
Marriott to adopt a similar policy across its
portfolio of brands.

Franchising Laws
A large proportion of industry establishments
are operated under franchise agreements.

There are both federal and state laws
governing franchising, which vary from state to
state. Franchising is regulated at the federal
level by the US Federal Trade Commission and
applied in any region within the United States.

At the state level, various state agencies
regulate franchises and laws vary between
states.

A state's franchise laws usually only apply if the
sale of a franchise is made in the state and the
business is located in the state. Laws generally
fall into three categories, which include
disclosure laws, registration laws and
relationship laws.
3560
Under the FTC Franchise Rule there are three
elements of a franchise, which include the
franchise has a trademark under which the
franchisee is given the right to distribute goods
and services; the franchisor has significant
control of or provides significance to the
franchisee's method of operation; and the
franchisee is required to pay the franchisor at
least $600.00 within the first six months of
opening for business.

COVID-19
In early 2020, the United States was affected by
the global COVID-19 (coronavirus) pandemic.

While many industries have been affected
heavily by this pandemic, industries related to
hospitality and tourism have been hit especially
hard due to travel bans and stay-at-home
restrictions.

There has been no direct legislation on hotels
and motels in the United States, however, there
has been broad sweeping regulation that
affected industry operators and employees.
41 Market Feasibility
This included the Families First Coronavirus
Response Act. This act required specified
employers to provide their employees with paid
sick leave or expanded family and medical
leave for specified reasons related to
coronavirus.

This regulation likely affected operators that fell
under the designated categories specified by
the act. However, the FFCRA leave
requirements expired December 31st, 2020. In
2021, operators still are contending with
regulations such as the limitation of foreign
travelers into the United States. For example, as
of August, U.S. borders remain closed to most
European travelers, even those with
vaccinations.

Industry Assistance
The level of industry assistance is Low and the
trend is Increasing
As a whole, the Hotels and Motels industry does
not receive on-going and continuous direct
support from local or state governments.

In early 2020, however, many hotel and motel
operators were given stimulus in the form of
money from the US government due to the
COVID-19 (coronavirus) pandemic.

The US Coronavirus Aid, Relief, and Economic
Security (CARES) Act, which was introduced
and signed into law in March 2020, is a $2.0
trillion economic relief package designed to
provide direct economic assistance for
American workers, families and small businesses
as well as preserve jobs for American industries.

The Paycheck Protection Program (PPP), which
was established by the CARES Act, is
implemented by the Small Business
Administration (SBA) and provides small
businesses with funds to pay up to eight weeks
of payroll costs including benefits.

Funds can also be used to pay interest on
mortgages, rent and utilities. Furthermore, in
December 2020, the government passed an
additional $900.0 billion in a COVID-19
(coronavirus) relief bill. The legislation included
another $300.0 billion for the PPP and
3561
expanded the kinds of businesses that can
qualify for forgivable loans and grants. Lastly, in
March 2021, a third, $1.9 trillion coronavirus
relief plan was signed into law.

The plan provides $15.0 billion to the
Emergency Injury Disaster Loan program, which
provides long-term, low-interest loans from the
SBA. Moreover, the PPP will receive an
additional $7.0 billion in funds under this relief
plan.

Many industry operators were severely
affected by the coronavirus pandemic as
travel from many international locations was
suspended for months and domestic travel
declined as people were ordered to
quarantine and self-isolate at home throughout
most of the United States.

Aside from direct stimulus provided on rare
occasions, the industry receives other indirect
assistance regularly. In many states, some of
the funds collected by lodging taxes are spent
on promoting local tourism, which can directly
42 Market Feasibility
and indirectly benefit the Hotels and Motels
industry. This tax is often used to promote
tourism within the state. Thus, the industry is an
indirect beneficiary of any promotional tourism
spending by governments, to which operators
may or may not have contributed funds. The
more local tourism is promoted, the more likely
people might be to travel to that location
which typically benefits the region's overall
economy.

Trade groups such as the American Hotel &
Lodging Association also lobby on the industry's
behalf. This is the sole national association that
represents all components of the lodging
industry. This association includes individual
hotel property members, hotel companies,
training organizations, students and suppliers. Its
activities incorporate national advocacy,
public relations and image management,
education and research and information. It
also operates through 43 partner state
associations to provide local representation to
members.
3562
The Great Smoky Mountains
Nature and Extent of the
Market and Market Area
3563
44 Market Feasibility
Source: Veritas Development Advisors Primary Research
Top 10 things to do in Ontario, CA (per TripAdvisor)
No Name
1 Ontario Mills
2 Toyota Arena
3 Escape Lounge
4 Ontario Convention Center
5 Museum of History and Art, Ontario
6 Animanga
7 Cucamonga-Guasti Regional Park
8 Treasures N Junk
9 K1 Speed Ontario
10 Scandia
1 2
3 4
5 6
7 8
9 10
3564
Major Airports Near the Subject Project Data Table and Map 45 Market Feasibility
No. Name Address Miles Away from the Subject Project
1 Ontario International Airport Ontario, CA 91761 3.2
2 Los Angeles International Airport 1 World Way, Los Angeles, CA 90045 58.5 Source: Google Maps, Veritas Development Advisors Primary Research Analysis 3565
Significant Demand Generators Near the Subject Project Data Table and Map 46 Market Feasibility
No. Name Address Miles from Subject Project Overnight Stays Demanded Annually 1 Toyota Arena 4000 Ontario Center, Ontario, CA 1.6 Left voice msg with Ontario Econ. Dev. 2 Ontario Convention Center 2000 E Convention Center Way, Ontario, CA 4.9 Left voice msg with Ontario Econ. Dev.

Source: Google Maps, Veritas Development Advisors Primary Research Analysis 3566
Restaurants Near the Subject Project Data Table
47 Market Feasibility
No. Name Address Miles Away from the
Subject Project
1 El Chilitos Mexican Restaurant 1630 E 4th St K, Ontario, CA 91764 1.49 2 Zeke's Eatin' Place 1855 E 4th St, Ontario, CA 91764, 1.92 3 Johnny O's Café 8890 8th St, Rancho Cucamonga, CA 91730 2.20 4 Spires Restaurant 104 N Vineyard Ave, Ontario, CA 91764 2.25 5 Ontar Thai Restaurant 750 Archibald Ave, Ontario, CA 91764 3.10 6 Chasqui 8880 Archibald Ave, Rancho Cucamonga, CA 91730 3.12 7 Panda Inn 3223 E, N Centre Lake Dr, Ontario, CA 91761 3.77 8 Jikan Japanese Restaurant 3495 Concours St suite e, Ontario, CA 91764 3.97 9 Benihana 3760 Inland Empire Blvd, Ontario, CA 91764 4.39 10 @ Home Thai Fusion bistro 4275 Concours St Suite 130, Ontario, CA 91764 4.93 11 Chili Bistro-湘巴佬 765 N Milliken Ave ste a, Ontario, CA 91764 4.98 12 Applebee's Grill + Bar 1021 N Milliken Ave, Ontario, CA 91764 5.02 13 Olive Garden Italian Restaurant 4403 Mills Cir, Ontario, CA 91764 5.07 14 Big Wok Mongolian Grill BWRC 11334 Fourth St Ste 103, Rancho Cucamonga, CA 91730 5.08 15 In-N-Out Burger 4310 Ontario Mills Pkwy, Ontario, CA 91764 5.13 16 BJ's Restaurant & Brewhouse 11520 Fourth St, Rancho Cucamonga, CA 91730 5.28 17 Lazy Dog Restaurant & Bar 11560 Fourth St, Rancho Cucamonga, CA 91730 5.40 18 The Sweet Spot Ontario, CA 91764 5.45
19 Rainforest Café 4810 Mills Cir, Ontario, CA 91764 5.59 20 Rubio's Coastal Grill 980 Ontario Mills Dr Suite A, Ontario, CA 91764 5.71 Source: Google Map, Veritas Development Advisors Primary Research Analysis 3567
Restaurants Near the Subject Project Map
48 Market Feasibility
Source: Google Map, Veritas Development Advisors Primary Research Analysis 3568
Medical Facilities Near the Subject Project Data Table
49 Market Feasibility
No. Name Address Miles Away from the
Subject Project
1 Kindred Hospital Ontario 550 N Monterey Ave, Ontario, CA 91764 0.71 2 San Antonio Regional Hospital 999 San Bernardino Rd, Upland, CA 91786 1.66 3 Chaparral Medical Group 585 N Mountain Ave, Upland, CA 91786 2.09 4 Montclair Hospital Medical Center 5000 San Bernardino St, Montclair, CA 91763 2.87 5 Casa Colina Hospital and Centers for Healthcare 255 E Bonita Ave, Pomona, CA 91767 5.70 6 Pomona Valley Hospital Medical Center 1798 N Garey Ave, Pomona, CA 91767 6.10 7 Emanate Health Inter-Community Hospital 210 W San Bernardino Rd, Covina, CA 91723 14.18 8 Monrovia Memorial Hospital 323 S Heliotrope Ave, Monrovia, CA 91016 20.05 9 Methodist Hospital 300 Huntington Dr, Arcadia, CA 91007 22.54 Source: Google Map, Veritas Development Advisors Primary Research Analysis 3569
Medical Facilities Near the Subject Project Map
50 Market Feasibility
Source: Google Map, Veritas Development Advisors Primary Research Analysis 3570
Golf Courses Near the Subject Project Data Table
51 Market Feasibility
No. Name Address Miles Away from the Subject Project
1 Red Hill Country Club 8358 Red Hill Country Club Dr, Rancho Cucamonga, CA 91730 2.09 2 Upland Hills Country Club 1231 E 16th St, Upland, CA 91784 2.60 3 Whispering Lakes Golf Course 2525 E Riverside Dr, Ontario, CA 91761 5.23 4 Mountain Meadows Golf Course 1875 Fairplex Dr, Pomona, CA 91768 7.37 5 Marshall Canyon Golf Course 1135, 6100 Stephens Ranch Rd, La Verne, CA 91750 7.45 6 San Dimas Canyon Golf Course 2100 Terrebonne Ave, San Dimas, CA 91773 8.69 7 El Prado Golf Courses 6555 Pine Ave, Chino, CA 91708 9.61 8 Goose Creek Golf Club 11418 68th St, Mira Loma, CA 91752 10.72 9 Sierra Lakes Golf Club 16600 Clubhouse Dr, Fontana, CA 92336 12.41 10 Indian Hills Golf Club 5700 Club House Dr, Riverside, CA 92509 12.79 11 Oak Quarry Golf Club 7151 Sierra Ave, Riverside, CA 92509 12.96 12 Jurupa Hills Country Club 6161 Moraga Ave, Riverside, CA 92509 14.13 13 Van Buren Golf Center 6720 Van Buren Boulevard, Riverside, CA 92503 14.28 14 Colton Golf Course 1901 W Valley Blvd, Colton, CA 92324 16.49 15 Fairmount Golf Course 2681 Dexter Dr, Riverside, CA 92501 16.51 Source: Google Map, Veritas Development Advisors Primary Research Analysis 3571
Golf Courses Near the Subject Project Map
52 Market Feasibility
Source: Google Map, Veritas Development Advisors Primary Research Analysis 3572
Museums Near the Subject Project Data Table
53 Market Feasibility
No. Name Address Miles Away from the Subject
Project
1 Cooper Regional History Museum 217 E A St, Upland, CA 9178 0.82 2 Ontario Museum of History & Art 225 Euclid Ave, Ontario, CA 91762 1.48 3 Chaffey Community Museum of Art 217 S Lemon Ave, Ontario, CA 91761 1.49 4 Sasse Museum of Art 1334 N Benson Ave STE D, Upland, CA 91786 2.79 5 Cucamonga Service Station 9670 Foothill Blvd, Rancho Cucamonga, CA 91730 3.38 6 The African-American Museum of Beginnings 1460 E Holt Ave Suite 188, Pomona, CA 91767 4.56 7 Petterson Museum of Intercultural Art 730 Plymouth Rd, Claremont, CA 91711 4.70 8 Chino's Old Schoolhouse Museum 5493 B St, Chino, CA 91710 5.19 9 Wignall Museum & Gallery 5885 Haven Ave, Rancho Cucamonga, CA 91737 6.19 10 Latino Art Museum 281 S Thomas St, Pomona, CA 91766 6.31 Source: Google Map, Veritas Development Advisors Primary Research Analysis 3573
Museums Near the Subject Project Map
54 Market Feasibility
Source: Google Map, Veritas Development Advisors Primary Research Analysis 3574
4 th Street Hotel (Subject Project)
55 Market Feasibility

SUITE AMENITIES INCLUDE
Spacious Kitchens
• Stove
• Microwave Oven
• Toaster
• Refrigerator (Full)
• Icemaker In Refrigerator
• Dishwasher
• Pots/Pans/Serving Dishes
• Plates/Glassware
• Silverware
• Dining Table
Flexible Workspaces
• Work Desk With Lamp
• Desk Level Electrical Outlet
• Spare Electrical Outlet at Desk
Connectivity
• Wired Internet Available in Rooms, Suites,
Business Center, Public Areas and Meeting
Convention Spaces.
• Wireless Internet Available in Rooms, Suites,
Business Center, Public Areas and Meeting
Convention Spaces.
• Standard Wireless Internet service is free for
all members
• Two-Line Phone
• Phone with Voicemail

HOTEL AMENITIES INCLUDE
Connectivity
• Wired Internet Available in Rooms, Suites,
Business Center, Public Areas and Meeting
Convention Spaces.
• Wireless Internet Available in Rooms, Suites,
Business Center, Public Areas and Meeting
Convention Spaces.

Housekeeping and Laundry Services
• On-site Guest Self-Laundry Facilities
• Weekly Housekeeping
• Housekeeping Full Service
• Full service - complete room clean.

Site Info
Location 5060 E. 4th Street, Ontario,
California 91764
Rooms 128 (planned)
Room Types
61 Queen Suites
61 DBL Queen Suites
3 ADA DBL Queen Suites
3 ADA Queen Suites
Site Area • 80,000 sq. ft
GBA • 55,250 sq. ft
Story • Four
Parking Area • 19,106 sq. ft
Meeting Room • 1,824 sq. ft
Seating Area • 300 sq. ft
Café/Snack • 331 sq. ft
Fitness • 331 sq. ft
Pool Deck/Spa • 2,353 sq. ft
Lobby • 504 sq. ft
Reception • 110 sq. ft
Laundry • 437 sq. ft
3575
Business Services
• On-Site Business Center
• Business Services are available
• Copying
• Office supplies available
• Printer
• Scanner
Entertainment and Recreation
On-site Fitness Center Available
• Limited Offering
• Available Equipment: Elliptical Machines,
Treadmill, Free Weights, Stationary Bicycle
Outdoor Pool Available
• Outdoor Gazebo Grill
56 Market Feasibility
3576
The Great Smoky Mountains
Competitive
Market Area Analysis
3577
58 Market Feasibility
Home2 Suites by Hilton Azusa
Site Info
Location 229 S Azusa Ave , Azusa, CA 91702
Room 110
Built July 2017
Miles (away) from the
Subject Project 15.23
Room Types
• King Studio Suite -Hearing Accessible
• King Studio Suite- Non-Smoking
• King Studio Suite -Mobility Access/Non-Smoking
• One-bedroom King Suite - Non-Smoking
• King Suite - Mobility Accessible/Non-Smoking
• King Accessible Roll In Shower Suite With Sofa Bed -
Non-Smoking
• King Suite -Hearing Accessible/Non-Smoking
Value
Min Asking Rate $146.00
Max Asking Rate $297.00
Min Mean Asking Rate $175.44
Max Mean Asking Rate $228.86
Mean Asking Rate $203.72
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
Room Rates
Online Survey
$203.72
3578
59 Market Feasibility
Homewood Suites by Hilton Ontario Rancho Cucamonga
Site Info
Location 11433 Mission Vista Drive, Rancho Cucamonga,
CA 91730
Room 103
Built November 2005
Miles (away) from the
Subject Project 5.14
Room Types
• Studio Suite, 1 Queen Bed, Non-smoking
• Suite, 2 Queen Beds, Non-Smoking
• Suite, 2 Queen Beds, Accessible , Bathtub (Mobility & Hearing)
• Suite, 1 King Bed, Non-Smoking
• Suite, 1 King Bed, Hearing Accessible
• Suite, 1 King Bed, Accessible, Bathtub (Mobility &
Hearing)
• Suite, 1 King Bed, Accessible (Mobility & Hearing , Roll In Shower)
• Premium Suite, 1 King Bed, Accessible, Bathtub
• Premium Suite, 1 King Bed, Accessible , Non- Smoking
(Hearing)
• Room. 2 Bedrooms. Non-Smoking
• Suite, Accessible, Non - Smoking
• Suite, 2 Queen Beds, Accessible (Roll-in Shower
Value
Min Asking Rate $156.00
Max Asking Rate $537.00
Min Mean Asking Rate $190.00
Max Mean Asking Rate $350.50
Mean Asking Rate $230.38
$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
Room Rates
Online Survey
$230.38
3579
60 Market Feasibility
TownePlace Suites Ontario Airport
Site Info
Location 9625 Milliken Avenue, Rancho
Cucamonga, CA 91730
Room 112
Built November 2005
Miles (away) from the Subject
Project 5.05
Room Types
• Studio, 1 Queen Bed, Non-Smoking
• Studio, 2 Queen Beds, Non-Smoking
• Suite, 1 Bedroom, Non-Smoking
• Suite 2 Bedrooms, Non-Smoking
Value
Min Asking Rate $167.00
Max Asking Rate $482.00
Min Mean Asking Rate $218.09
Max Mean Asking Rate $359.00
Mean Asking Rate $280.16
$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
Room Rates
Online Survey
$280.16
3580
61 Market Feasibility
Residence Inn Ontario Rancho Cucamonga
Site Info
Location 9299 Haven Avenue, Rancho Cucamonga,
91730
Room 126
Built December 2018
Miles (away) from the
Subject Project 4.11
Room Types
• Studio, 1 King Bed, Non-Smoking
• Studio, 2 Queen Beds, Non-Smoking
• Suite, 1 Bedroom, Non-Smoking
Value
Min Asking Rate $234.00
Max Asking Rate $448.00
Min Mean Asking Rate $269.91
Max Mean Asking Rate $324.82
Mean Asking Rate $297.69
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
$450.00
$500.00
Room Rates
Online Survey
$297.69
3581
62 Market Feasibility
Extended Stay America Los Angeles - Ontario Airport
Site Info
Location 3990 Inland Empire Blvd, Guasti, CA 91764
Room 127
Built May 1997
Miles (away) from the
Subject Project 4.49
Room Types
• Studio, 1 Queen Bed, Non-Smoking
• Studio, 1 Queen Bed, Accessible Non-Smoki
• Studio, 1 King Bed, Non-Smoking
• Studio, 2 Double Beds, Non-Smoking
Value
Min Asking Rate $118.00
Max Asking Rate $169.00
Min Mean Asking Rate $122.64
Max Mean Asking Rate $145.30
Mean Asking Rate $131.32
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
Room Rates
Online Survey
$131.32
3582
63 Market Feasibility
Element Ontario
Site Info
Location 900 Via Piemonte, Ontario, 91764
Room 131
Built May 2020
Miles (away) from the
Subject Project 4.65
Room Types
• Room,1 King Bed, Non-Smoking
• Studio,1 King Bed, Non-Smoking
• Studio,1 King Bed, Non-Smoking
• Suite, 1 Bedroom, Non-Smoking
Value
Min Asking Rate $184.00
Max Asking Rate $399.00
Min Mean Asking Rate $214.18
Max Mean Asking Rate $278.09
Mean Asking Rate $242.86
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
$450.00
Room Rates
Online Survey
$242.86
3583
$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$100.00 $120.00 $140.00 $160.00 $180.00 $200.00 $220.00 $240.00 $260.00 Min, Max and Mean Asking Rates of Hotels Compared to Subject Project 64 Market Feasibility
Summary of ADR in the Market
Subject Project ADR $120.00
The Company’s ADR
assumption/expectation for
the Subject Project appears
reasonable when compared
to market rates.

ADR: $242.86
ADR: $131.32
ADR: $120.00
ADR: $203.72
Excellent Very good Medium Weak
ADR: $230.38
ADR: $297.69
Max Asking Rate
Min Asking Rate
ADR: $280.16
3584
The Great Smoky Mountains
Smith Travel
Research Report Analysis
3585
66 Market Feasibility
Smith Travel Research STR Report – Hotels in the Market Area

0.0 20.0 40.0 60.0 80.0 100.0
2017
2018
2019
2020
2021
Avg
Occupancy
December November October September August July
June May April March February January

53.1 Percent
May 2020
Min
Occupancy

93.4 Percent
March 2021
Max
Occupancy

81.5 Percent
Aug 2017 – April 2021
Avg.

Occupancy
Company Projections Vs. Market Area
Conservative Reasonable Optimistic

82.0 – 85.0 Percent
Stabilized
Company
Expectations
Average
3586
67 Market Feasibility
Smith Travel Research STR Report – Hotels in the Market Area -10.00 10.00 30.00 50.00 70.00 90.00 110.00 130.00
2017
2018
2019
2020
2021
Avg
ADR
December November October September August July
June May April March February January
$96.44
May 2020
Min
ADR
$129.26
August 2019
Max
ADR
$118.10
Aug 2017 – April 2021
Avg.

ADR
3587
68 Market Feasibility
Smith Travel Research STR Report –Hotels in the Market Area -10.00 10.00 30.00 50.00 70.00 90.00 110.00
2017
2018
2019
2020
2021
Avg
RevPAR
December November October September August July
June May April March February January
$51.17
May 2020
Min
RevPAR
$114.72
October 2018
Max
RevPAR
$96.76
Aug 2017 – April 2021
Avg.

RevPAR
3588
69 Market Feasibility
Smith Travel Research STR Report – Hotels in the Market Area

65.00 70.00

75.00 80.00

85.00 90.00
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
January February March April May June July August September October November December Demand Versus Supply (Average 2017 - 2021)
Demand Supply Occupancy
3589
70 Market Feasibility
Market Area Dilution Analysis

50.00%

55.00%

60.00%

65.00%

70.00%

75.00%

80.00%

85.00%
Year 1 Year 2 Year 3 Year 4 Year 5
Occupancy

65.00 Percent
Threshold
Based on the supply and demand analysis (pre-COVID) within the market area, it appears as though occupancy will likely remain above 65 percent over the next five years. 3590
71 Market Feasibility
Summary of Occupancy, RevPAR, ADR and Demand in the Market Area

81.5%
Smith Travel
Research Report
Occupancy Rate
-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%
Occupancy ADR RevPAR Demand
Percentage Change from Previous Year (Average)

82.0%
to

85.0%
Company
Forecasts
Excellent Very good Medium Weak

80.4 Percent Weekend
Occupancy

78.4 Percent Weekday
Occupancy
No Risks
Identified
All Key
Parameters
Room: 124
Room Nights: 45,260
Subject
Project
Based on the STR report, the Subject Project’s rooms are expected to be absorbed in the market area.

Approx. 124-Keys
Construction Pipeline
New Hospitality
Supply Units
3591
3,937 584 2,755 749 2,947 4,242 124
15,338
Current Room Counts within 15 Mile Radius
72 Market Feasibility
Subject Project Penetration Rate:
• The graph, derived from data obtained from Smith Travel Research, shows hotel types and room counts in a 15-mile radius from the Subject Project.
• This geographic footprint contains about 15,338 total rooms which accounts for about 5,460,328 total room nights.
• The Subject Project plans call for 128 keys, which is 46,720 room nights, and represents a penetration rate of ~ 0.8 percent of the total market. • Based on the STR report, it appears as though the Subject Project rooms will be absorbed in the market area as the demand for the market appears to be growing at a CAGR of ~16.30 percent.

3.25%

21.92%

4.65%

17.09%

4.34% 3.02%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%
Subject Project Penetration of Various
Hotel Classes Within 15 Miles
Independent
Upper Upscale
Upscale
Midscale
Economy
Upper Midscale

25.67%

3.81%

17.96%

4.88%

19.21%

27.66%

0.81%
Room Stocks Percentage
Independent
Upper Upscale
Upscale
Midscale
Economy
Upper Midscale
Under Construction
Total Room
Nights
5,460,328
room nights
15,338 keys

0.80 Percent of the
total market area
Subject Project
Market Share
3592
Discuss adequacy of management (experience, training, and education of management).

Leadership Team
73 Market Feasibility
Hero Hotels, LLC
The Company is a fully integrated real estate development company specializing in hotel development with a focus in the California and Texas market areas. The Company also specializes in asset management, hotel property management, and revenue management, with a strong focus on an aggressive sales and marketing strategies, so that their hotels are run at maximum efficiencies.

Company principals have owned, operated, and developed real estate assets for the last thirty years and have partnered with well-known franchises such as Holiday Inn Express, Best Western, Days Inn, Ramada, Four Points and Choice.

Dipak Patel| Founder &
Principal- Operations
Focus: Hotel Operations
Education: UCLA, Bachelors of Science- Bachelors of Science in Economics Other: Owner and Operator of Hotels for 30 plus years in Southern California; liaison to the community relations and experience entrepreneur.

Amar Patel| Founder &
Principal- Development
Focus: Acquisitions, real estate development, construction, design & architecture Education: University of Southern California (USC), Bachelors in Business Administration, Real Estate Finance, Masters of Science (USC) for Construction Management
Other: USC Construction Alumni Group, Founder; 10 plus years in Project Management with RD Olson Construction. 3593
A complete listing of proposed facilities,
amenities, and services (i.e.: number and type
of rooms, meeting space square footage,
recreational amenities, business services such
as data ports-workstations-etc., refrigerators in
room, laundry service, restaurant-coffee shopfood service, etc.); See PP55, 56.

History of proposed developer and potential
operators (i.e.: years in business, principals,
capitalizing, experience, listing of projects,
number of units owned, average rates charged,
occupancy rates, etc.);
See P73.

Analysis of economic environment projecting
likely future economic conditions as they
relate to the operation of the subject hotel;
See PP9-17.
74 Market Feasibility
Subjects competitive market (i.e.: identification
of their market, 3 and 5 year history of
occupancy, average daily rate, revenue per
available room trends for that market,
estimated share of the market the hotel will
capture during the first five years of operation,
etc.);
See PP57-72.

Analysis of the economic impacts on existing
hotel markets within Ontario (i.e.: estimate of
the dilution of the market due to addition of
proposed hotel, etc.). Note: new hotel projects
should only be approved if competitive market
occupancy remains at or above 65 percent for
a five year projection period;
See PP70-72.

Relationship to demand generators (i.e.: airport,
convention center, corporate market,
shopping and entertainment);
See PP45-54.

Public cost/revenue projections.

This item does not apply to the Subject Project
as planned.
3594
The Great Smoky Mountains
Project Experience (Partial List)
• Upscale Hotels in California
• Midscale Hotels in California
• Midscale Hotels in Arizona
• Luxury Hotels in Florida
• Luxury Hotels in California
• Midscale Hotels in Texas
• Upper Midscale Hotels in California
• Cannabis Grow House Expansion in Florida
• Hydroponic Facility acquisition in Puerto Rico
• Hydroponic in Florida
• Retail Fruits and Vegetables project in Hurst, Texas
• Indoor Sports Complex in Texas
• Indoor Sports Complex in North Carolina
• Indoor Game Center in New Jersey
• Squash Academy in New Jersey
• Neighborhood Retail Center in Florida
• Biofuel Facility in Hawaii
• Hospitals in Louisiana
• Mobile Home Parks in Louisiana
• Cold Storage Facility in Wisconsin
• Cold Storage Facility in New Jersey
• Self Storage Facility in Texas
• Car Wash in California
• Medical Waste to Energy in Rhode Island
• Wheat, Corn and Forage Operation
• Frac Sand Manufacturing Plant
• 52 Oil and Gas Wells in Kentucky
• Golf Center and Hotel in Colorado
• Indoor Gym & Wellness Center in Idaho
• Indoor Sports Complex in North Carolina
• Nursery and Landscaping in Maryland
• Assisted Living and Memory Care in Michigan
• Marina Expansion in Kentucky
• Apartment Complex in Texas
• Football Stadium in Riyadh
• Pipe Factory in Sweden
3595
Resume of the Analyst
International Publications/Awards
― Investment Foundations certificate by CFA Institute, ID: 204095 ― Financial Modelling and Valuation Analyst, ID: 21257732 ― Capital Market and Securities Analyst, ID: 22013916
― Certified Banking and Credit Analyst, ID: 22717302
― Hotel Valuation, American Appraisal Institute, ID: 2637 ― Forecasting Revenue, American Appraisal Institute, ID: 2637 ― CFA level 1 (Passed), ID: 9445336
― Project Management (University of New South Wales), ID: 3250978 ― Business Management (University of New South Wales), ID: 3250978 ― Crystal Ball (Oracle), ID: 41909
― University of New South Wales, Australia– Master with Business Management, ID: 3250978
― University of Engineering and Technology, ID: 100312
― International Merger & Acquisition Expert ID: 592
― Merger & Acquisition Professional ID: 593
Standardizing your
expectations
May 8, 2016 publication

Page 64 ends

Forbes
Entrepreneurship
Award 2015
Four ways to decrease
your venture's burn rate
Jan 1, 2016 publication

Page 98 ends

Education/Courses/Certifications
Awais Dilawer, B.E, MBA eq, FMVA, CMSA, CBCA, IM&A,
M&AP, American Appraisal Institute Certified, CFA
Investment Foundations Certificate Holder, Completed
Level I in 2021 (1
st Attempt), CFA Level II (Candidate)
Over fifteen years of experience in investment, venture capital, business management and consulting with a demonstrated record of consistent achievements across different organizations globally.

Specialties include feasibility and due diligence of investment opportunities, business strategy and planning, investment strategy development, deal negotiation and structuring.
76 Certifications
3596
Key Success
Resume of the Analyst
Veritas Development Advisors,
LLC. – Senior Analyst
Consultant roles in different
transactions across USA, Europe,
Middle East and Asia Pacific.

Senior Investment Associate for
private equity and venture
capital investments
Different roles in sectors: FMCG,
power & gas, manufacturing,
petrochemical and refineries.

Professional
History
Present
Jan 2010 to Present
Jan 2010 to March 2018
Sep 2005 to 2010
― Prepared and supervised feasibility study, due diligence and business plan of various complexities across USA, EU and other regions. ― Built and recommended investment committee and board in managing real estate portfolio of million US Dollars in value (commercial malls, hospitals, stadiums, hotels, residential apartments, villas, etc.) ― Experienced in performing in depth transaction financial and commercial diligence using internal and external resources
― Assessed risk and impact analysis for different business opportunities and proposing solutions to deal with potential threatening investment risks. ― Analyzed, reviewed and evaluated reports in the area of ICT, Renewable Energy, Life Sciences Health Care and manufacturing sector in the deals pipeline
― Conducted equity valuations both for transactions and financial reporting purposes
― Developed Investment MEMO’s and deal reports for board and potential investors especially for the private equity and venture capital funds. ― Advised clients on financial feasibilities of large projects and conducted market research studies.
― Hands on experience in preparation of legal documents in coordination with internal and external resources.
― Experienced in identifying and sourcing investments in private equity and venture capital funds.
― Managed a team of different resources and contributed to their professional development. Extensive experience of talent management, coaching, development and mentoring.
― Led equity investment projects, help structuring and negotiating transactions from start to close.

Key Experience
Led due diligence and feasibility study of a biotech based in California. The transaction involved arranging financing. The target company listed on Nasdaq with the market cap of
more than a billion dollar.

Worked on the due diligence and feasibility study on an electric vehicle startup with the transaction valued more than $100 million. The target company is listed in Hong Kong Exchange with the market cap of 400 million dollar.

Successfully conducted feasibility study and due diligence of a Dutch based EV charging station company for a private equity fund. The Company is listed on Amsterdam Exchange with the market cap of 170 million dollar..
77 3597
Resume of the Analyst
Key Projects throughout his career include:
78 Manufacturing:
• Battery Manufacturing, WA
• Operational Assessment Steel Plant, ME
• Dairy Farm, GA
• Shrimp Farm, AZ,
• Solar Cells Manufacturing, CA
• Aseptic Packaging Food & Beverage Plant, WV
• Bunker Fuel Oil Processing Plant, TX
• Oil and Gas Drill Fuel Wastewater Plant, OH
• Dairy Biogas Digester, WI, TX, AZ
• Yard Waste Disposal and Composting Facility, FL
• Charcoal Manufacturing, OK
• Aluminum processing facility, TX
• Hydroponics, TX, PR
• Concrete Manufacturing Plant, USVI
• Water Bottling Factory, ME
• Chip Manufacturing, ME
• Biofuel Processing, HI
• Medical Waste, RI
• Oil and Gas Wells, KY
• Frac Sand Facility, OK
• Pipe factory, EU
• Automotive, ME
• Solar Panels Coating, EU
Healthcare & Life science:
• Addiction Center, MD, PA
• Biotech, CA
• Assisted Living & Memory Care, WI, UT, TX, FL, MI, CO • Therapy and Skilled Day School Facility, FL
• Child Day Care, NV
• Hospitals, LA
• Biosimilars Manufacturing, MA
• Vaccine Manufacturing Plant, WA
• Diabetes Center, ME
• Health Information System, MO
Real Estate:
• Self Storage & RV Storage, NV, PA
• Outdoor Soccer Facility, NM
• Car Wash, CA, NV, TX
• Multicomplex Apartments, TX, LA, CA
• Leadership School, UT
• Equestrian Center, TX
• Cold Storage, FL, WI
• Primrose Schools, MD, VA
• Historic Park, IL, KY
• Indoor Sports Complex, NC, NM, TX, ID
• Gas Station with Convenience Store, UT, CA
• Nursey and Landscaping, MD
• RV Park, FL
• Indoor Shooting Range, VA
• Golf Sports Complex, CO
• Distribution & Shipping Facility, TX
• Marina, KY
• Mobile Home Park, LA
• Neighborhood Shopping Center, FL
• Squash Academy, NJ
• Private School, WA, EU
• Stadium, ME
Restaurant:
• Culver, AZ
• Independent Restaurants, UT, NM
• Buffalo Wings, KY
• Dairy Queen, GA
• Cinnabon, ME
• McDonald, ME
• Subway, ME
Hotels & Resorts:
• Baymont Inn & Suites, AZ
• Hilton Hotel, PA, CA, AZ
• Best Western, CA,
• Best Western Plus, TX
• Fairfield Inn& Suites, CA
• Mainstay Suites, TN
• Holiday Inn, TX
• Motel 6, CA
• Independent Hotels, CA, FL, UT
• Resort, NY
• Dual Branded Hotel, AL
• Banquet Hall, CA
• Event Center, TX
• Comfort Suites, CA
• Hampton Inn & Suites, CA
• Marriot, CA
3598
79 Contact Us
Veritas Development Advisors, LLC (“VDA”)
Steve Alves, Managing Partner
Email: [email protected]
Ph: 240-626-1209
3599
Planning Commission Staff Report
File Nos. PDEV21-021 and PCUP21-009
February 22, 2022
Exhibit L—PARKING STUDY
(Document follows this page)
3600
Trames 0365-0001
4225 Oceanside Blvd., #354H
Oceanside, CA 92056
(760) 291 - 1400
October 21, 2021
Roger Barbosa
Milestone Management
9891 Irvine Center Dr., Suite #200
Irvine, CA 92618
Subject: Extended Stay Hotel Parking Study (JN 0365-0001) Dear Mr. Barbosa:

Trames Solutions Inc. is pleased to submit the following parking evaluation for the proposed Extended Stay Hotel development. It is our understanding that the site is proposed to be developed with a 128 room hotel. The project site is located at 5060 E.

Fourth St. in the City of Ontario.

INTRODUCTION
The proposed project consists of a 128-room hotel with an 1,824 sf meeting room, and a 331 sf cafe. Attachment A contains the site plan that shows a total of 118 parking spaces consisting of 106 regular spaces, 5 handicap spaces, and 7 electric vehicle spaces.

The intent of this parking evaluation is to determine the parking requirements of the proposed uses based on the City’s parking code and the potential requirements of the project due to the nature of the proposed land uses.
3601
Roger Barbosa
Milestone Management
October 21, 2021

Page 2 ends

Trames 0365-0001

CITY OF ONTARIO PARKING CODE REQUIREMENTS
Proposed Project
The following parking rate is based on the City of Ontario for the use associated with the proposed site:
• Hotel = 1 space per room
Therefore, according to the City’s requirements, the following number of parking spaces would be required for the proposed project:

Hotel: 128 rooms x (1 space per room) = 128 spaces

PARKING REDUCTION MEASURES
The proposed project will consist of several factors that can reduce the number of parking spaces required for the site. These “mode and noncaptive adjustment” factors include the location of the project (urban environment), provision/proximity to public transit opportunities, and ride hailing opportunities.

The typical patron of the proposed hotel use is anticipated to arrive from the Ontario International Airport (about 5 miles away) to attend a conference or meeting in the adjacent area or attend an event at the Ontario Convention Center. Rather than renting a car, it is anticipated that the patrons will arrive at the hotel via a ride hailing service since the cost and convenience of such services outweigh the difficulty and expense of renting a vehicle.

Ride Hailing Services
Uber/Lyft provide on-demand transportation services for a reasonable cost. Once at the hotel, guests can use the Uber/Lyft services to travel to their nearby meetings/conferences rather than renting a vehicle.
3602
Roger Barbosa
Milestone Management
October 21, 2021

Page 3 ends

Trames 0365-0001
Public Transit
Public bus service is provided by Omnitrans Route 61 and can be taken to the Ontario Airport or other various amenities.

Urban Location
The urban environment promotes pedestrian mobility in lieu of vehicles. Many of the restaurants/attractions are within walking distance of the hotel. Sidewalks and signalized intersections provide controlled crossings.

Urban Land Institute (ULI) Recommended Reduction Measures The Urban Land Institute has provided mode and noncaptive parking reduction percentages for a hotel based on the factors listed above. ULI has indicated a 41% reduction factor during the weekday and a 31% reduction factor during the weekend in visitor parking for a hotel located in the vicinity of a suburban location (Shared Parking, 3rd Edition, Urban Land Institute, 2020, Figure 4-18 Suggested Mode and Noncaptive Adjustment Factors for Hotels). Since the hotel will contain an 1,824 sf meeting room and a 331 sf cafe, these uses were also accounted for in the parking calculations.

Furthermore, parking demands at hotels peak at different times of day/different months of the year. ULI’s publication Shared Parking, 3rd edition (2020) provides the peaking factors by time of day and month. For the analysis provided in this report, the highest peaks (worst case conditions) were used.

The peak parking demands can be determined by applying the factors and peak demands by time of day/month for the proposed hotel use as shown below. Based on the application of these factors, the hotel will have a peak demand of 94 spaces at 8 AM on a weekday and 105 spaces at 8 AM on a weekend. Attachment B contains the summary of the project’s peak parking demands based on the ULI factors. 3603
Roger Barbosa
Milestone Management
October 21, 2021

Page 4 ends

Trames 0365-0001
Weekday at 8 AM
Suburban Hotel:

Rooms (128 rooms x 1 space/room) = 128 spaces
Adjustment due to ride hailing/public transit/suburban location (41% reduction) = -52 spaces
Peak hour adjustment (10% reduction) = -8 spaces
Subtotal = 68 spaces
Employees (128 rooms x .15 space/room) = 19 spaces
Subtotal = 19 spaces
Meeting Room (1,824 sf x 8.72 space/tsf) = 16 spaces
Peak hour adjustment (70% reduction) = -11 spaces
Employees (2,155 sf x 1.39 space/tsf) = 3 spaces
Peak hour adjustment (40% reduction) = -1 space
Subtotal = 7 spaces
Total = 94 spaces
3604
Roger Barbosa
Milestone Management
October 21, 2021

Page 5 ends

Trames 0365-0001
Weekend at 8 AM
Suburban Hotel:

Rooms (128 rooms x 1 space/room) = 128 spaces
Adjustment due to ride hailing/public transit/suburban location (31% reduction) = -40 spaces
Peak hour adjustment (10% reduction) = -9 spaces
Subtotal = 79 spaces
Employees (128 rooms x .15 space/room) = 19 spaces
Subtotal = 19 spaces
Meeting Room (1,824 sf x 6.78 space/tsf) = 12 spaces
Peak hour adjustment (70% reduction) = -8 spaces
Employees (2,155 sf x 1.41 space/tsf) = 3 spaces
Peak hour adjustment (40% reduction) = -1 space
Subtotal = 6 spaces
Total = 104 spaces
3605
Roger Barbosa
Milestone Management
October 21, 2021

Page 6 ends

Trames 0365-0001

CONCLUSIONS
Based on the City’s requirements, a total of 128 parking spaces would be required for the proposed 128 room hotel project. The City’s parking code does not differentiate between the various hotel types nor where they are located. For example, a resort/family hotel may require more parking spaces than a suburban hotel located near a hotel since renting a passenger vehicle may be more economical/convenient for a family on vacation than using a ride hailing service.

As indicated in this study, a reduction in the number of parking spaces for a suburban hotel has been determined due to the close proximity to the Ontario Airport, the economic advantage and convenience of ride hailing services, and the availability of public transit services. The analysis indicates that a total of 94 parking spaces on a weekday and 104 parking spaces on a weekend would be the peak parking demands of the proposed hotel due to the factors described above. Since the project is proposed to provide 118 spaces for the hotel, a surplus of 14 parking spaces would be provided for the hotel during the peak demand timeframe.

If there are any questions regarding this evaluation, please do not hesitate to call me at (949) 244-2436.

Respectfully submitted,
Trames Solutions Inc.

Scott Sato, P.E.

Vice President
Attachment A – Site Plan
Attachment B - Shared Parking Summary
3606
Trames 0365-0001

ATTACHMENT A

SITE PLAN
3607
3608
3609
Trames 0365-0001

ATTACHMENT B

ULI PEAK PARKING DEMAND SUMMARY
3610
Copyright © 2020 All rights reserved. The Urban Land Institute, International Council of Shopping Centers, and National Parking Association.

Project: Extended Stay
Description: 128 room hotel
Quantity Unit 8 AM March 8 AM March
Hotel-Business keys 1.00 59% 100% 0.59 key 1.00 69% 100% 0.69 key 80% 90% - 80% 90% - Hotel-Leisure 128 keys 1.00 59% 100% 0.59 key 1.00 69% 100% 0.69 key 90% 100% 68 90% 100% 79 Hotel Employees 128 keys 0.15 100% 100% 0.15 key 0.15 100% 100% 0.15 key 100% 100% 19 100% 100% 19 Restaurant/Lounge 331 sf GLA 6.67 63% 90% 3.78 ksf GLA 7.67 54% 30% 1.24 ksf GLA 30% 95% - 30% 95% - Meeting/Banquet (0 to 20 sq ft/key) 1,824 sf GLA 21.38 68% 60% 8.72 ksf GLA 14.25 68% 70% 6.78 ksf GLA 30% 100% 5 30% 100% 4 Meeting/Banquet (20 to 50 sq ft/key) sf GLA 0.00 68% 60% 0.00 ksf GLA 0.00 68% 70% 0.00 ksf GLA 30% 100% - 30% 100% - Meeting/Banquet (50 to 100 sq ft/key) sf GLA 0.00 68% 60% 0.00 ksf GLA 0.00 68% 70% 0.00 ksf GLA 30% 100% - 30% 100% - Convention (100 to 200 sq ft/key) sf GLA 0.00 68% 60% 0.00 ksf GLA 5.50 68% 70% 2.62 ksf GLA 50% 90% - 50% 90% - Convention (> 200 sq ft/key) sf GLA 5.50 68% 60% 2.24 ksf GLA 5.50 68% 70% 2.62 ksf GLA 50% 90% - 50% 90% - Restaurant/Meeting Employees 2,155 sf GLA 1.39 100% 100% 1.39 ksf GLA 1.41 100% 100% 1.41 ksf GLA 60% 100% 2 60% 100% 2 73 83
21 21
- -
94 104
Additional Land Uses
Total
Reserved
Employee/Resident
Customer/Visitor Customer
Employee/Resident
Total
Reserved
Office
Base
Ratio
Unit For
Ratio
Estimated
Parking
Demand
Retail
NonCaptive
Ratio
Project
Ratio
NonCaptive
Ratio
Project
Ratio
Driving
Adj
Entertainment and Institutions
Hotel and Residential
Food and Beverage
Base
Ratio
Driving
Adj
Peak Hr
Adj
Weekend
Shared Parking Demand Summary
Peak Month: MARCH -- Peak Period: 8 AM, WEEKEND
Weekday Weekend Weekday
Project Data Land Use Peak Mo
Adj Unit For
Ratio
Estimated
Parking
Demand
Peak Hr
Adj
Peak Mo
Adj
3611
September 2018 Program (Un-Nested Residential)
0 20
40 60
80 100
120
140
Parking Stalls
Hour
Peak Month Daily Parking Demand by Hour (Weekday)
Hotel Total Supply
3612
September 2018 Program (Un-Nested Residential)
0 20
40 60
80 100
120
140
Parking Stalls
Hour
Peak Month Daily Parking Demand by Hour (Weekend)
Hotel Total Supply
3613
RESOLUTION NO. PC22-011

A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF

ONTARIO, CALIFORNIA, RECOMMENDING APPROVAL TO CITY
COUNCIL FOR FILE NO. PCUP21-009, A CONDITIONAL USE PERMIT TO ESTABLISH AND OPERATE A LIMITED-SERVICE HOTEL ON 1.83 ACRES OF LAND LOCATED AT 5060 EAST FOURTH STREET, WITHIN

THE FREEWAY COMMERCIAL LAND USE DISTRICT OF THE

EXCHANGE SPECIFIC PLAN, AND MAKING FINDINGS IN SUPPORT
THEREOF—APN: 0238-012-30.

WHEREAS, ROGER BARBOSA ("Applicant") has filed an Application for the approval of a Conditional Use Permit, File No. PCUP21-009, as described in the title of this Resolution (hereinafter referred to as "Application" or "Project"); and WHEREAS, the Application applies to 1.83 acres of land located at 5060 East Fourth Street, within the Freeway Commercial land use district of The Exchange Specific Plan, and the site is presently vacant; and
WHEREAS, the property to the north of the Project site is within the Freeway Commercial land use district of The Exchange Specific Plan and is developed with a multitenant retail building. The property to the east is within the Open Space zoning district and is developed with Southern California Edison transmission lines. The property to the south is within the Freeway Commercial land use district of The Exchange Specific Plan and is currently vacant. The property to the west is Interstate 15; and WHEREAS, on June 4, 2021, the Applicant submitted File No. PCUP21-009, a Conditional Use Permit application requesting approval to establish and operate a limitedservice hotel land use on the Project site; and WHEREAS, the proposed Conditional Use Permit was submitted for concurrent processing with File No. PDEV21-021, a Development Plan to construct a 4-story, 128- room Extended Stay Hotel on the Project site; and
WHEREAS, in 2003, the City approved The Exchange Specific Plan, a 23.60-acre master plan for the project area. The Exchange Specific Plan is composed of two land use districts, including the Freeway Commercial land use district, which comprises the northerly 12.03 acres of the Specific Plan, and the Industrial Park land use district, which comprises the southerly 11.57 acres of the Specific Plan; and WHEREAS, the City’s Development Code requires that all new hotels must be reviewed under concurrently filed Conditional Use Permit and Development Plan applications. The purpose of the Conditional Use Permit application and review is to ensure that the proposed use will be operated in a manner consistent with all local regulations, and to ensure the use will not be detrimental to the public health, safety, or 3614
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welfare, or materially injurious to uses, properties or improvements in the vicinity. More specifically, in the case of hotels, the Conditional Use Permit is required to establish the project’s market feasibility and ensure on-going compliance with the minimum amenity package required by the Development Code; and
WHEREAS, in fulfillment of the requirements of Development Code Section

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WHEREAS, the Project is located within the Airport Influence Area of Ontario International Airport, which encompasses lands within parts of San Bernardino, Riverside, and Los Angeles Counties, and is subject to, and must be consistent with, the policies and criteria set forth in the Ontario International Airport Land Use Compatibility Plan (“ALUCP”), which applies only to jurisdictions within San Bernardino County, and addresses the noise, safety, airspace protection, and overflight impacts of current and future airport activity; and
WHEREAS, City of Ontario Development Code Division 2.03 (Public Hearings) prescribes the manner in which public notification shall be provided and hearing procedures to be followed, and all such notifications and procedures have been completed; and
WHEREAS, on February 7, 2022, the Development Advisory Board of the City of Ontario conducted a hearing to consider the Project, and concluded said hearing on that date, voting to issue Decision No. DAB22-007, recommending that the Planning Commission recommend the City Council approve the Application; and WHEREAS, on February 22, 2022, the Planning Commission of the City of Ontario conducted a hearing to consider the Project, and concluded said hearing on that date; and
WHEREAS, all legal prerequisites to the adoption of this Resolution have occurred.

NOW, THEREFORE, IT IS HEREBY FOUND, DETERMINED, AND RESOLVED by the Planning Commission of the City of Ontario, as follows:

SECTION 1: Environmental Determination and Findings. As the recommending authority for the Project, the Planning Commission has reviewed and considered the information contained in the administrative record for the Project. Based upon the facts and information contained in the administrative record, including all written and oral evidence presented to the Planning Commission, the Planning Commission finds as follows:
(1) The administrative record has been completed in compliance with CEQA, the State CEQA Guidelines, and the City of Ontario Local CEQA Guidelines; and (2) The Project is categorically exempt from environmental review pursuant to Section 15332 (Class 32, In-Fill Development Projects) of the CEQA Guidelines, which consists of: (a) the Project is consistent with the applicable general plan designation and all applicable general plan policies, as well as the applicable zoning designation and regulations; (b) the proposed development occurs within city limits, on a project site of no more than five acres, and is substantially surrounded by urban uses; (c) the Project site 3616
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has no value as habitat for endangered, rare, or threatened species; (d) approval of the Project will not result in any significant effects relating to traffic, noise, air quality, or water quality; and (e) the Project site is adequately served by all required utilities and public services; and
(3) The application of the categorical exemption is not barred by one of the exceptions set forth in CEQA Guidelines Section 15300.2; and (4) The determination of CEQA exemption reflects the independent judgment of the Planning Commission.

SECTION 2: Housing Element Compliance. Pursuant to the requirements of California Government Code Chapter 3, Article 10.6, commencing with Section 65580, as the recommending authority for the Project, the Planning Commission finds that based on the facts and information contained in the Application and supporting documentation, at the time of Project implementation, the project is consistent with the Housing Element of the Policy Plan (General Plan) component of The Ontario Plan, as the project site is not one of the properties in the Available Land Inventory contained in Table A-3 (Available Land by Planning Area) of the Housing Element Technical Report Appendix.

SECTION 3: Ontario International Airport Land Use Compatibility Plan (“ALUCP”) Compliance. The California State Aeronautics Act (Public Utilities Code Section 21670 et seq.) requires that an Airport Land Use Compatibility Plan be prepared for all public use airports in the State; and requires that local land use plans and individual development proposals must be consistent with the policies set forth in the adopted Airport Land Use Compatibility Plan. On April 19, 2011, the City Council of the City of Ontario approved and adopted the ALUCP, establishing the Airport Influence Area for Ontario International Airport (hereinafter referred to as “ONT”), which encompasses lands within parts of San Bernardino, Riverside, and Los Angeles Counties, and limits future land uses and development within the Airport Influence Area, as they relate to noise, safety, airspace protection, and overflight impacts of current and future airport activity. As the recommending authority for the Project, the Planning Commission has reviewed and considered the facts and information contained in the Application and supporting documentation against the ALUCP compatibility factors, including [1] Safety Criteria (ALUCP Table 2-2) and Safety Zones (ALUCP Map 2-2), [2] Noise Criteria (ALUCP Table 2-3) and Noise Impact Zones (ALUCP Map 2-3), [3] Airspace protection Zones (ALUCP Map 2-4), and [4] Overflight Notification Zones (ALUCP Map 2-5). As a result, the PLANNING COMMISSION, therefore, finds and determines that the Project, when implemented in conjunction with the conditions of approval, will be consistent with the policies and criteria set forth within the ALUCP.

SECTION 4: Concluding Facts and Reasons. Based upon the substantial evidence presented to the Planning Commission during the above-referenced hearing, 3617
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and upon the specific findings set forth in Sections 1 through 3, above, the Planning Commission hereby concludes as follows:
(1) The scale and intensity of the proposed land use would be consistent with the scale and intensity of land uses intended for the particular zoning or land use district. The proposed location of the Conditional Use Permit is in accord with the objectives and purposes of the City of Ontario Development Code and The Exchange Specific Plan, and the scale and intensity of land uses intended for the Freeway Commercial land use district in which the use is proposed to be located. Furthermore, the proposed 128-room, hotel land use will be established and operated consistent with the objectives and purposes, and development standards and guidelines of the Freeway Commercial land use designation of The Exchange Specific Plan; and (2) The proposed use at the proposed location, and the manner in which it will be operated and maintained, is consistent with the goals, policies, plans and exhibits of the Vision, Policy Plan (General Plan), and City Council Priorities components of The Ontario Plan. The proposed 128-room hotel land use will be located within the Planned Commercial land use district of the Policy Plan Land Use Map, and the Freeway Commercial land use district of The Exchange Specific Plan. The development standards, and the conditions of approval under which the proposed land use will be established, operated, and maintained, are consistent with the goals, policies, plans, and exhibits of the Vision, City Council Priorities, and Policy Plan (General Plan) components of The Ontario Plan; and
(3) The proposed use at the proposed location, and the manner in which it will be operated and maintained, is consistent with the objectives and requirements of the Development Code and any applicable specific plan or planned unit development. The proposed 128-room hotel land use is located with the Freeway Commercial land use district of The Exchange Specific Plan and has been reviewed and conditioned to ensure the establishment, operation and maintenance of the proposed land use consistent with all applicable objectives, purposes, standards, and guidelines of the Development Code and The Exchange Specific Plan; and
(4) The establishment, maintenance, and operation of the proposed use at the proposed location would not be detrimental or injurious to property and improvements within the vicinity, nor would it be detrimental to the health, safety, or general welfare of persons residing or working in the surrounding neighborhood. The Development Advisory Board has required certain safeguards, and impose certain conditions of approval, which have been established to ensure that: [i] the purposes of The Exchange Specific Plan are maintained; [ii] the project will not endanger the public health, safety or general welfare; [iii] the project will not result in any significant environmental impacts; and [iv] the project will be in harmony with the surrounding area in which it is proposed to be located.
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SECTION 5: Planning Commission Action. Based upon the findings and conclusions set forth in Sections 1 through 4, above, the Planning Commission hereby RECOMMENDS THE CITY COUNCIL APPROVE the herein described Application, subject to each and every condition set forth in the Department reports attached hereto as “Attachment A,” and incorporated herein by this reference.

SECTION 6: Indemnification. The Applicant shall agree to defend, indemnify and hold harmless, the City of Ontario or its agents, officers, and employees from any claim, action or proceeding against the City of Ontario or its agents, officers or employees to attack, set aside, void, or annul this approval. The City of Ontario shall promptly notify the applicant of any such claim, action, or proceeding, and the City of Ontario shall cooperate fully in the defense.

SECTION 7: Custodian of Records. The documents and materials that constitute the record of proceedings on which these findings have been based are located at the City of Ontario City Hall, 303 East “B” Street, Ontario, California 91764. The custodian for these records is the City Clerk of the City of Ontario.

SECTION 8: Certification to Adoption. The Secretary shall certify to the adoption of the Resolution.
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ATTACHMENT A:

File No. PCUP21-009
Departmental Conditions of Approval
(Departmental conditions of approval to follow this page) 3622

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303 East B Street, Ontario, California 91764 Phone: 909.395.2036 / Fax: 909.395.2420

LAND DEVELOPMENT DIVISION

CONDITIONS OF APPROVAL
Date Prepared: 1/24/2022
File No: PCUP21-009
Related Files: N/A
Project Description: A Conditional Use Permit (File No. PCUP21-009) to establish and operate a limited-service hotel use on 1.83 acres of land located at 5060 East Fourth Street, within the Freeway Commercial land use district of The Exchange Specific Plan. (APN: 0238-012-30); submitted by Roger Barbosa.

Prepared By: Luis E. Batres, Senior Planner
Phone: 909.395.2431 (direct)
Email: [email protected]
The Planning Department, Land Development Section, conditions of approval applicable to the above-described Project, are listed below. The Project shall comply with each condition of approval listed below:

1.0 Standard Conditions of Approval. The project shall comply with the Standard Conditions for New Development, adopted by City Council Resolution No. 2017-027 on April 18, 2017. A copy of the Standard Conditions for New Development may be obtained from (https://www.ontarioca.gov/Planning/Applications) or from the Planning Department/City Clerk/Records Management Department.

2.0 Special Conditions of Approval. In addition to the Standard Conditions for New Development identified in condition no. 1.0, above, the project shall comply with the following special conditions of approval:

2.1 Time Limits. Conditional Use Permit approval shall become null and void one year following the effective date of application approval, unless a building permit is issued and construction is commenced, and diligently pursued toward completion, or a time extension has been approved by the Planning Director, except that a Conditional Use Permit approved in conjunction with a Development Plan shall have the same time limits as said Development Plan.

This condition does not supersede any individual time limits specified herein, or any other departmental conditions of approval applicable to the Project, for the performance of specific conditions or improvements.

2.2 General Requirements. The Project shall comply with the following general requirements:
(a) All construction documentation shall be coordinated for consistency, including, but not limited to, architectural, structural, mechanical, electrical, plumbing, landscape 3623
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and irrigation, grading, utility and street improvement plans. All such plans shall be consistent with the approved entitlement plans on file with the Planning Department. (b) The project site shall be developed in conformance with the approved plans on file with the City. Any variation from the approved plans must be reviewed and approved by the Planning Department prior to building permit issuance. (c) The herein-listed conditions of approval from all City departments shall be included in the construction plan set for project, which shall be maintained on site during project construction.
(d) The project shall provide a total of 118 parking spaces. In the future, if it is determined by the Planning Department as a result of complaints received that additional parking is necessary, the Applicant shall enter into a reciprocal parking agreement with adjacent developments to provide the additional parking (additional 10 parking spaces). 3624
RESOLUTION NO. ________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA, APPROVING FILE NO. PCUP21-009, A CONDITIONAL USE PERMIT TO ESTABLISH AND OPERATE A 128-ROOM LIMITEDSERVICE HOTEL ON 1.83 ACRES OF LAND LOCATED AT 5060 EAST

FOURTH STREET, WITHIN THE FREEWAY COMMERCIAL LAND USE

DISTRICT OF THE EXCHANGE SPECIFIC PLAN AND MAKING
FINDINGS IN SUPPORT THEREOF - APN: 0238-012-30.

WHEREAS, ROGER BARBOSA ("Applicant") has filed an Application for the approval of File No. PCUP21-009, a Conditional Use Permit as described in the title of this Resolution (hereinafter referred to as "Application" or "Project"); and WHEREAS, the Application applies to 1.83 acres of land located at 5060 East Fourth Street, within the Freeway Commercial land use district of The Exchange Specific Plan, and the site is presently vacant; and
WHEREAS, the property to the north of the Project site is within the Freeway Commercial land use district of The Exchange Specific Plan and is developed with a multitenant retail building. The property to the east is within the Open Space zoning district and is developed with Southern California Edison transmission lines. The property to the south is within the Freeway Commercial land use district of The Exchange Specific Plan and is currently vacant. The property to the west is Interstate 15; and WHEREAS, on June 4, 2021, the Applicant submitted File No. PCUP21-009, a Conditional Use Permit application requesting approval to establish and operate a limitedservice hotel on the Project site; and WHEREAS, the proposed Conditional Use Permit was submitted for concurrent processing with File No. PDEV21-021, a Development Plan to construct a four-story, 128-room Extended Stay Hotel on the Project site; and
WHEREAS, in 2003, the City approved The Exchange Specific Plan, a 23.60 acre master plan for the project area. The Exchange Specific Plan is composed of two land use districts, including the Freeway Commercial, which comprises the northerly 12.03 acres of the Specific Plan, and the Industrial Park land use district, which comprises the southerly 11.57 acres of the Specific Plan; and
WHEREAS, the City’s Development Code requires that all new hotels must be reviewed under concurrently filed Conditional Use Permit and Development Plan applications. The purpose of the Conditional Use Permit application and review is to ensure that the proposed use will be operated in a manner consistent with all local regulations, and to ensure the use will not be detrimental to the public health, safety, or welfare, or materially injurious to uses, properties or improvements in the vicinity. More specifically, in the case of hotels, the Conditional Use Permit is required to establish the project’s market feasibility and ensure on-going compliance with the minimum amenity package required by the Development Code; and
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WHEREAS, Development Code Section 5.03.250.D (Minimum Amenity Package) stipulates that no Conditional Use Permit shall be approved for a hotel, motel, residence inn, or other similar traveler accommodation, unless certain specific amenities are provided and permanently maintained, as described below:
 Each guestroom shall include voicemail, wired or wireless internet access, desk with chair, hairdryer, retractable magnifying (10X) and lighted makeup mirror, iron and ironing board, high definition television, and alarm clock or wake-up service.

Compliance with these requirements will be verified by the Planning Department during Building Department plan check and at time of final building inspection; and  For limited-service hotels, meeting space equal to 15 square feet per guestroom shall be provided, requiring that Project provide a minimum of 1,920 square feet of meeting/gathering area. The Project exceeds the minimum requirement, incorporating a total of 2,250 square feet of available meeting/gathering area; and  Both active and passive leisure amenities are required. At a minimum, the Project must provide a swimming pool, whirlpool/spa or furnished cabana, and fitness room. The Project exceeds the minimum requirement, providing a pool and spa, poolside cabana, outdoor seating areas, and a fitness room; and  A guest courtesy lounge for the serving of light meals and snacks is required to be provided in conjunction with limited-service hotels. The Project has provided a 331-square-foot café/snack room for hotel guests, meeting the minimum requirement; and
WHEREAS, in fulfillment of the requirements of Development Code Section

5.03.250.C (Market Feasibility Report Required), the Applicant has submitted a Market Feasibility Study, which demonstrates that the local market can support the development of a new hotel. The Study, prepared by Veritas Development Advisors (dated October 21, 2021), includes analysis and market research related to the proposed project. The Study found that the local market can support a limited-service hotel on the Project site. The study’s conclusions are based primarily upon the growth in the Inland Empire, the area’s proximity to the Los Angeles area, the Ontario Convention Center, the Ontario International Airport, California Speedway in Fontana, and the Project’s proximity to the Ontario Mills Mall. The report includes an analysis of other similar hotels in the area, long-term viability, and overall demand due to new businesses and activities in and around the City; and
WHEREAS, the Application is a project pursuant to the California Environmental Quality Act, commencing with Public Resources Code Section 21000 (hereinafter referred to as "CEQA"); and
WHEREAS, the Project is exempt from CEQA pursuant to a categorical exemption (listed in CEQA Guidelines Article 19, commencing with Section 15300) and the application of that categorical exemption is not barred by one of the exceptions set forth in CEQA Guidelines Section 15300.2; and
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WHEREAS, Ontario Development Code Table 2.02-1 (Review Matrix) grants the City Council the responsibility and authority to review and act on the subject Application; and
WHEREAS, the Project has been reviewed for consistency with the Housing Element of the Policy Plan component of The Ontario Plan, as State Housing Element law (as prescribed in Government Code Sections 65580 through 65589.8) requires that development projects must be consistent with the Housing Element, if upon consideration of all its aspects, it is found to further the purposes, principals, goals, and policies of the Housing Element; and
WHEREAS, the Project is located within the Airport Influence Area of Ontario International Airport, which encompasses lands within parts of San Bernardino, Riverside, and Los Angeles Counties, and is subject to, and must be consistent with, the policies and criteria set forth in the Ontario International Airport Land Use Compatibility Plan (“ALUCP”), which applies only to jurisdictions within San Bernardino County, and addresses the noise, safety, airspace protection, and overflight impacts of current and future airport activity; and
WHEREAS, City of Ontario Development Code Division 2.03 (Public Hearings) prescribes the manner in which public notification shall be provided and hearing procedures to be followed, and all such notifications and procedures have been completed; and
WHEREAS, on February 7, 2022, the Development Advisory Board of the City of Ontario conducted a hearing to consider the Project, and concluded said hearing on that date, voting to issue Decision No. DAB22-007, recommending that the Planning Commission recommend the City Council approve the Application; and WHEREAS, on February 22, 2022, the Planning Commission of the City of Ontario conducted a hearing to consider the Project and concluded said hearing on that date, voting unanimously (7-0) to issue Resolution No. PC22-01 recommending that the City Council approve the Application; and
WHEREAS, on April 19, 2022, the City Council of the City of Ontario conducted a hearing to consider the Project, and concluded said hearing on that date; and WHEREAS, all legal prerequisites to the adoption of this Resolution have occurred.

NOW, THEREFORE, IT IS HEREBY FOUND, DETERMINED, AND RESOLVED by the City Council of the City of Ontario, as follows:

SECTION 1. Environmental Determination and Findings. As the decision-making body for the Project, the City Council has reviewed and considered the information contained in the administrative record for the Project. Based upon the facts and information contained in the administrative record, including all written and oral evidence presented to the City Council, the City Council finds as follows:
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(1) The administrative record has been completed in compliance with CEQA, the State CEQA Guidelines, and the City of Ontario Local CEQA Guidelines; and (2) The Project is categorically exempt from environmental review pursuant to Section 15332 (Class 32, In-Fill Development Projects) of the CEQA Guidelines, which consists of: (a) the Project is consistent with the applicable general plan designation and all applicable general plan policies, as well as the applicable zoning designation and regulations; (b) the proposed development occurs within city limits, on a project site of no more than five acres, and is substantially surrounded by urban uses; (c) the Project site has no value as habitat for endangered, rare, or threatened species; (d) approval of the Project will not result in any significant effects relating to traffic, noise, air quality, or water quality; and (e) the Project site is adequately served by all required utilities and public services; and
(3) The application of the categorical exemption is not barred by one of the exceptions set forth in CEQA Guidelines Section 15300.2; and (4) The determination of CEQA exemption reflects the independent judgment of the City Council.

SECTION 2. Housing Element Compliance. Pursuant to the requirements of California Government Code Chapter 3, Article 10.6, commencing with Section 65580, as the decision-making body for the Project, the City Council finds that based on the facts and information contained in the Application and supporting documentation, at the time of Project implementation, the project is consistent with the Housing Element of the Policy Plan (General Plan) component of The Ontario Plan, as the project site is not one of the properties in the Available Land Inventory contained in Table A-3 (Available Land by Planning Area) of the Housing Element Technical Report Appendix.

SECTION 3. Ontario International Airport Land Use Compatibility Plan (“ALUCP”) Compliance. The California State Aeronautics Act (Public Utilities Code Section 21670 et seq.) requires that an Airport Land Use Compatibility Plan be prepared for all public use airports in the State; and requires that local land use plans and individual development proposals must be consistent with the policies set forth in the adopted Airport Land Use Compatibility Plan. On April 19, 2011, the City Council of the City of Ontario approved and adopted the Ontario International Airport Land use Compatibility Plan (“ALUCP”), establishing the Airport Influence Area for Ontario International Airport (“ONT”), which encompasses lands within parts of San Bernardino, Riverside, and Los Angeles Counties, and limits future land uses and development within the Airport Influence Area, as they relate to noise, safety, airspace protection, and overflight impacts of current and future airport activity. As the decision-making body for the Project, the City Council has reviewed and considered the facts and information contained in the Application and supporting documentation against the ALUCP compatibility factors, including [1] Safety Criteria (ALUCP Table 2-2) and Safety Zones (ALUCP Map 2-2), [2] Noise Criteria (ALUCP Table 2-3) and Noise Impact Zones (ALUCP Map 2-3), [3] Airspace protection Zones (ALUCP Map 2-4), and [4] Overflight Notification Zones (ALUCP Map 2-5). As a result, the City Council, therefore, finds and determines that the Project, when implemented in conjunction with the conditions of approval, will be consistent with the policies and criteria set forth within the ALUCP.
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SECTION 4. Concluding Facts and Reasons. Based upon the substantial evidence presented to the City Council during the above-referenced hearing, and upon the specific findings set forth in Sections 1 through 3, above, the City Council hereby concludes as follows:
(1) The scale and intensity of the proposed land use would be consistent with the scale and intensity of land uses intended for the particular zoning or land use district. The proposed location of the Conditional Use Permit is in accord with the objectives and purposes of the City of Ontario Development Code and The Exchange Specific Plan, and the scale and intensity of land uses intended for the Freeway Commercial land use district in which the use is proposed to be located. Furthermore, the proposed 128-room extended stay hotel will be established and operated consistent with the objectives and purposes, and development standards and guidelines of the Freeway Commercial land use designation of The Exchange Specific Plan, which meets the Specific Plans goal of providing a balance of employment, shopping and service opportunities, reducing the need for long commutes; and (2) The proposed use at the proposed location, and the manner in which it will be operated and maintained, is consistent with the goals, policies, plans and exhibits of the Vision, Policy Plan (General Plan), and City Council Priorities components of The Ontario Plan. The proposed 128-room extended stay hotel will be located within the Planned Commercial land use district of the Policy Plan Land Use Map, and the Freeway Commercial land use district of The Exchange Specific Plan. A hotel land use within the Freeway Commercial land use is conditionally permitted with the approval of a Conditional Use Permit. Furthermore, the development standards, and the conditions of approval under which the proposed land use will be established, operated, and maintained, are consistent with the goals, policies, plans, and exhibits of the Vision, City Council Priorities, and Policy Plan (General Plan) components of The Ontario Plan; and (3) The proposed use at the proposed location, and the manner in which it will be operated and maintained, is consistent with the objectives and requirements of the Development Code and any applicable specific plan or planned unit development. The proposed 128-room extended stay hotel is located with the Freeway Commercial land use district of The Exchange Specific Plan and has been reviewed and conditioned to ensure the establishment, operation and maintenance of the proposed land use is consistent with all applicable objectives, purposes, standards, and guidelines of the Development Code and The Exchange Specific Plan; and (4) The establishment, maintenance, and operation of the proposed use at the proposed location would not be detrimental or injurious to property and improvements within the vicinity, nor would it be detrimental to the health, safety, or general welfare of persons residing or working in the surrounding neighborhood.

The establishment, maintenance, and operation of the proposed 128-room extended stay hotel at the proposed location would not be detrimental or injurious to property and improvements within the vicinity, nor would it be detrimental to the health, safety, or general welfare of persons residing or working in the surrounding neighborhood. The project site is located within the Freeway Commercial land use designation of the Exchange Specific Plan 3629
and a hotel use is a conditionally permitted use. In addition, certain safeguards are required and certain conditions of approval have been imposed, which have been established to ensure that: (i) the purposes of The Exchange Specific Plan are maintained; (ii) the project will not endanger the public health, safety or general welfare; (iii) the project will not result in any significant environmental impacts; and (iv) the project will be in harmony with the surrounding area in which it is proposed to be located.

SECTION 5. City Council Action. Based upon the findings and conclusions set forth in Sections 1 through 4, above, the City Council hereby APPROVES the herein described Conditional Use Permit subject to each and every condition set forth in the Department reports, attached hereto as Exhibit “A” and incorporated herein by this reference.

SECTION 6. Indemnification. The Applicant shall agree to defend, indemnify, and hold harmless, the City of Ontario or its agents, officers, and employees from any claim, action or proceeding against the City of Ontario or its agents, officers or employees to attack, set aside, void, or annul this approval. The City of Ontario shall promptly notify the applicant of any such claim, action, or proceeding, and the City of Ontario shall cooperate fully in the defense.

SECTION 7. Custodian of Records. The documents and materials that constitute the record of proceedings on which these findings have been based are located at the City of Ontario City Hall, 303 East “B” Street, Ontario, California 91764. The custodian for these records is the City Clerk of the City of Ontario.

The City Clerk of the City of Ontario shall certify as to the adoption of this Resolution.

PASSED, APPROVED, AND ADOPTED this 19th day of April 2022. _____________________________________
PAUL S. LEON, MAYOR
ATTEST:
_________________________________

SHEILA MAUTZ, CITY CLERK
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APPROVED AS TO FORM:
_______________________________

BEST BEST & KRIEGER LLP

CITY ATTORNEY
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STATE OF CALIFORNIA )

COUNTY OF SAN BERNARDINO )

CITY OF ONTARIO )
I, SHEILA MAUTZ, City Clerk of the City of Ontario, DO HEREBY CERTIFY that foregoing Resolution No. 2022- was duly passed and adopted by the City Council of the City of Ontario at their regular meeting held April 19, 2022, by the following roll call vote, to wit:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:
_________________________________

SHEILA MAUTZ, CITY CLERK
(SEAL)
The foregoing is the original of Resolution No. 2022- duly passed and adopted by the Ontario City Council at their regular meeting held April 19, 2022. _________________________________

SHEILA MAUTZ, CITY CLERK
(SEAL)
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ATTACHMENT A:

Conditions of Approval
(Document follows this page)
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Department: Investments & Revenue Resources
Prepared By: Cruz Torres
Staff Member Presenting:

Armen Harkalyan, Executive Director of Finance
Reviewed By: Cecilia House, Armen Harkalyan
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 21
SUBJECT: A RESOLUTION AUTHORIZING THE ISSUANCE OF CITY OF ONTARIO COMMUNITY FACILITIES DISTRICT NO. 54 (ESPERANZA FACILITIES) SPECIAL TAX BONDS, SERIES 2022, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $8 MILLION AND

RELATED MATTERS

CITY OF ONTARIO
Agenda Report
April 19, 2022
SECTION:

ADMINISTRATIVE

REPORTS/DISCUSSION/ACTION
RECOMMENDATION: That the City Council consider and adopt a Resolution authorizing the issuance of City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022.

A. Authorize the issuance of special tax bonds for public improvements required to facilitate the development of the Esperanza Facilities project and the Ontario Ranch development; B. Approve the forms of the Indenture, the Bond Purchase Agreement, the Continuing Disclosure Agreement, and the Preliminary Official Statement; C. Authorize a negotiated sale of the special tax bonds to Stifel, Nicolaus & Company, Incorporated (the "Underwriter") in accordance with the terms of the Bond Purchase Agreement; and
D. Authorize the execution of the Indenture, the Bond Purchase Agreement, the Continuing Disclosure Agreement, a deemed final certification in connection with the Preliminary Official Statement, a final Official Statement and other documents in connection with the issuance of the bonds by the City Manager or the other specified authorized officers.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Operate in a Businesslike Manner
Focus Resources in Ontario's Commercial and Residential Neighborhoods Ensure the Development of a Well Planned, Balanced, and Self-Sustaining Community in Ontario Ranch
FISCAL IMPACT: The use of Mello-Roos financing for public facilities in the residential development of the Esperanza Facilities project in the Ontario Ranch development is estimated to generate approximately $8 million, based on current market interest rates, which will be used to help fund a portion of the public infrastructure improvements that will serve the project. The Resolution 3642
authorizing the issuance of City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022, and related matters, limits the principal amount of the bonds to $8 million. The City currently expects the bonds to be sold no later than May, 2022; however, such schedule could change based on market volatility and market conditions. Since Mello-Roos bonds are not a direct obligation of the City and are paid from special taxes levied on each taxable parcel in the applicable community facilities district, there is no General Fund impact from the issuance of Mello-Roos bonds. Annual approval by the City Council will be required to process the special tax levies necessary to fund the ongoing debt service obligations of Ontario Community Facilities District No. 54 (Esperanza Facilities).

BACKGROUND & ANALYSIS: The Mello-Roos Community Facilities Act of 1982 provides local government, with the requisite consent and approval from the property owners, the authority to establish community facilities districts for the purpose of levying special taxes to fund governmental services and to finance various kinds of public infrastructure facilities. Under the Mello-Roos Act, the initial steps in the formation of a community facilities district to finance public improvements are adopting a resolution declaring the City's intention to establish a community facilities district and levy special taxes, and a resolution to issue bonds. On April 7, 2020 the City Council, in accordance with the Mello-Roos Act, took the initial steps in the formation of the District with the adoption of Resolution No. 2020-034, declaring the City's intention to establish the District and to authorize the levy of special taxes. On May 19, 2020, the City Council adopted Resolution No. 2020-052 forming the District, and Resolution No. 2020-053 deeming it necessary for the District to incur bonded indebtedness. Based on a successful property owner election held on May 19, 2020, the City Council adopted Ordinance No. 3162 on June 2, 2020, authorizing the levy of special taxes within the District to finance public improvements related to the Esperanza Facilities project. The public improvements to be financed by the District are as follows:

Street and Traffic Circulation System Facilities
The Esperanza Facilities project addresses the residential development of approximately 26 gross acres located east of Mill Creek Avenue, west of Hamner Avenue, south of Chatham Street, north of Eucalyptus Avenue. At build out, the development is projected to include 226 units; comprised of 100 detached units and 126 attached units.

The proposed Resolution references several bond documents and other matters related to the proposed issuance of bonds by City of Ontario Community Facilities District No. 54 (Esperanza Facilities). The documents are listed below and are on file with the Records Management Department:

Indenture;
Bond Purchase Agreement;
Continuing Disclosure Agreement; and
Preliminary Official Statement
3643
RESOLUTION NO. ________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO,

CALIFORNIA, AUTHORIZING THE ISSUANCE OF CITY OF ONTARIO COMMUNITY FACILITIES DISTRICT NO. 54 (ESPERANZA FACILITIES) SPECIAL TAX BONDS, SERIES 2022, IN AN AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $8,000,000, AUTHORIZING THE

EXECUTION AND DELIVERY OF AN INDENTURE, A BOND PURCHASE

AGREEMENT AND A CONTINUING DISCLOSURE AGREEMENT,

AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN

CONNECTION THEREWITH AND AUTHORIZING THE EXECUTION OF

NECESSARY DOCUMENTS AND CERTIFICATES AND RELATED
ACTIONS.

WHEREAS, the City Council (the “City Council”) of the City of Ontario (the “City”) has formed City of Ontario Community Facilities District No. 54 (Esperanza Facilities) (the “Community Facilities District”) under the provisions of the Mello-Roos Community Facilities Act of 1982 (the “Act”); and
WHEREAS, the Community Facilities District is authorized under the Act to levy special taxes (the “Special Taxes”) to pay for the costs of certain public facilities (the “Facilities”) and to issue bonds payable from the Special Taxes; and WHEREAS, in order to provide funds to finance certain of the Facilities, the Community Facilities District proposes to issue its City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022 (the “Series 2022 Bonds”), in the aggregate principal amount of not to exceed $8,000,000; and WHEREAS, in order to provide for the authentication and delivery of the Series 2022 Bonds, to establish and declare the terms and conditions upon which the Series 2022 Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Community Facilities District proposes to enter into an Indenture with Zions Bancorporation, National Association, as trustee (the “Trustee”) (such Indenture, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Indenture”); and
WHEREAS, Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), has presented the Community Facilities District with a proposal, in the form of a Bond Purchase Agreement, to purchase the Series 2022 Bonds from the Community Facilities District (such Bond Purchase Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Purchase Agreement”); and
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”) requires that, in order to be able to purchase or sell the Series 2022 Bonds, the underwriter thereof must have reasonably determined that the Community Facilities District has, or one or more appropriate obligated persons have, undertaken in a written 3644
agreement or contract for the benefit of the holders of the Series 2022 Bonds to provide disclosure of certain financial information and certain listed events on an ongoing basis; and WHEREAS, in order to cause such requirement to be satisfied, the Community Facilities District desires to enter into a Continuing Disclosure Agreement with the Trustee (such Continuing Disclosure Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Continuing Disclosure Agreement”); and WHEREAS, a form of the Preliminary Official Statement to be distributed in connection with the public offering of the Series 2022 Bonds has been prepared (such Preliminary Official Statement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Preliminary Official Statement”); and
WHEREAS, there have been prepared and submitted to this meeting forms of:
(a) the Indenture;
(b) the Purchase Agreement;
(c) the Continuing Disclosure Agreement; and
(d) the Preliminary Official Statement;
WHEREAS, Kitty Siino & Associates, Inc. has prepared and provided to the Community Facilities District an appraisal report, dated March 23, 2022 (the “Appraisal”), providing an opinion of value of the property in the Community Facilities District, which has been submitted to this meeting; and
WHEREAS, Section 5852.1 of the California Government Code requires that the City Council obtain from an underwriter, financial advisor or private lender and disclose, in a meeting open to the public, prior to authorization of the issuance of the Series 2022 Bonds, good faith estimates of (a) the true interest cost of the Series 2022 Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Series 2022 Bonds, (c) the amount of proceeds of the Series 2022 Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Series 2022 Bonds, and (d) the sum total of all debt service payments on the Series 2022 Bonds calculated to the final maturity of the Series 2022 Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Series 2022 Bonds; and WHEREAS, in compliance with Section 5852.1 of the California Government Code, the City Council has obtained from CSG Advisors Incorporated, as the Community Facilities District’s Municipal Advisor, the required good faith estimates, which the Municipal Advisor has prepared in consultation with the Underwriter, and such estimates are disclosed and set forth in Exhibit A attached hereto; and WHEREAS, the Community Facilities District desires to proceed to issue and sell the Series 2022 Bonds and to authorize the execution of such documents and the performance of such acts as may be necessary or desirable to effect the offering, sale and issuance of the Series 2022 Bonds; and
3645
WHEREAS, the City Council is the legislative body of the Community Facilities District.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ontario as follows:

SECTION 1. The foregoing recitals are true and correct.

SECTION 2. Subject to the provisions of Section 3 hereof, the issuance of the Series 2022 Bonds, in an aggregate principal amount of not to exceed $8,000,000, on the terms and conditions set forth in, and subject to the limitations specified in, the Indenture, be and the same is hereby authorized and approved. The Series 2022 Bonds shall be dated, shall bear interest at the rates, shall mature on the dates, shall be subject to call and redemption, shall be issued in the form and shall be as otherwise provided in the Indenture, as the same shall be completed as provided in this Resolution.

SECTION 3. The Indenture, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved.

Each of the Mayor of the City, and such other member of the City Council as the Mayor may designate, the City Manager of the City, the Assistant City Manager of the City, the Executive Director of Finance of the City, the Deputy City Treasurer of the City, and such other officer or employee of the City as the City Manager may designate (the “Authorized Officers”) is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Indenture in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Indenture by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not authorize an aggregate principal amount of Series 2022 Bonds in excess of $8,000,000, shall not result in a final maturity date of the Series 2022 Bonds later than September 1, 2053, and shall not result in a true interest cost for the Series 2022 Bonds in excess of 6.50%.

SECTION 4. The Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Purchase Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate underwriter’s discount (not including any original issue discount) from the principal amount of the Series 2022 Bonds in excess of 2.00% of the aggregate principal amount of the Series 2022 Bonds. The City Council hereby finds and determines that the sale of the Series 2022 Bonds at negotiated sale as contemplated by the Purchase Agreement will result in a lower overall cost.
3646
SECTION 5. The Continuing Disclosure Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Continuing Disclosure Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Continuing Disclosure Agreement by such Authorized Officer.

SECTION 6. The Preliminary Official Statement, in substantially the form presented to this meeting and made a part hereof as though set forth in full herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, be and the same is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Series 2022 Bonds is hereby authorized and approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, to certify on behalf of the Community Facilities District that the Preliminary Official Statement is deemed final as of its date, within the meaning of Rule 15c2-12 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2-12).

SECTION 7. The preparation and delivery of a final Official Statement (the “Official Statement”), and its use in connection with the offering and sale of the Series 2022 Bonds, be and the same is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement, with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute the final Official Statement and any amendment or supplement thereto.

SECTION 8. Based upon the property values within the Community Facilities District reported in the Appraisal and the value-to-lien information set forth in the Preliminary Official Statement, the City Council, for purposes of Section 53345.8 of the Act, hereby finds and determines that the value of the real property that would be subject to the Special Tax to pay debt service on the Series 2022 Bonds will be at least three times the principal amount of the Series 2022 Bonds to be sold and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act on property within the Community Facilities District or a special assessment levied on property within the Community Facilities District.

SECTION 9. If and to the extent that any feature or aspect of the Series 2022 Bond structure, the rate and method of apportionment of the Special Taxes, the method of financing the Facilities, the appraisal, the absorption study or other components of the Series 2022 Bond issue approved and authorized hereby is inconsistent or in conflict with any requirement, standard, measure or procedure set forth in the City’s Mello-Roos Community Facilities Act of 1982 Local Goals and Policies, such requirement, standard, measure or procedure is, to the extent necessary to eliminate such inconsistency or conflict, hereby 3647
waived, and the City Council hereby finds and determines that benefit inures to the ultimate property owners, the Community Facilities District and the City as a result of such waiver.

SECTION 10. The City Council hereby approves the execution and delivery of all agreements, documents, certificates and instruments referred to herein with electronic signatures as may be permitted under the California Uniform Electronic Transactions Act and digital signatures as may be permitted under Section 16.5 of the California Government Code using DocuSign.

SECTION 11. All actions heretofore taken by the officers, employees and agents of the City with respect to the issuance and sale of the Series 2022 Bonds, or in connection with or related to any of the agreements or documents referred to herein, are hereby approved, confirmed and ratified.

SECTION 12. The officers, employees and agents of the City are hereby authorized and directed to take all actions and do all things which they, or any of them, may deem necessary or desirable to accomplish the purposes of this Resolution and not inconsistent with the provisions hereof.

SECTION 13. This Resolution shall take effect immediately upon its adoption.

The City Clerk of the City of Ontario shall certify as to the adoption of this Resolution.

PASSED, APPROVED, AND ADOPTED this 19th day of April 2022. _____________________________________
PAUL S. LEON, MAYOR
ATTEST:
____________________________________

SHEILA MAUTZ, CITY CLERK
APPROVED AS TO FORM:
____________________________________

BEST BEST & KRIEGER, LLP

CITY ATTORNEY
3648

STATE OF CALIFORNIA )

COUNTY OF SAN BERNARDINO )

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:
____________________________________

SHEILA MAUTZ, CITY CLERK
(SEAL)
3649

EXHIBIT A

GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Series 2022 Bonds in accordance with Section 5852.1 of the California Government Code. Such good faith estimates have been provided to the Community Facilities District by CSG Advisors Incorporated, the Community Facilities District’s municipal advisor (the “Municipal Advisor”), which the Municipal Advisor has prepared in consultation with Stifel, Nicolaus & Company, Incorporated, the Underwriter.

Principal Amount. The Municipal Advisor has informed the Community Facilities District that, based on the Community Facilities District’s financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Series 2022 Bonds to be issued and sold is $6,110,000 (the “Estimated Principal Amount”), which does not include approximately $369,000 of net premium estimated to be generated based on current market conditions. Net premium is generated when, on a net aggregate basis for a single issuance of bonds, the price paid for such bonds is higher than the face value of such bonds. Such Estimated Principal Amount and such estimated net premium amount would produce approximately $6,479,000 of gross proceeds.

True Interest Cost of the Series 2022 Bonds. The Municipal Advisor has informed the Community Facilities District that, assuming that the Estimated Principal Amount of the Series 2022 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Series 2022 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Series 2022 Bonds, is 4.22%.

Finance Charge of the Series 2022 Bonds. The Municipal Advisor has informed the Community Facilities District that, assuming that the Estimated Principal Amount of the Series 2022 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Series 2022 Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Series 2022 Bonds), is $341,000.

Amount of Proceeds to be Received. The Municipal Advisor has informed the Community Facilities District that, assuming that the Estimated Principal Amount of the Series 2022 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the Community Facilities District for sale of the Series 2022 Bonds, less the finance charge of the Series 2022 Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the Series 2022 Bonds, is $5,756,000.

Total Payment Amount. The Municipal Advisor has informed the Community Facilities District that, assuming that the Estimated Principal Amount of the Series 2022 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum 3650
total of all payments the Community Facilities District will make to pay debt service on the Series 2022 Bonds, plus the finance charge for the Series 2022 Bonds, as described above, not paid with the proceeds of the Series 2022 Bonds, calculated to the final maturity of the Series 2022 Bonds, is $11,456,000, which excludes any reserves or capitalized interest funded or paid with proceeds of the Series 2022 Bonds (which may offset such total payment amount).

The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates. The actual principal amount of the Series 2022 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Series 2022 Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Series 2022 Bonds issued and sold being different from the Estimated Principal Amount, (c) the actual amortization of the Series 2022 Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Series 2022 Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the Community Facilities District’s financing plan, or a combination of such factors. The actual date of sale of the Series 2022 Bonds and the actual principal amount of Series 2022 Bonds issued and sold will be determined by the Community Facilities District based on the timing of the need for proceeds of the Series 2022 Bonds and other factors. The actual interest rates borne by the Series 2022 Bonds will depend on market interest rates at the time of sale thereof.

The actual amortization of the Series 2022 Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the Community Facilities District. 3651
4165-0024-8116.1

INDENTURE
by and between

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
and

ZIONS BANCORPORATION, NATIONAL ASSOCIATION,

AS TRUSTEE
Dated as of ___________ 1, 2022
Relating to
City of Ontario
Community Facilities District No. 54
(Esperanza Facilities)
Special Tax Bonds
3652

TABLE OF CONTENTS
Page
i
4165-0024-8116.1

ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; EQUAL SECURITY
Section 1.01. Definitions................................................................................................................ 3 Section 1.02. Rules of Construction ............................................................................................ 10 Section 1.03. Equal Security........................................................................................................ 11

ARTICLE II

THE BONDS
Section 2.01. Authorization of Bonds; Special Obligations ........................................................ 12 Section 2.02. Terms of Series 2022 Bonds.................................................................................. 12 Section 2.03. Execution of Bonds................................................................................................ 13 Section 2.04. Authentication of Bonds ........................................................................................ 13 Section 2.05. Registration Books................................................................................................. 14 Section 2.06. Transfer and Exchange of Bonds........................................................................... 14 Section 2.07. Book-Entry System................................................................................................ 14 Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen.......................................................... 16 Section 2.09. Temporary Bonds................................................................................................... 17

ARTICLE III
ISSUANCE OF SERIES 2022 BONDS; APPLICATION OF PROCEEDS; ADDITIONAL BONDS
Section 3.01. Issuance of Series 2022 Bonds .............................................................................. 18 Section 3.02. Application of Proceeds......................................................................................... 18 Section 3.03. Costs of Issuance Fund .......................................................................................... 18 Section 3.04. Improvement Fund................................................................................................. 19 Section 3.05. Conditions for the Issuance of Additional Bonds.................................................. 22 Section 3.06. Procedure for the Issuance of Additional Bonds ................................................... 23 Section 3.07. Additional Bonds ................................................................................................... 24

ARTICLE IV

REDEMPTION OF BONDS
Section 4.01. Redemption of Series 2022 Bonds......................................................................... 25 3653

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4165-0024-8116.1
Section 4.02. Notice of Redemption............................................................................................ 27 Section 4.03. Selection of Bonds for Redemption....................................................................... 27 Section 4.04. Partial Redemption of Bonds................................................................................. 28 Section 4.05. Effect of Notice of Redemption............................................................................. 28

ARTICLE V
SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS
Section 5.01. Pledge..................................................................................................................... 29 Section 5.02. Special Tax Fund ................................................................................................... 29 Section 5.03. Bond Fund.............................................................................................................. 30 Section 5.04. Reserve Fund ......................................................................................................... 31 Section 5.05. Redemption Fund................................................................................................... 32 Section 5.06. Rebate Fund ........................................................................................................... 32 Section 5.07. Administrative Expense Fund................................................................................ 32 Section 5.08. Investment of Moneys............................................................................................ 33

ARTICLE VI

COVENANTS
Section 6.01. Collection of Special Tax Revenues...................................................................... 35 Section 6.02. Foreclosure............................................................................................................. 35 Section 6.03. Compliance with Act ............................................................................................. 36 Section 6.04. Punctual Payment................................................................................................... 36 Section 6.05. Extension of Payment of Bonds............................................................................. 36 Section 6.06. Against Encumbrances; Defense of Pledge ........................................................... 36 Section 6.07. Tax Covenants ....................................................................................................... 36 Section 6.08. Non-Cash Payments of Special Taxes ................................................................... 37 Section 6.09. Reduction in Special Taxes.................................................................................... 37 Section 6.10. Continuing Disclosure ........................................................................................... 37 Section 6.11. Accounting Records............................................................................................... 37 Section 6.12. State Reporting....................................................................................................... 37 Section 6.13. Annual Reports to the California Debt and Investment Advisory Commission ................................................................................................... 38 3654

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4165-0024-8116.1
Section 6.14. Further Assurances................................................................................................. 38

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default ................................................................................................... 39 Section 7.02. Foreclosure............................................................................................................. 39 Section 7.03. Other Remedies...................................................................................................... 39 Section 7.04. Remedies Not Exclusive........................................................................................ 40 Section 7.05. Application of Net Special Tax Revenues After Default....................................... 40 Section 7.06. Power of Trustee to Enforce .................................................................................. 41 Section 7.07. Owners’ Direction of Proceedings......................................................................... 41 Section 7.08. Limitation on Owners’ Right to Sue...................................................................... 41 Section 7.09. Absolute Obligation............................................................................................... 41 Section 7.10. Termination of Proceedings................................................................................... 42 Section 7.11. No Waiver of Default............................................................................................. 42

ARTICLE VIII

TRUSTEE
Section 8.01. Duties and Liabilities of Trustee............................................................................ 43 Section 8.02. Qualifications; Removal and Resignation; Successors.......................................... 43 Section 8.03. Liability of Trustee ................................................................................................ 44 Section 8.04. Right to Rely on Documents and Opinions ........................................................... 46 Section 8.05. Accounting Records and Financial Statements...................................................... 47 Section 8.06. Preservation and Inspection of Documents............................................................ 47 Section 8.07. Compensation and Indemnification ....................................................................... 47

ARTICLE IX

SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures........................................................................................ 49 Section 9.02. Effect of Supplemental Indenture .......................................................................... 50 Section 9.03. Endorsement of Bonds; Preparation of New Bonds .............................................. 50 Section 9.04. Amendment of Particular Bonds............................................................................ 50 3655

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4165-0024-8116.1

ARTICLE X

DEFEASANCE
Section 10.01. Discharge of Indenture......................................................................................... 51 Section 10.02. Bonds Deemed To Have Been Paid..................................................................... 51 Section 10.03. Unclaimed Moneys .............................................................................................. 52

ARTICLE XI

MISCELLANEOUS
Section 11.01. Successor Is Deemed Included in All References to Predecessor ....................... 53 Section 11.02. Limitation of Rights............................................................................................. 53 Section 11.03. Destruction of Bonds ........................................................................................... 53 Section 11.04. Severability of Invalid Provisions........................................................................ 53 Section 11.05. Notices ................................................................................................................. 53 Section 11.06. Evidence of Rights of Owners ............................................................................. 54 Section 11.07. Disqualified Bonds............................................................................................... 55 Section 11.08. Money Held for Particular Bonds........................................................................ 55 Section 11.09. Funds and Accounts............................................................................................. 55 Section 11.10. Business Days ...................................................................................................... 56 Section 11.11. Waiver of Personal Liability................................................................................ 56 Section 11.12. Conflict with Act.................................................................................................. 56 Section 11.13. Conclusive Evidence of Regularity ..................................................................... 56 Section 11.14. Governing Laws................................................................................................... 56 Section 11.15. Electronic Signature............................................................................................. 56 Section 11.16. Execution in Several Counterparts....................................................................... 56 EXHIBIT A PERMITTED INVESTMENTS ......................................................................... A-1 EXHIBIT B FORM OF SERIES 2022 BOND........................................................................ B-1 3656
4165-0024-8116.1

INDENTURE
THIS INDENTURE (this “Indenture”), dated as of ___________ 1, 2022, is by and between CITY OF ONTARIO COMMUNITY FACILITIES DISTRICT NO. 54 (Esperanza FACILITIES), a community facilities district organized and existing under the laws of the State of California (the “Community Facilities District”), and ZIONS BANCORPORATION, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the City Council of the City of Ontario has formed the Community Facilities District under the provisions of the Mello-Roos Community Facilities Act of 1982 (the “Act”); WHEREAS, the Community Facilities District is authorized under the Act to levy special taxes (the “Special Taxes”) to pay for the costs of certain public facilities (the “Facilities”) and to issue bonds payable from the Special Taxes;
WHEREAS, in order to provide funds to finance a portion of the Facilities, the Community Facilities District desires to provide for the issuance of its City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022 (the “Series 2022 Bonds”), in the aggregate principal amount of not to exceed $__________; WHEREAS, the Community Facilities District desires to provide for the issuance of additional bonds (the “Additional Bonds”) for refunding purposes payable from the Special Taxes on a parity with the Series 2022 Bonds, provided that said issuance is in accordance with the Act and this Indenture (the Series 2022 Bonds and any such Additional Bonds being collectively referred to as the “Bonds”);
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Community Facilities District has authorized the execution and delivery of this Indenture; and WHEREAS, the Community Facilities District has determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the Community Facilities District, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Community Facilities District, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Indenture has been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of, premium, if any, and the interest on all Bonds at any time issued and outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the owners thereof, and for other valuable consideration, the receipt whereof is hereby 3657
2 4165-0024-8116.1
acknowledged, the Community Facilities District does hereby covenant and agree with the Trustee, for the benefit of the respective owners from time to time of the Bonds, as follows:
3658
3 4165-0024-8116.1

ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; EQUAL SECURITY
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Indenture and of any certificate, opinion or other document herein or therein mentioned, have the meanings herein specified. “Act” means the Mello-Roos Community Facilities Act of 1982, constituting Sections 53311 et seq. of the California Government Code.
“Additional Bonds” means Bonds other than Series 2022 Bonds issued hereunder in accordance with the provisions of Sections 3.05 and 3.06. “Administrative Expense Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.07.
“Administrative Expenses” means any reasonably necessary or appropriate expenses incurred in the administration of the Community Facilities District and the Bonds, including (a) the administrative and legal costs of levying and collecting the Special Taxes (including costs incurred in connection with any appeals relating thereto and litigation expenses incurred in connection with the collection of such Special Taxes), (b) the fees, costs and indemnifications due the Trustee, (c) the costs incurred with on-going disclosure in connection with the Bonds, (d) the costs incurred in connection with the disclosure of the Special Taxes to property owners and potential purchasers of property, (e) the amounts required to calculate and pay arbitrage rebate payments to the federal government, and (f) an allocable share of the salaries of the City staff providing services on behalf of the Community Facilities District directly related to the foregoing and an allocable share of City general administrative overhead related thereto.
“Annual Debt Service” means, for each Bond Year, the sum of (a) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled (including by reason of mandatory sinking fund redemptions), and (b) the principal of the Outstanding Bonds due in such Bond Year (including by reason of mandatory sinking fund redemptions).
“Authorized Denominations” means (a) with respect to the Series 2022 Bonds, $5,000 and any integral multiple thereof, and (b) with respect to each Series of Additional Bonds, the authorized denominations for such Series of Additional Bonds specified in the Supplemental Indenture pursuant to which such Additional Bonds are issued. “Authorized Representative” means, with respect to the Community Facilities District, the Mayor of the City, the City Manager of the City, the Assistant City Manager of the City, the Executive Director of Finance of the City and the Deputy City Treasurer of the City, and any other Person designated as an Authorized Representative of the Community Facilities District in a Written Certificate of the Community Facilities District filed with the Trustee. “Average Annual Debt Service” means the average of the Annual Debt Service for all Bond Years, including the Bond Year in which the calculation is made. 3659
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“Beneficial Owners” means those Persons for which the Participants have caused the Depository to hold Book-Entry Bonds.
“Bond Counsel” means a firm of nationally recognized bond counsel selected by the Community Facilities District.
“Bond Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.03.
“Bond Year” means the twelve-month period beginning on September 2 in each year and extending to the next succeeding September 1, both dates inclusive, except that the first Bond Year shall begin on the Closing Date and end on September 1, 2022. “Bonds” means the City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds issued hereunder, and includes the Series 2022 Bonds and any Additional Bonds.
“Book-Entry Bonds” means the Bonds of a Series registered in the name of the Depository, or the Nominee thereof, as the registered owner thereof pursuant to the terms and provisions of Section 2.07.
“Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday in the State, (b) a day on which banking institutions in the State, or in any state in which the Office of the Trustee is located, are required or authorized by law (including executive order) to close, or (c) a day on which the New York Stock Exchange is closed.
“Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to a Series of Book-Entry Bonds.
“Circulation System Facility” has the meaning ascribed to the term “Circulation System Segment” in the NMC Acquisition Agreement.
“City” means the City of Ontario, a general law city organized and existing under and by virtue of the laws of the State of California, and any successor thereto. “City Council” means the City Council of the City.
“City Facilities Account” means the account by that name within the Improvement Fund established and held by the Trustee pursuant to Section 3.04. “Closing Date” means the date upon which the Series 2022 Bonds are delivered to the Original Purchaser, being ____________, 2022.
“Code” means the Internal Revenue Code of 1986.
“Community Facilities District” means City of Ontario Community Facilities District No. 54 (Esperanza Facilities), a community facilities district organized and existing under the laws of the State, and any successor thereto.
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“Continuing Disclosure Agreement” means the Continuing Disclosure Agreement, dated as of ___________ 1, 2022, by and between the Community Facilities District and Zions Bancorporation, National Association, as Trustee, as originally executed and as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof. “Corresponding Bond Year” means, with respect to any Fiscal Year, the Bond Year that commences in such Fiscal Year.
“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the Community Facilities District relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to printing expenses, rating agency fees, filing and recording fees, initial fees, expenses and charges of the Trustee and its counsel, including the Trustee’s first annual administrative fee, fees, charges and disbursements of attorneys, municipal advisors, accounting firms, consultants and other professionals, fees and charges for preparation, execution and safekeeping of the Bonds, any premium for a bond insurance policy securing payment of the Bonds, any premium for a reserve facility and any other cost, charge or fee in connection with the original issuance of the Bonds.
“Costs of Issuance Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.03.
“County” means the County of San Bernardino, a county and political subdivision of the State organized and existing under the laws of the State, and any successor thereto. “County Assessor” means the assessor of the County.
“County Auditor” means the auditor of the County.
“Defeasance Securities” means (a) non-callable direct obligations of the United States of America (“United States Treasury Obligations”), and (b) evidences of ownership of proportionate interests in future interest and principal payments on United States Treasury Obligations held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying United States Treasury Obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated.
“Depository” means DTC, and its successors as securities depository for any Series of Book-Entry Bonds, including any such successor appointed pursuant to Section 2.07. “DTC” means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York.
“Electronic Means” means e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder.
“Event of Default” means any event specified in Section 7.01. 3661
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“Facilities” means the facilities authorized to be financed by the Community Facilities District, as more particularly described in the Resolution of Formation. “Fiscal Year” means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period hereafter selected and designated as the official fiscal year period of the Community Facilities District. “GDC/CDG Esperanza” means GDC/CDG Esperanza PA 4 Venture, L.P., a limited partnership organized and existing under the laws of the State of Delaware, and any successor thereto.
“GDC/CDG Esperanza Acquisition Account” means the account by that name within the Improvement Fund established and held by the Trustee pursuant to Section 3.04. “GDC/CDG Esperanza Acquisition Agreement” means the Acquisition and Funding Agreement, dated as of May 1, 2020, by and between the City and GDC/CDG Esperanza, as originally executed and as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“GDC/CDG Esperanza Facilities” has the meaning ascribed to the term “Facilities” in the GDC/CDG Esperanza Acquisition Agreement.
“GDC/CDG Esperanza Payment Request” has the meaning ascribed to the term “Payment Request” in the GDC/CDG Esperanza Acquisition Agreement. “Improvement Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.04.
“Indenture” means this Indenture, dated as of ___________ 1, 2022, by and between the Community Facilities District and Zions Bancorporation, National Association, as Trustee, as originally executed and as it may be modified or amended from time to time by any Supplemental Indenture.
“Independent Consultant” means any consultant or firm of such consultants selected by the Community Facilities District and who, or each of whom (a) is generally recognized to be qualified in the financial consulting field, (b) is in fact independent and not under the control of the Community Facilities District or the City, (c) does not have any substantial interest, direct or indirect, with or in the Community Facilities District or the City, with or in any owner of real property in the Community Facilities District, or in any real property in the Community Facilities District, and (d) is not connected with the Community Facilities District or the City as an officer or employee thereof, but who may be regularly retained to make reports to the Community Facilities District or the City.
“Interest Account” means the account by that name within the Bond Fund established and held by the Trustee pursuant to Section 5.03.
“Interest Payment Dates” means March 1 and September 1 of each year, commencing September 1, 2022.
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“Letter of Representations” means the Letter of Representations from the Community Facilities District to the Depository, in which the Community Facilities District makes certain representations with respect to issues of its securities for deposit by the Depository. “Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond Year, including the Bond Year in which the calculation is made. “Moody’s” means Moody’s Investors Service, Inc., a corporation duly organized and existing under the laws of the State of Delaware, and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Community Facilities District. “Net Special Tax Revenues” means Special Tax Revenues, less amounts required to pay Administrative Expenses.
“NMC Acquisition Account” means the account by that name within the Improvement Fund established and held by the Trustee pursuant to Section 3.04. “NMC Acquisition Agreement” means the Acquisition and Funding Agreement, dated as of July 21, 2015, by and between the City and NMC Builders, as originally executed and as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“NMC Builders” means NMC Builders, LLC, a limited liability company organized and existing under the laws of the State of California, and any successor thereto. “NMC Facilities” has the meaning ascribed to the term “Facilities” in the NMC Acquisition Agreement.
“NMC Payment Request” has the meaning ascribed to the term “Payment Request” in the NMC Acquisition Agreement.
“Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.07.
“Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Community Facilities District by the Trustee in writing; provided, however, that with respect to presentation of Bonds for payment or for registration of transfer and exchange, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business shall be conducted, which other office or agency shall be specified to the Community Facilities District by the Trustee in writing. “Ordinance” means any ordinance adopted by the City Council levying the Special Taxes. “Original Purchaser” means the original purchaser of the Series 2022 Bonds from the Community Facilities District.
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“Outstanding” means, when used as of any particular time with reference to Bonds, subject to the provisions of Section 11.07, all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this Indenture except (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation, (b) Bonds with respect to which all liability of the Community Facilities District shall have been discharged in accordance with Section 10.01, and (c) Bonds in lieu of which other Bonds shall have been authenticated and delivered by the Trustee, or that have been paid without surrender thereof, pursuant to Section 2.08. “Owner” means, with respect to a Bond, the Person in whose name such Bond is registered on the Registration Books.
“Participant” means any entity which is recognized as a participant by DTC in the bookentry system of maintaining records with respect to Book-Entry Bonds. “Participating Underwriter” has the meaning ascribed to such term in the Continuing Disclosure Agreement.
“Permitted Investments” is defined in Exhibit A hereto. “Person” means an individual, corporation, limited liability company, firm, association, partnership, trust or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof.
“Principal Account” means the account by that name within the Bond Fund established and held by the Trustee pursuant to Section 5.03.
“Rate and Method” means the rate and method of apportionment of the Special Taxes approved by the qualified electors of the Community Facilities District. “Rebate Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.06.
“Rebate Requirement” has the meaning ascribed to such term in the Tax Certificate. “Record Date” means, with respect to interest payable on any Interest Payment Date, the 15th calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day.
“Redemption Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.05.
“Redemption Price” means the aggregate amount of principal of and premium, if any, on the Bonds upon the redemption thereof pursuant hereto.
“Registration Books” means the records maintained by the Trustee for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.05. 3664
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“Reserve Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.04.
“Reserve Requirement” means, as of the date of any calculation, the least of (a) “10% of the proceeds of the issue,” within the meaning of Section 148 of the Code, with respect to the Bonds (excluding from such calculation Bonds refunded with the proceeds of subsequently issued Bonds), (b) Maximum Annual Debt Service, and (c) 125% of Average Annual Debt Service. “Resolution of Formation” means Resolution No. 2020-052, adopted by the City Council on May 19, 2020, as originally adopted and as it may be amended, supplemented or otherwise modified from time to time.
“S&P” means S&P Global Ratings, a business unit of Standard and Poor’s Financial Services, LLC, and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Community Facilities District.
“Series” means the initial series of Bonds executed, authenticated and delivered on the date of initial issuance of the Bonds and identified pursuant to this Indenture as the Series 2022 Bonds, and any Additional Bonds issued pursuant to a Supplemental Indenture and identified as a separate Series of Bonds.
“Series 2022 Bonds” means the City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022, issued hereunder. “Services” has the meaning ascribed to such term in the Rate and Method. “Special Tax Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.02.
“Special Tax Revenues” means the proceeds of the Special Taxes received by or on behalf of the Community Facilities District, other than proceeds of Special Taxes levied to pay the costs of Services received by or on behalf of the Community Facilities District, including any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, which shall be limited to the amount of said lien and interest and penalties thereon.
“Special Taxes” means the special taxes approved by the qualified electors to be levied within the Community Facilities District pursuant to the Act and the Rate and Method. “State” means the State of California.
“Supplemental Indenture” means any supplemental indenture modifying or amending this Indenture, but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
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“Tax Certificate” means the Tax Certificate executed by the Community Facilities District at the time of issuance of the Series 2022 Bonds relating to the requirements of Section 148 of the Code, as originally executed and as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“Trustee” means Zions Bancorporation, National Association, a national banking association organized and existing under the laws of the United States of America, or any successor thereto as Trustee hereunder substituted in its place as provided herein. “Verification Report” means, with respect to the deemed payment of Bonds pursuant to clause (ii) of Section 10.02(a), a report of a nationally recognized certified public accountant, or firm of such accountants, verifying that the Defeasance Securities and cash, if any, deposited in connection with such deemed payment satisfy the requirements of clause (ii) of Section 10.02(a). “Written Certificate” and “Written Request” of the Community Facilities District mean, respectively, a written certificate or written request signed in the name of the Community Facilities District by an Authorized Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.

Section 1.02. Rules of Construction. (a) The terms defined herein expressed in the singular shall, unless the context otherwise indicates, include the plural and vice versa. (b) The use herein of the masculine, feminine or neuter gender is for convenience only and shall be deemed and construed to include correlative words of the masculine, feminine or neuter gender, as appropriate.
(c) References herein to a document shall include all amendments, supplements or other modifications to such document, and any replacements, substitutions or novation of, that document.
(d) Any term defined herein by reference to another document shall continue to have the meaning ascribed thereto whether or not such other document remains in effect. (e) The use herein of the words “including” and “includes,” and words of similar import, shall be deemed to be followed by the phrase “without limitation.” (f) Headings of Articles and Sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof.
(g) All references herein to designated “Articles,” “Sections,” “Exhibits,” “subsections,” “paragraphs,” “clauses,” and other subdivisions are to the designated Articles, Sections, Exhibits, subsections, paragraphs, clauses, and other subdivisions of this Indenture. (h) The words “hereof” (except when preceded by a specific Section or Article reference) “herein,” “hereby,” “hereunder,” “hereinabove,” “hereinafter,” and other equivalent 3666
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words and phrases used herein refer to this Indenture and not solely to the particular portion hereof in which any such word is used.

Section 1.03. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the Community Facilities District, the Trustee and the Owners from time to time of all Bonds authorized, executed, issued and delivered hereunder and then Outstanding to secure the full and final payment of the principal of, premium, if any, and interest on all Bonds which may from time to time be authorized, executed, issued and delivered hereunder, subject to the agreements, conditions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Community Facilities District shall be for the equal and proportionate benefit, protection and security of all Owners of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. 3667
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ARTICLE II

THE BONDS
Section 2.01. Authorization of Bonds; Special Obligations. (a) The Community Facilities District hereby authorizes the issuance of the Bonds under and subject to the terms of this Indenture, the Act and other applicable laws of the State. The Bonds may consist of one or more Series of varying denominations, dates, maturities, interest rates and other provisions, subject to the provisions and conditions contained herein. The Bonds shall be designated generally as the “City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds,” each Series thereof to bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Bonds. (b) The Bonds shall be special, limited obligations of the Community Facilities District, payable, as provided herein, solely from Net Special Tax Revenues and the other assets pledged therefor hereunder. Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth herein), the City or the State, or any political subdivision thereof, is pledged to the payment of the Bonds.

Section 2.02. Terms of Series 2022 Bonds. (a) The Series 2022 Bonds shall be designated “City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022.” The aggregate principal amount of Series 2022 Bonds that may be issued and Outstanding under this Indenture shall not exceed $__________, except as may be otherwise provided in Section 2.08.
(b) The Series 2022 Bonds shall be issued in fully registered form without coupons in Authorized Denominations, so long as no Series 2022 Bond shall have more than one maturity date. The Series 2022 Bonds shall be dated as of the Closing Date, shall be in the aggregate principal amount of $__________, shall mature on September 1 of each year, shall bear interest at the rates per annum (calculated on the basis of a 360-day year comprised of twelve 30-day months) and shall be in the principal amounts as follows:

Maturity Date
(September 1)
Principal
Amount
Interest
Rate
$ %
(c) Interest on the Series 2022 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Series 2022 Bond is authenticated 3668
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on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interest thereon shall be payable from such Interest Payment Date, (ii) a Series 2022 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any Series 2022 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has previously been paid or duly provided for. Interest shall be paid in lawful money of the United States on each Interest Payment Date. Interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Series 2022 Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. Notwithstanding the foregoing, interest on any Series 2022 Bond that is not punctually paid or duly provided for on any Interest Payment Date shall, if and to the extent that amounts subsequently become available therefor, be paid on a payment date established by the Trustee to the Person in whose name the ownership of such Series 2022 Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which shall be given to such Owner not less than ten days prior to such special record date.
(d) The principal of the Series 2022 Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee.
(e) The Series 2022 Bonds shall be subject to redemption as provided in Article IV. (f) The Series 2022 Bonds shall be in substantially the form set forth in Exhibit B hereto, with appropriate or necessary insertions, omissions and variations as permitted or required hereby.

Section 2.03. Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Community Facilities District with the manual or facsimile signature of the Mayor of the City attested by the manual or facsimile signature of the City Clerk of the City. The Bonds shall then be delivered to the Trustee for authentication by it. In case any of such officers who shall have signed or attested any of the Bonds shall cease to be such officers before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee, or issued by the Community Facilities District, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Community Facilities District as though those who signed and attested the same had continued to be such officers, and also any Bonds may be signed and attested on behalf of the Community Facilities District by such Persons as at the actual date of execution of such Bonds shall be the proper officers of the City although at the nominal date of such Bonds any such Person shall not have been such officer of the City.

Section 2.04. Authentication of Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form as that set forth in Exhibit B hereto for the Series 2022 Bonds, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be 3669
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conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture.

Section 2.05. Registration Books. The Trustee shall keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which shall be open to inspection during regular business hours and upon reasonable notice by the Community Facilities District. Upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds.

Section 2.06. Transfer and Exchange of Bonds. (a) Any Bond may be transferred upon the Registration Books by the Person in whose name it is registered, in person or by such Person’s duly authorized attorney, upon surrender of such Bond to the Trustee for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be so surrendered for transfer, the Community Facilities District shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds of the same Series and maturity in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. (b) The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same Series and maturity of other Authorized Denominations.

The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. (c) The Trustee shall not be obligated to make any transfer or exchange of Bonds of a Series pursuant to this Section during the period established by the Trustee for the selection of Bonds of such Series for redemption, or with respect to any Bonds of such Series selected for redemption.

Section 2.07. Book-Entry System. (a) Prior to the issuance of a Series of Bonds, the Community Facilities District may provide that such Series of Bonds shall initially be issued as Book-Entry Bonds, and in such event, the Bonds of such Series for each maturity date shall be in the form of a separate single fully registered Bond (which may be typewritten). Upon initial issuance, the ownership of each such Bond of such Series shall be registered in the Registration Books in the name of the Nominee, as nominee of the Depository. The Series 2022 Bonds shall initially be issued as Book-Entry Bonds.

Payment of principal of, and interest and premium, if any, on, any Book-Entry Bond registered in the name of the Nominee shall be made on the applicable payment date by wire transfer of New York clearing house or equivalent next day funds or by wire transfer of same day funds to the account of the Nominee. Such payments shall be made to the Nominee at the address which is, on the Record Date, shown for the Nominee in the Registration Books. (b) With respect to Book-Entry Bonds, the Community Facilities District and the Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of which such a Participant holds an interest in such Book-Entry Bonds. Without limiting the 3670
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immediately preceding sentence, the Community Facilities District and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in Book-Entry Bonds, (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the Registration Books, of any notice with respect to Book-Entry Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in Book-Entry Bonds of a maturity to be redeemed in the event such Book-Entry Bonds are redeemed in part, (iv) the payment to any Participant or any other Person, other than an Owner as shown in the Registration Books, of any amount with respect to principal of, or premium, if any, or interest on Book-Entry Bonds, or (v) any consent given or other action taken by the Depository as Owner. (c) The Community Facilities District and the Trustee may treat and consider the Person in whose name each Book-Entry Bond is registered in the Registration Books as the absolute Owner of such Book-Entry Bond for the purpose of payment of principal of, and premium, if any, and interest on such Bond, for the purpose of selecting any Bonds, or portions thereof, to be redeemed, for the purpose of giving notices of redemption and other matters with respect to such Book-Entry Bond, for the purpose of registering transfers with respect to such Book-Entry Bond, for the purpose of obtaining any consent or other action to be taken by Owners and for all other purposes whatsoever, and the Community Facilities District and the Trustee shall not be affected by any notice to the contrary. (d) In the event of a redemption of all or a portion of a Book-Entry Bond, the Depository, in its discretion (i) may request the Trustee to authenticate and deliver a new BookEntry Bond, or (ii) if the Depository is the sole Owner of such Book-Entry Bond, shall make an appropriate notation on the Book-Entry Bond indicating the date and amounts of the reduction in principal thereof resulting from such redemption, except in the case of final payment, in which case such Book-Entry Bond must be presented to the Trustee prior to payment. (e) The Trustee shall pay all principal of, and premium, if any, and interest on the Book-Entry Bonds only to or “upon the order of” (as that term is used in the Uniform Commercial Code as adopted in the State) the respective Owner, as shown in the Registration Books, or such Owner’s respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the obligations with respect to payment of principal of, and premium, if any, and interest on the Book-Entry Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the Registration Books, shall receive an authenticated Book-Entry Bond. Upon delivery by the Depository to the Owners, the Community Facilities District and the Trustee of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such nominee of the Depository.
(f) In order to qualify the Book-Entry Bonds for the Depository’s book-entry system, the Community Facilities District shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Community Facilities District or the Trustee any obligation whatsoever with respect to Persons having interests in such Book-Entry Bonds other than the Owners, as shown on the Registration Books. Such Letter of Representations may provide the time, form, content 3671
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and manner of transmission, of notices to the Depository. In addition to the execution and delivery of a Letter of Representations by the Community Facilities District, the Community Facilities District and the Trustee shall take such other actions, not inconsistent with this Indenture, as are reasonably necessary to qualify Book-Entry Bonds for the Depository’s bookentry program. (g) In the event the Community Facilities District determines that it is in the best interests of the Beneficial Owners that they be able to obtain certificated Bonds and that such Bonds should therefore be made available and notifies the Depository and the Trustee of such determination, the Depository will notify the Participants of the availability through the Depository of certificated Bonds. In such event, the Trustee shall transfer and exchange certificated Bonds as requested by the Depository and any other Owners in appropriate amounts.

In the event (i) the Depository determines not to continue to act as securities depository for Book-Entry Bonds, or (ii) the Depository shall no longer so act and gives notice to the Trustee of such determination, then the Community Facilities District shall discontinue the Book-Entry system with the Depository. If the Community Facilities District determines to replace the Depository with another qualified securities depository, the Community Facilities District shall prepare or direct the preparation of a new single, separate, fully registered Bond of the appropriate Series for each maturity date of such Book-Entry Bonds, registered in the name of such successor or substitute qualified securities depository or its nominee. If the Community Facilities District fails to identify another qualified securities depository to replace the Depository, then the Book-Entry Bonds shall no longer be restricted to being registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging such Bonds shall designate, in accordance with the provisions of Sections 2.06, 2.08 and 2.09. Whenever the Depository requests the Community Facilities District to do so, the Community Facilities District shall cooperate with the Depository in taking appropriate action after reasonable notice (i) to make available one or more separate certificates evidencing the Book-Entry Bonds to any Participant having Book-Entry Bonds credited to its account with the Depository, and (ii) to arrange for another securities depository to maintain custody of certificates evidencing the Book-Entry Bonds. (h) Notwithstanding any other provision of this Indenture to the contrary, if the Depository is the sole Owner of the Bonds of a Series, so long as any Book-Entry Bond of such Series is registered in the name of the Nominee, all payments of principal of, and premium, if any, and interest on such Book-Entry Bond and all notices with respect to such Book-Entry Bond shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository.
(i) In connection with any notice or other communication to be provided to Owners pursuant to this Indenture by the Community Facilities District or the Trustee, with respect to any consent or other action to be taken by Owners of Book-Entry Bonds, the Trustee shall establish a record date for such consent or other action and give the Depository notice of such record date not less than 15 calendar days in advance of such record date to the extent possible.

Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Community Facilities District, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of the same Series 3672
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and maturity in a like principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or upon the order of, the Community Facilities District. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence and indemnity reasonably satisfactory to the Trustee shall be given, the Community Facilities District, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of the same Series and maturity in a like aggregate principal amount in lieu of and in replacement for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been selected for redemption, instead of issuing a replacement Bond, the Trustee may pay the same without surrender thereof). The Community Facilities District may require payment by the Owner of a sum not exceeding the actual cost of preparing the replacement Bond delivered thereto under this Section and the expenses incurred by the Community Facilities District and the Trustee in connection therewith. Any Bond of a Series issued under the provisions of this Section in lieu of any Bond of such Series alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Community Facilities District whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other Bonds of such Series secured by this Indenture.

Section 2.09. Temporary Bonds. The Bonds of a Series may be issued in temporary form exchangeable for definitive Bonds of such Series when ready for delivery. Any temporary Bonds may be printed, lithographed or typewritten, shall be of such Authorized Denominations as may be determined by the Community Facilities District, shall be in fully registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Community Facilities District and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Community Facilities District issues temporary Bonds of a Series it shall execute and deliver definitive Bonds of such Series as promptly thereafter as practicable, and thereupon the temporary Bonds of such Series may be surrendered, for cancellation, at the Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of such Series and maturities in Authorized Denominations. Until so exchanged, the temporary Bonds of such Series shall be entitled to the same benefits under this Indenture as definitive Bonds of such Series authenticated and delivered hereunder. 3673
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ARTICLE III
ISSUANCE OF SERIES 2022 BONDS; APPLICATION OF PROCEEDS; ADDITIONAL BONDS
Section 3.01. Issuance of Series 2022 Bonds. The Community Facilities District may at any time execute the Series 2022 Bonds and deliver the same to the Trustee. The Trustee shall authenticate the Series 2022 Bonds and deliver the Series 2022 Bonds to the Original Purchaser upon receipt of a Written Request of the Community Facilities District and upon receipt of the purchase price therefor.

Section 3.02. Application of Proceeds. (a) On the Closing Date, the proceeds of the sale of the Series 2022 Bonds received by the Trustee, $__________, shall be deposited by the Trustee as follows:
(i) the Trustee shall deposit the amount of $__________ in the Costs of Issuance Fund;
(ii) the Trustee shall deposit the amount of $__________ in the Reserve Fund, which is equal to the Reserve Requirement;
(iii) the Trustee shall deposit the amount of $__________ in the GDC/CDG Esperanza Acquisition Account; and
(iv) the Trustee shall deposit the amount of $__________ in the NMC Acquisition Account.
(b) [On the Closing Date, Special Taxes collected by the City received by the Trustee, $__________, shall be deposited by the Trustee as follows:
(i) the Trustee shall deposit the amount of $__________ in the Administrative Expense Fund; and
(ii) the Trustee shall deposit the amount of $__________ in the GDC/CDG Esperanza Acquisition Account.]
Section 3.03. Costs of Issuance Fund. (a) The Trustee shall establish and maintain a separate fund designated the “Costs of Issuance Fund.” On the Closing Date, the Trustee shall deposit in the Costs of Issuance Fund the amount required to be deposited therein pursuant to Section 3.02. There shall additionally be deposited in the Cost of Issuance Fund the portion, if any, of the proceeds of the sale of any Additional Bonds required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued. (b) The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the Community Facilities District stating (i) the Person to whom payment is to be made, (ii) the amount to be paid and instructions for such payment, (iii) the purpose for which the obligation was incurred, (iv) that such payment is a proper charge against the Costs of Issuance Fund, and 3674
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(v) that such amount has not been the subject of a prior disbursement from the Costs of Issuance Fund, in each case together with a statement or invoice for each amount requested thereunder.

On the last Business Day that is no later than six months after the Closing Date, the Trustee shall transfer any amount remaining in the Costs of Issuance Fund to the NMC Acquisition Account and, upon making such transfer, the Costs of Issuance Fund shall be closed. (c) If the Costs of Issuance Fund has been closed in accordance with the provisions hereof, a Costs of Issuance Fund shall be reestablished by the Trustee in connection with the issuance of any Additional Bonds, if so provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued.

Section 3.04. Improvement Fund. (a) The Trustee shall establish and maintain a separate fund designated the “Improvement Fund.” Within the Improvement Fund, the Trustee shall establish and maintain a separate account designated the “GDC/CDG Esperanza Acquisition Account,” a separate account designated the “NMC Acquisition Account” and a separate account designated the “City Facilities Account.” On the Closing Date, the Trustee shall deposit in the GDC/CDG Esperanza Acquisition Account and the NMC Acquisition Account the respective amounts required to be deposited therein pursuant to Section 3.02. There shall additionally be deposited in the GDC/CDG Esperanza Acquisition Account, the NMC Acquisition Account or the City Facilities Account amounts received by the Trustee when accompanied by a Written Request of the Community Facilities District that such amounts are to be deposited in such account, which amounts may include Special Tax Revenues collected and received by the Community Facilities District prior to the Closing Date. (b) The moneys in the GDC/CDG Esperanza Acquisition Account shall be used and withdrawn by the Trustee from time to time to pay the costs of the GDC/CDG Esperanza Facilities upon submission of a Written Request of the Community Facilities District stating (i) the Person to whom payment is to be made, (ii) the amount to be paid and instructions for such payment, (iii) the purpose for which the obligation was incurred, (iv) that such payment constitutes a cost of the GDC/CDG Esperanza Facilities and is a proper charge against the GDC/CDG Esperanza Acquisition Account, (v) that such amount has not been the subject of a prior disbursement from the GDC/CDG Esperanza Acquisition Account, and (vi) whether or not such costs of the GDC/CDG Esperanza Facilities are to be paid pursuant to a GDC/CDG Esperanza Payment Request submitted in accordance with the GDC/CDG Esperanza Acquisition Agreement, in each case together with a statement or invoice for each amount requested thereunder. If costs of the GDC/CDG Esperanza Facilities are to be paid pursuant to a GDC/CDG Esperanza Payment Request submitted in accordance with the GDC/CDG Esperanza Acquisition Agreement, a duplicate original of the signed and approved GDC/CDG Esperanza Payment Request relating to such costs of the GDC/CDG Esperanza Facilities, together with all exhibits and attachments thereto, must accompany such Written Request of the Community Facilities District.

Upon the filing of a Written Certificate of the Community Facilities District stating (i) that the portion of the GDC/CDG Esperanza Facilities to be financed from the GDC/CDG Esperanza Acquisition Account has been completed and that all costs of such GDC/CDG Esperanza Facilities have been paid, or (ii) that such portion of the GDC/CDG Esperanza Facilities has been substantially completed and that all remaining costs of such portion of the GDC/CDG Esperanza 3675
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Facilities have been determined and specifying the amount to be retained therefor, the Trustee shall transfer all of the amount remaining in the GDC/CDG Esperanza Acquisition Account (less any such retention) to the NMC Acquisition Account.
(c) The moneys in the NMC Acquisition Account shall be used and withdrawn by the Trustee from time to time to pay the costs of the NMC Facilities upon submission of a Written Request of the Community Facilities District stating (i) the Person to whom payment is to be made, (ii) the amount to be paid and instructions for such payment, (iii) the purpose for which the obligation was incurred, (iv) that such payment constitutes a cost of the NMC Facilities and is a proper charge against the NMC Acquisition Account, (v) that such amount has not been the subject of a prior disbursement from the NMC Acquisition Account, and (vi) whether or not such costs of the NMC Facilities are to be paid pursuant to a NMC Payment Request submitted in accordance with the NMC Acquisition Agreement, in each case together with a statement or invoice for each amount requested thereunder. If costs of the NMC Facilities are to be paid pursuant to a NMC Payment Request submitted in accordance with the NMC Acquisition Agreement, a duplicate original of the signed and approved NMC Payment Request relating to such costs of the NMC Facilities, together with all exhibits and attachments thereto, must accompany such Written Request of the Community Facilities District.

If, on the date the Community Facilities District submits to the Trustee a Written Request of the Community Facilities District to pay costs of the NMC Facilities, there are insufficient moneys in the NMC Acquisition Account to pay such costs in full, the amount remaining unpaid shall be paid as and to the extent that moneys are subsequently deposited in the NMC Acquisition Account, but only after the payment in full of all amounts that the Community Facilities District, by a Written Request of the Community Facilities District, previously directed the Trustee to pay from the NMC Acquisition Account.

If the NMC Payment Request submitted to the Trustee pursuant to this subsection requests that the costs of the NMC Facilities to be paid thereunder be paid to the Person or Persons, in the amounts, set forth in the completed Purchase Price Payment Instructions attached to such NMC Payment Request as Attachment B, the Trustee shall, as and when amounts become available in the NMC Acquisition Account to pay all or a portion of such costs, pay from the NMC Acquisition Account such costs or portion thereof to such Person or Persons. If the NMC Payment Request submitted to the Trustee pursuant to this subsection indicates that the costs of the NMC Facilities to be paid thereunder be paid to the Person or Persons, in the amounts, to be set forth in Purchase Price Payment Instructions to be submitted to the Trustee as and when amounts become available in the NMC Acquisition Account to pay all or a portion of such costs, the Trustee shall, as and when such amounts become available, notify NMC Builders in writing of (i) the number or other designation of the NMC Payment Request pursuant to which such payment of such costs is requested to be made, (ii) the amount available in the NMC Acquisition Account to pay such costs or portion thereof, and (iii) the name of the Community Facilities District, and, upon submission to the Trustee by NMC Builders of completed and signed Purchase Price Payment Instructions in the form attached to such NMC Payment Request as Attachment B, the Trustee shall pay from the NMC Acquisition Account such costs or portion thereof to the Person or Persons, in the amounts, set forth in such Purchase Price Payment Instructions.
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If, on the date the Community Facilities District submits to the Trustee a Written Request of the Community Facilities District to pay 85% of the costs of a Circulation System Facility, there are insufficient moneys in the NMC Acquisition Account to pay such portion of such costs in full, the amount remaining unpaid shall be paid as and to the extent that moneys are subsequently deposited in the NMC Acquisition Account, but only after the payment in full of all amounts that the Community Facilities District, by a Written Request of the Community Facilities District, previously directed the Trustee to pay from the NMC Acquisition Account.

If the NMC Payment Request submitted to the Trustee pursuant to this subsection requests that 85% of the costs of a Circulation System Facility to be paid thereunder be paid to the Person or Persons, in the amounts, set forth in the completed Purchase Price Payment Instructions attached to such NMC Payment Request as Attachment B, the Trustee shall, as and when amounts become available in the NMC Acquisition Account to pay all or a portion of such costs, pay from the NMC Acquisition Account such costs or portion thereof to such Person or Persons. If the NMC Payment Request submitted to the Trustee pursuant to this subsection indicates that 85% of the costs of a Circulation System Facility to be paid thereunder be paid to the Person or Persons, in the amounts, to be set forth in Purchase Price Payment Instructions to be submitted to the Trustee as and when amounts become available in the NMC Acquisition Account to pay all or a portion of such costs, the Trustee shall, as and when such amounts become available, notify NMC Builders in writing of (i) the number or other designation of the NMC Payment Request pursuant to which such payment of such costs is requested to be made, (ii) the amount available in the NMC Acquisition Account to pay such costs or portion thereof, and (iii) the name of the Community Facilities District, and, upon submission to the Trustee by NMC Builders of completed and signed Purchase Price Payment Instructions in the form attached to such NMC Payment Request as Attachment B, the Trustee shall pay from the NMC Acquisition Account such costs or portion thereof to the Person or Persons, in the amounts, set forth in such Purchase Price Payment Instructions.

Upon the filing of a Written Certificate of the Community Facilities District stating (i) that the portion of the NMC Facilities to be financed from the NMC Acquisition Account has been completed and that all costs of such NMC Facilities have been paid, or (ii) that such portion of the NMC Facilities has been substantially completed and that all remaining costs of such portion of the NMC Facilities have been determined and specifying the amount to be retained therefor, the Trustee shall (A) if the amount remaining in the NMC Acquisition Account (less any such retention) is equal to or greater than $25,000, transfer the portion of such amount equal to the largest integral multiple of $5,000 that is not greater than such amount to the Redemption Fund, to be applied to the redemption of Bonds as directed by the Community Facilities District, and (B) after making the transfer, if any, required to be made pursuant to the preceding clause (A), transfer all of the amount remaining in the NMC Acquisition Account (less any such retention) to the Interest Account, to be applied to the payment of interest on the Bonds.
(d) The moneys in the City Facilities Account shall be used and withdrawn by the Trustee from time to time to pay the costs of the Facilities upon submission of a Written Request of the Community Facilities District stating (i) the Person to whom payment is to be made, (ii) the amount to be paid and instructions for such payment, (iii) the purpose for which the obligation was incurred, (iv) that such payment constitutes a cost of the Facilities and is a proper charge against the City Facilities Account, and (v) that such amount has not been the subject of a 3677
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prior disbursement from the City Facilities Account, in each case together with a statement or invoice for each amount requested thereunder.

Upon the filing of a Written Certificate of the Community Facilities District stating (i) that the portion of the Facilities to be financed from the City Facilities Account has been completed and that all costs of such Facilities have been paid, or (ii) that such portion of the Facilities has been substantially completed and that all remaining costs of such portion of the Facilities have been determined and specifying the amount to be retained therefor, the Trustee shall (A) if the amount remaining in the City Facilities Account (less any such retention) is equal to or greater than $25,000, transfer the portion of such amount equal to the largest integral multiple of $5,000 that is not greater than such amount to the Redemption Fund, to be applied to the redemption of Bonds as directed by the Community Facilities District, and (B) after making the transfer, if any, required to be made pursuant to the preceding clause (A), transfer all of the amount remaining in the City Facilities Account (less any such retention) to the Interest Account, to be applied to the payment of interest on the Bonds.

Section 3.05. Conditions for the Issuance of Additional Bonds. The Community Facilities District may at any time issue one or more Series of Additional Bonds payable from Net Special Tax Revenues as provided herein on a parity with all other Bonds theretofore issued hereunder, but only subject to the following conditions, which are hereby made conditions precedent to the issuance of such Additional Bonds:
(a) upon the issuance of such Additional Bonds, no Event of Default shall have occurred and be continuing hereunder;
(b) the issuance of such Additional Bonds shall have been authorized under and pursuant to this Indenture and the Act and shall have been provided for by a Supplemental Indenture which shall specify the following:
(i) the purposes for which the proceeds of such Additional Bonds are to be applied, which purposes may only include one or more of (A) providing funds to refund any Bonds previously issued hereunder, (B) providing funds to pay Costs of Issuance incurred in connection with the issuance of such Additional Bonds, and (C) providing funds to make any deposit to the Reserve Fund required pursuant to paragraph (vii) below;
(ii) the designation of such Series of Additional Bonds, the aggregate principal amount of the Additional Bonds of such Series, and the principal amount of, and the interest rate to be borne by, each maturity of such Additional Bonds;
(iii) that such Additional Bonds shall be payable as to interest on the Interest Payment Dates, except that the first installment of interest may be payable on either March 1 or September 1 and shall be for a period of not longer than twelve months;
(iv) the date, the maturity date or dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional 3678
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Bonds; provided, however, that each such maturity date and date on which a mandatory sinking fund redemption is to be made shall be a September 1 and, provided, further, that serial maturities of serial Bonds or mandatory sinking fund redemptions for term Bonds, or any combination thereof, shall be established to provide for the redemption or payment of such Additional Bonds on or before their respective maturity dates;
(v) the redemption premiums and terms, if any, for such Additional Bonds;
(vi) the form of such Additional Bonds;
(vii) the amount, if any, to be deposited from the proceeds of sale of such Additional Bonds in the Reserve Fund; provided, however, that the amount on deposit in the Reserve Fund at the time that such Additional Bonds become Outstanding shall be at least equal to the Reserve Requirement; and (viii) such other provisions that are appropriate or necessary and are not inconsistent with the provisions hereof;
(c) The Community Facilities District shall have received a certificate from an Independent Consultant certifying that Annual Debt Service in each Bond Year, calculated for all Bonds that will be Outstanding after the issuance of such Additional Bonds, will be less than or equal to Annual Debt Service in such Bond Year, calculated for all Bonds that are Outstanding immediately prior to the issuance of such Additional Bonds.

Nothing contained herein shall limit the issuance of any special tax bonds payable from Special Taxes if, after the issuance and delivery of such special tax bonds, none of the Bonds theretofore issued hereunder will be Outstanding.

Section 3.06. Procedure for the Issuance of Additional Bonds. At any time after the sale of any Additional Bonds in accordance with the Act, such Additional Bonds shall be executed by the Community Facilities District for issuance hereunder and shall be delivered to the Trustee and thereupon shall be authenticated and delivered by the Trustee, but only upon receipt by the Trustee of the following:
(a) a certified copy of the Supplemental Indenture authorizing the issuance of such Additional Bonds;
(b) a Written Request of the Community Facilities District as to the delivery of such Additional Bonds;
(c) a Written Certificate of the Community Facilities District stating that the conditions precedent to the issuance of such Additional Bonds specified in Section 3.05 have been satisfied;
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(d) an opinion of Bond Counsel substantially to the effect that (i) this Indenture, as modified and amended by all Supplemental Indentures theretofore, or thereupon being, entered into has been duly authorized, executed and delivered by, and constitutes the valid and binding obligation of, the Community Facilities District, enforceable in accordance with its terms, (ii) such Additional Bonds constitute valid and binding special obligations of the Community Facilities District, and (iii) the issuance of such Additional Bonds, in and of itself, will not adversely affect the exclusion of interest on the Bonds Outstanding prior to the issuance of such Additional Bonds from gross income for federal income tax purposes;
(e) the proceeds of the sale of such Additional Bonds; and (f) such further documents or money as are required by the provisions hereof or by the provisions of the Supplemental Indenture pursuant to which such Additional Bonds are issued.

Section 3.07. Additional Bonds. The Community Facilities District shall not incur any obligations payable from Net Special Tax Revenues on a parity with the Bonds, except as provided in Sections 3.05 and 3.06.
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ARTICLE IV

REDEMPTION OF BONDS
Section 4.01. Redemption of Series 2022 Bonds. (a) Optional Redemption. The Series 2022 Bonds maturing on and after September 1, 20__, shall be subject to optional redemption, in whole, or in part in Authorized Denominations, on any Interest Payment Date on or after September 1, 20__ from any source of available funds, at the following respective Redemption Prices (expressed as percentages of the principal amount of the Series 2022 Bonds to be redeemed), plus accrued interest thereon to the date of redemption:

Redemption Dates Redemption Price
September 1, 20__ and March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest
Payment Date thereafter
100
The Community Facilities District shall give the Trustee written notice of its intention to redeem Series 2022 Bonds pursuant to this subsection not less than 45 days prior to the applicable redemption date, unless a later date is agreed to by the Trustee. (b) Mandatory Redemption from Special Tax Prepayments. The Series 2022 Bonds shall be subject to mandatory redemption, in whole, or in part in Authorized Denominations, on any Interest Payment Date, from and to the extent of prepaid Special Taxes required to be applied thereto pursuant to Section 5.02(a) and any amount required to be applied thereto pursuant to Section 5.04(c), at the following respective Redemption Prices (expressed as percentages of the principal amount of the Series 2022 Bonds to be redeemed), plus accrued interest thereon to the date of redemption:

Redemption Dates Redemption Price
March 1, 20__ through March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest
Payment Date thereafter
100
(c) Mandatory Sinking Fund Redemption. The Series 2022 Bonds maturing September 1, 20__ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20__, at a Redemption Price equal to the principal amount of the Series 2022 Bonds maturing September 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
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Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed
$
(Maturity)
If some but not all of the Series 2022 Bonds maturing on September 1, 20__ are redeemed pursuant to Section 4.01(a), the principal amount of the Series 2022 Bonds maturing on September 1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1 shall be reduced, by $5,000 or an integral multiple thereof, as designated by the Community Facilities District in a Written Certificate of the Community Facilities District filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Series 2022 Bonds maturing on September 1, 20__ redeemed pursuant to Section

4.01(a). If some but not all of the Series 2022 Bonds maturing on September 1, 20__ are redeemed pursuant to Section 4.01(b), the principal amount of the Series 2022 Bonds maturing on September 1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1 shall be reduced by the aggregate principal amount of the Series 2022 Bonds maturing on September 1, 20__ so redeemed pursuant to Section 4.01(b), such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the Community Facilities District.

The Series 2022 Bonds maturing September 1, 20__ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20__, at a Redemption Price equal to the principal amount of the Series 2022 Bonds maturing September 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:

Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed
$
(Maturity)
If some but not all of the Series 2022 Bonds maturing on September 1, 20__ are redeemed pursuant to Section 4.01(a), the principal amount of the Series 2022 Bonds maturing on September 1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1 shall be reduced, by $5,000 or an integral multiple thereof, as designated by the Community Facilities District in a Written Certificate of the Community Facilities District filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Series 2022 Bonds maturing on September 1, 20__ redeemed pursuant to Section 3682
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Section 4.02. Notice of Redemption. The Trustee on behalf and at the expense of the Community Facilities District shall mail (by first class mail) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books and to the Original Purchaser at least 30 but not more than 60 days prior to the date fixed for redemption. Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate the CUSIP numbers, if any, the Bond numbers and the maturity or maturities of the Bonds to be redeemed (except in the event of redemption of all of the Bonds of such maturity or maturities in whole), and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Bonds will not accrue from and after the date fixed for redemption. Neither the failure to receive any notice so mailed, nor any defect in such notice, shall affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of any optional redemption of Bonds of a Series, unless at the time such notice is given the Bonds to be redeemed shall be deemed to have been paid within the meaning of Section 10.02, such notice shall state that such redemption is conditional upon receipt by the Trustee, on or prior to the date fixed for such redemption, of moneys that, together with other available amounts held by the Trustee, are sufficient to pay the Redemption Price of, and accrued interest on, the Bonds to be redeemed, and that if such moneys shall not have been so received said notice shall be of no force and effect and the Community Facilities District shall not be required to redeem such Bonds. In the event a notice of redemption of Bonds contains such a condition and such moneys are not so received, the redemption of Bonds as described in the conditional notice of redemption shall not be made and the Trustee shall, within a reasonable time after the date on which such redemption was to occur, give notice to the Persons and in the manner in which the notice of redemption was given, that such moneys were not so received and that there shall be no redemption of Bonds pursuant to such notice of redemption.

Section 4.03. Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption (a) with respect to any optional redemption of Bonds of a Series, among maturities of Bonds of such Series as directed in a Written Request of the Community Facilities District, (b) with respect to any redemption pursuant to Section 4.01(b) and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued, among maturities of all Series of Bonds on a pro rata basis as nearly as practicable, and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued, and by lot among Bonds of the same Series with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate. For purposes of 3683
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such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate Bonds that may be separately redeemed.

Section 4.04. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Community Facilities District shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Community Facilities District, a new Bond or Bonds of the same Series in Authorized Denominations in an aggregate principal amount equal to the unredeemed portion of the Bonds surrendered.

Section 4.05. Effect of Notice of Redemption. Notice of redemption of the Bonds subject to redemption having been mailed as aforesaid, and moneys for the Redemption Price thereof, and the interest thereon to the applicable date fixed for redemption, having been set aside with the Trustee, such Bonds shall become due and payable on said date, and, upon presentation and surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date.

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

All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed. 3684
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ARTICLE V
SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS
Section 5.01. Pledge. Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, in order to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of this Indenture and the Act, the Community Facilities District hereby pledges to the Owners, and grants thereto a lien on and a security interest in, all of the Net Special Tax Revenues and any other amounts held in the Special Tax Fund, the Bond Fund and the Reserve Fund. Said pledge shall constitute a first lien on and security interest in such assets, which shall immediately attach to such assets and be effective, binding and enforceable against the Community Facilities District, its successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the extent set forth in, and in accordance with, this Indenture, irrespective of whether those parties have notice of the pledge of, lien on and security interest in such assets and without the need for any physical delivery, recordation, filing or further act.

Section 5.02. Special Tax Fund. (a) The Trustee shall establish and maintain a separate fund designated the “Special Tax Fund.” As soon as practicable after the receipt by the Community Facilities District of any Special Tax Revenues, but in any event no later than the date ten Business Days after such receipt, the Community Facilities District shall transfer such Special Tax Revenues to the Trustee for deposit in the Special Tax Fund; provided, however, that with respect to any such Special Tax Revenues that represent prepaid Special Taxes (i) said prepaid Special Taxes shall be identified as such in a Written Certificate of the Community Facilities District delivered to the Trustee at the time such prepaid Special Taxes are transferred to the Trustee, (ii) the portion of such prepaid Special Taxes that is to be applied to the Redemption Price of the Bonds shall be identified in such Written Certificate of the Community Facilities District, shall be deposited by the Trustee in the Redemption Fund and shall be applied to the redemption of Bonds pursuant to Section 4.01(b) and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued, and (iii) the portion of such prepaid Special Taxes that is to be applied to the payment of interest on the Bonds to be so redeemed shall be identified in such Written Certificate of the Community Facilities District, shall be deposited by the Trustee in the Interest Account and shall be applied to the payment of such interest.
(b) Upon receipt of a Written Request of the Community Facilities District, the Trustee shall withdraw from the Special Tax Fund and transfer to the Administrative Expense Fund the amount specified in such Written Request of the Community Facilities District as the amount necessary to be transferred thereto in order to have sufficient amounts available therein to pay Administrative Expenses.
(c) No later than the Business Day immediately preceding each Interest Payment Date, after having made any requested transfer to the Administrative Expense Fund, the Trustee shall withdraw from the Special Tax Fund Net Special Tax Revenues in an amount sufficient to enable the Trustee to make the following transfers in the following order of priority:
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(i) Interest Account. To the Interest Account, the amount, if any, necessary to cause the amount on deposit in the Interest Account to be equal to the interest due on the Bonds on such Interest Payment Date;
(ii) Principal Account. To the Principal Account, the amount, if any, necessary to cause the amount on deposit in the Principal Account to be equal to the principal, if any, due on the Bonds on such Interest Payment Date, including principal due and payable by reason of mandatory sinking fund redemption of such Bonds; and (iii) Reserve Fund. To the Reserve Fund, the amount, if any, necessary to cause the amount in the Reserve Fund to be equal to the Reserve Requirement. (d) So long as the City Facilities Account has not been closed pursuant to Section

3.04(d), on each September 2, after having made any requested transfer to the Administrative Expense Fund, the Trustee shall transfer from the Special Tax Fund to the City Facilities Account any amount remaining in the Special Tax Fund; provided, however, that the Community Facilities District may, in a Written Request of the Community Facilities District submitted to the Trustee prior to such September 2, direct the Trustee to retain in the Special Tax Fund all or a portion of such remaining amount.

Section 5.03. Bond Fund. (a) The Trustee shall establish and maintain a separate fund designated the “Bond Fund.” Within the Bond Fund, the Trustee shall establish and maintain a separate account designated the “Principal Account” and a separate account designated the “Interest Account.” The Trustee shall deposit in the Interest Account and the Principal Account from time to time the amounts required to be deposited therein pursuant to Section 5.02. There shall additionally be deposited in the Interest Account the portion, if any, of the proceeds of the sale of Additional Bonds required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued.
(b) In the event that, on the Business Day prior to an Interest Payment Date, after the deposit in the Interest Account of the amounts required to be deposited therein pursuant to Section 5.02, amounts in the Interest Account are insufficient to pay the interest on the Bonds due and payable on such Interest Payment Date, the Trustee shall withdraw from the Reserve Fund, to the extent of any funds therein, the amount of such insufficiency, and shall transfer any amounts so withdrawn to the Interest Account.
(c) On each Interest Payment Date, the Trustee shall withdraw from the Interest Account for payment to the Owners of the Bonds the interest on the Bonds then due and payable. (d) In the event that, on the Business Day prior to a September 1 on which principal of the Bonds is due and payable, after the deposit in the Principal Account of the amounts required to be deposited therein pursuant to Section 5.02, including principal due and payable by reason of mandatory sinking fund redemption of the Bonds, amounts in the Principal Account are insufficient to pay such principal, after having withdrawn any amounts from the Reserve Fund required to be withdrawn therefrom on such date pursuant to subsection (b) of this Section, the Trustee shall withdraw from the Reserve Fund, to the extent of any funds therein, the amount of such insufficiency, and shall transfer any amounts so withdrawn to the Principal Account. 3686
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(e) On each September 1 on which principal of the Bonds is due and payable, including principal due and payable by reason of mandatory sinking fund redemption of the Bonds, the Trustee shall withdraw from the Principal Account for payment to the Owners of the Bonds such principal then due and payable.

Section 5.04. Reserve Fund. (a) The Trustee shall establish and maintain a special fund designated the “Reserve Fund.” On the Closing Date, the Trustee shall deposit in the Reserve Fund the amount specified in Section 3.02. The Trustee shall deposit in the Reserve Fund from time to time the amounts required to be deposited therein pursuant to Section 5.02(c).

There shall additionally be deposited in the Reserve Fund, in connection with the issuance of Additional Bonds, the amount required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued.
(b) Except as otherwise provided in this Section, amounts in the Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of (i) making transfers to the Interest Account in accordance with Section 5.03(b) in the event of any deficiency in the Interest Account of the amount then required for payment of the interest on the Bonds, (ii) making transfers to the Principal Account in accordance with Section 5.03(d) in the event of any deficiency in the Principal Account of the amount then required for payment of the principal of the Bonds, and (iii) redeeming Bonds in accordance with the provisions of this Section. (c) Whenever Bonds are to be optionally redeemed or redeemed from Special Tax prepayments, a proportionate share, determined as provided below, of the amount on deposit in the Reserve Fund shall, on the date on which amounts to redeem such Bonds are deposited in the Redemption Fund or otherwise deposited with the Trustee pursuant to Section 10.02, be transferred by the Trustee from the Reserve Fund to the Redemption Fund or to such deposit held by the Trustee and shall be applied to the redemption of said Bonds; provided, however, that such amount shall be so transferred only if and to the extent that the amount remaining on deposit in the Reserve Fund will be at least equal to the Reserve Requirement (excluding from the calculation thereof said Bonds to be redeemed). Such proportionate share shall be equal to the largest integral multiple of the minimum Authorized Denomination for said Bonds that is not larger than the amount equal to the product of (i) the amount on deposit in the Reserve Fund on the date of such transfer, times (ii) a fraction, the numerator of which is the principal amount of Bonds to be so redeemed and the denominator of which is the principal amount of Bonds to be Outstanding on the day prior to the date on which such Bonds are to be so redeemed. (d) Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay all Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Trustee shall, upon receipt of a Written Request of the Community Facilities District, transfer the amount in the Reserve Fund to the Interest Account, Principal Account and/or Redemption Fund, as applicable, to be applied, on the next succeeding Interest Payment Date to the payment and redemption of all of the Outstanding Bonds.
(e) If, as a result of the scheduled payment of principal of or interest on the Bonds, the Reserve Requirement is reduced, the Trustee shall transfer an amount equal to the amount of such reduction to the Interest Account.
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Section 5.05. Redemption Fund. (a) The Trustee shall establish and maintain a special fund designated the “Redemption Fund.” The Trustee shall deposit in the Redemption Fund (i) amounts received from the Community Facilities District in connection with the Community Facilities District’s exercise of its rights to optionally redeem Bonds, (ii) the portion of prepaid Special Taxes required to be deposited therein pursuant to Section 5.02(a), (iii) amounts required to be transferred to the Redemption Fund from the Improvement Fund (or accounts therein) pursuant to Section 3.04(c) or Section 3.04(d), (iv) amounts required to be transferred to the Redemption Fund from the Reserve Fund pursuant to Section 5.04(c) or Section 5.04(d), and (v) amounts required to be deposited therein pursuant to any Supplemental Indenture. (b) Amounts in the Redemption Fund shall be disbursed therefrom for the payment of the Redemption Price of Series 2022 Bonds redeemed pursuant to Section 4.01(a) or Section

4.01(b) and for the payment of the Redemption Price of Additional Bonds redeemed under the Supplemental Indenture pursuant to which such Additional Bonds are issued (other than mandatory sinking fund redemptions thereof).

Section 5.06. Rebate Fund. (a) The Trustee shall establish and maintain a special fund designated the “Rebate Fund.” There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate, as specified in a Written Request of the Community Facilities District. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement, for payment to the United States of America. Notwithstanding defeasance of the Bonds pursuant to Article X or anything to the contrary contained herein, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section and by the Tax Certificate, which is hereby incorporated herein as if fully set forth herein. The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Community Facilities District, and shall have no liability or responsibility to enforce compliance by the Community Facilities District with the terms of the Tax Certificate. The Trustee may conclusively rely upon the Community Facilities District’s determinations, calculations and certifications required by the Tax Certificate. The Trustee shall have no responsibility to independently make any calculation or determination or to review the Community Facilities District’s calculations.
(b) Any funds remaining in the Rebate Fund after payment in full of all of the Bonds and after payment of any amounts described in this Section, shall, upon receipt by the Trustee of a Written Request of the Community Facilities District, be withdrawn by the Trustee and remitted to the Community Facilities District.

Section 5.07. Administrative Expense Fund. (a) The Trustee shall establish and maintain a special fund designated the “Administrative Expense Fund.” On the Closing Date, the Trustee shall deposit in the Administrative Expense Fund the amount specified in Section 3.02.

The Trustee shall deposit in the Administrative Expense Fund the amounts transferred from the Special Tax Fund and required to be deposited therein pursuant to Section 5.02. (b) The moneys in the Administrative Expense Fund shall be used and withdrawn by the Trustee from time to time to pay the Administrative Expenses upon submission of a Written Request of the Community Facilities District stating (i) the Person to whom payment is to be 3688
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made, (ii) the amount to be paid and instructions for such payment, (iii) the purpose for which the obligation was incurred and that such purpose constitutes an Administrative Expense, (iv) that such payment is a proper charge against the Administrative Expense Fund, and (v) that such amount has not been the subject of a prior disbursement from the Administrative Expense Fund, in each case together with a statement or invoice for each amount requested thereunder.

Section 5.08. Investment of Moneys. (a) Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Indenture held by the Trustee shall be invested by the Trustee solely in Permitted Investments, as directed in a Written Request of the Community Facilities District received by the Trustee no later than two Business Days prior to the making of such investment. Moneys in all such funds and accounts shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture; provided, however, that Permitted Investments in which moneys in the Reserve Fund are so invested shall mature no later than the earlier of five years from the date of investment or the final maturity date of the Bonds and, provided, further, that if such Permitted Investments may be redeemed at par so as to be available on each Interest Payment Date, any amount in the Reserve Fund may be invested in such redeemable Permitted Investments maturing on any date on or prior to the final maturity date of the Bonds. Absent a timely Written Request of the Community Facilities District with respect to the investment of moneys in any of the funds or accounts established pursuant to this Indenture held by the Trustee, the Trustee shall invest such moneys in Permitted Investments described in paragraph (7) of the definition thereof; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a Written Request of the Community Facilities District specifying a specific money market fund that satisfies the requirements of said paragraph in which such investment is to be made and, if no such Written Request of the Community Facilities District is so received, the Trustee shall hold such moneys uninvested. (b) Subject to the provisions of Section 5.06, all interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Indenture (other than the Reserve Fund) shall be retained therein. Subject to the provisions of Section 5.06, all interest, profits or other income received from the investment of moneys in the Reserve Fund shall, prior to the date on which a Written Certificate of the Community Facilities District is delivered to the Trustee pursuant to subsection (c) of Section 3.04, be transferred to the NMC Acquisition Account and, thereafter, shall be transferred to the Interest Account; provided, however, that, notwithstanding the foregoing, any such transfer shall be made from the Reserve Fund only if and to the extent that, after such transfer, the amount on deposit in the Reserve Fund is at least equal to the Reserve Requirement. (c) Permitted Investments acquired as an investment of moneys in any fund or account established under this Indenture shall be credited to such fund or account. For the purpose of determining the amount in any fund or account, all Permitted Investments credited to such fund or account shall be valued by the Trustee at the market value thereof, such valuation to be performed not less frequently than semiannually on or before each February 15 and August

15. In determining the market value of Permitted Investments, the Trustee may use and rely upon generally recognized pricing information services, including brokers and dealers in securities, available to it.
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(d) The Trustee may act as principal or agent in the making or disposing of any investment. Upon the Written Request of the Community Facilities District, the Trustee shall sell or present for redemption any Permitted Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investments are credited, and the Trustee shall not be liable or responsible for any loss resulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the funds and accounts established hereunder. The Trustee, in making or disposing of any investment permitted by this Section, may deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as a principal for its own account but only if such dealing is not in conflict with, contrary to or in violation of any of the Trustee’s fiduciary obligations as Trustee hereunder. (e) The Community Facilities District acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Community Facilities District the right to receive brokerage confirmations of security transactions as they occur, at no additional cost, the Community Facilities District specifically waives receipt of such confirmations to the extent permitted by law. The Trustee shall furnish the Community Facilities District periodic cash transaction statements, which shall include detail for all investment transactions made by the Trustee hereunder.
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ARTICLE VI

COVENANTS
Section 6.01. Collection of Special Tax Revenues. (a) The Community Facilities District shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including the enforcement of delinquent Special Taxes. (b) Prior to August 1 of each year, the Community Facilities District shall ascertain from the County Assessor the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year. The Community Facilities District shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each August 10, or otherwise such that the computation of the levy is complete before the final date on which the County Auditor will accept the transmission of the Special Tax amounts for the parcels within the Community Facilities District for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the Community Facilities District shall prepare or cause to be prepared, and shall transmit to the County Auditor, such data as the County Auditor requires in order to include the levy of the Special Taxes on the next real property tax roll.
(c) The Community Facilities District shall fix and levy the amount of Special Taxes within the Community Facilities District in each Fiscal Year in accordance with the Rate and Method and, subject to the limitations in the Rate and Method as to the maximum Special Taxes that may be levied, in an amount sufficient to yield Special Tax Revenues in the amount required for (i) the payment of principal of and interest on any Outstanding Bonds becoming due and payable during the Corresponding Bond Year, (ii) any necessary replenishment of the Reserve Fund, and (iii) the payment of Administrative Expenses estimated to be paid from such Special Tax Revenues, taking into account the balances in the funds and accounts established hereunder. (d) The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable (or in such other manner as the City Council shall determine, including direct billing of the affected property owners), and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property.

Section 6.02. Foreclosure. Pursuant to Section 53356.1 of the Act, the Community Facilities District hereby covenants with and for the benefit of the Owners that it will determine or cause to be determined, no later than August 15 of each year, whether or not any owners of property within the Community Facilities District are delinquent in the payment of Special Taxes and, if such delinquencies exist, the Community Facilities District will order and cause to be commenced no later than October 1, and thereafter diligently prosecute, an action in the superior court to foreclose the lien of any Special Taxes or installment thereof not paid when due; provided, however, that the Community Facilities District shall not be required to order the commencement of foreclosure proceedings if (a) the total Special Tax delinquency in the Community Facilities District for such Fiscal Year is less than 5% of the total Special Taxes levied in such Fiscal Year, and (b) the amount then on deposit in the Reserve Fund is equal to the 3691
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Reserve Requirement. Notwithstanding the foregoing, if the Community Facilities District determines that any single parcel in the Community Facilities District is delinquent in excess of $7,500 in the payment of the Special Taxes, then the Community Facilities District shall diligently institute, prosecute and pursue foreclosure proceedings against such parcel.

Section 6.03. Compliance with Act. The Community Facilities District shall comply with all applicable provisions of the Act.

Section 6.04. Punctual Payment. The Community Facilities District shall punctually pay or cause to be paid the principal, premium, if any, and interest to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of Net Special Tax Revenues and other assets pledged for such payment as provided in this Indenture and received by the Community Facilities District or the Trustee.

Section 6.05. Extension of Payment of Bonds. The Community Facilities District shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Community Facilities District to issue Bonds for the purpose of refunding any Outstanding Bonds in accordance with the provisions hereof, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.

Section 6.06. Against Encumbrances; Defense of Pledge. The Community Facilities District shall not create, or permit the creation of, any pledge of, lien on, security interest in or charge or other encumbrance upon the assets pledged under this Indenture, except as permitted hereby. The Community Facilities District shall at all times, to the extent permitted by law, defend, preserve and protect said pledge of such assets, and the lien thereon and security interest therein created hereby, against all claims and demands of all Persons whomsoever.

Section 6.07. Tax Covenants. (a) The Community Facilities District shall not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Series 2022 Bonds under Section 103 of the Code. Without limiting the generality of the foregoing, the Community Facilities District shall comply with the requirements of the Tax Certificate, which is incorporated herein as if fully set forth herein. This covenant shall survive payment in full or defeasance of the Series 2022 Bonds.
(b) In the event that at any time the Community Facilities District is of the opinion that for purposes of this Section it is necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee in any of the funds or accounts established hereunder, the Community Facilities District shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. 3692
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(c) Notwithstanding any provisions of this Section, if the Community Facilities District shall provide to the Trustee an opinion of Bond Counsel to the effect that any specified action required under this Section is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Series 2022 Bonds, the Trustee may conclusively rely on such opinion in complying with the requirements of this Section and of the Tax Certificate, and the covenants hereunder shall be deemed to be modified to that extent.

Section 6.08. Non-Cash Payments of Special Taxes. The Community Facilities District shall not authorize owners of taxable parcels within the Community Facilities District to satisfy Special Tax obligations by the tender of Bonds unless the Community Facilities District shall have first obtained a report of an Independent Consultant certifying that doing so would not result in the Community Facilities District having insufficient Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds when due.

Section 6.09. Reduction in Special Taxes. The Community Facilities District shall not initiate proceedings under the Act to modify the Rate and Method if such modification would adversely affect the security for the Bonds. If an initiative is adopted that purports to modify the Rate and Method in a manner that would adversely affect the security for the Bonds, the Community Facilities District shall, to the extent permitted by law, commence and pursue reasonable legal actions to prevent the modification of the Rate and Method in a manner that would adversely affect the security for the Bonds.

Section 6.10. Continuing Disclosure. Each of the Community Facilities District and the Trustee shall comply with and carry out all of the provisions of the Continuing Disclosure Agreement applicable to it. Notwithstanding any other provision of this Indenture, failure of the Community Facilities District or the Trustee to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; provided, however, that the Trustee may (and, at the written direction of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Series 2022 Bonds, and upon receipt of indemnification reasonably satisfactory to the Trustee, shall) or any Owner or Beneficial Owner of the Series 2022 Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.

Section 6.11. Accounting Records. The Community Facilities District shall keep or cause to be kept appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the Special Taxes, which records shall be available for inspection by the Trustee at reasonable hours and under reasonable conditions.

Section 6.12. State Reporting. If at any time principal or interest due on any scheduled payment date for the Bonds is not paid, or if funds are withdrawn from the Reserve Fund to pay principal of or interest on the Bonds, the Trustee shall notify the Community Facilities District in writing of such failure or withdrawal, and the Community Facilities District shall notify the California Debt and Investment Advisory Commission of such failure or withdrawal within ten days of the failure to make such payment or the date of such withdrawal. 3693
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Section 6.13. Annual Reports to the California Debt and Investment Advisory Commission. Not later than October 30 of each year, commencing October 30, 2023 and continuing until the October 30 following the final maturity of the Bonds, the Community Facilities District shall supply to the California Debt and Investment Advisory Commission the information required to be provided thereto pursuant to Section 53359.5(b) of the Act. Such information shall be made available to any Owner upon written request to the Community Facilities District accompanied by a fee determined by the Community Facilities District to pay the costs of the Community Facilities District in connection therewith. The Community Facilities District shall in no event be liable to any Owner or any other person or entity in connection with any error in any such information.

Section 6.14. Further Assurances. The Community Facilities District shall make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Indenture.
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ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following events shall be Events of Default:
(a) failure to pay any installment of principal of any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption or otherwise;
(b) failure to pay any installment of interest on any Bonds when and as the same shall become due and payable;
(c) failure by the Community Facilities District to observe and perform any of the other covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, if such failure shall have continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the Community Facilities District by the Trustee, or to the Community Facilities District and the Trustee by the Owners of not less than 5% in aggregate principal amount of the Bonds at the time Outstanding; provided, however, that, if in the reasonable opinion of the Community Facilities District the failure stated in the notice can be corrected, but not within such 30 day period, such failure shall not constitute an Event of Default if corrective action is instituted by the Community Facilities District within such 30 day period and the Community Facilities District shall thereafter diligently and in good faith cure such failure in a reasonable period of time, provided, further, that, unless otherwise consented to by the Trustee, such period of time shall not exceed 180 days; or (d) the commencement by the Community Facilities District of a voluntary case under Title 11 of the United States Code or any substitute or successor statute.

Section 7.02. Foreclosure. If an Event of Default shall occur under Section 7.01(a) or Section 7.01(b) then, and in each and every such case during the continuance of such Event of Default, the Trustee may, or at the written direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, and upon being indemnified to its satisfaction therefor, shall, commence foreclosure against any parcels of land in the Community Facilities District with delinquent Special Taxes, as provided in Section 53356.1 of the Act; provided, however, that the Trustee shall not be required to pursue a foreclosure action against any such parcel if the Trustee would be required to take title to, or an ownership interest in, such parcel in connection with or as a result of such foreclosure action.

Section 7.03. Other Remedies. If an Event of Default shall have occurred and be continuing, the Trustee shall have the right:
(a) by mandamus, suit, action or proceeding, to compel the Community Facilities District and its officers, agents or employees to perform each and every term, provision and covenant contained in this Indenture and in the Bonds, and to require the carrying out of any or all such covenants and agreements of the Community Facilities District and the fulfillment of all duties imposed upon it by this Indenture and the Act; 3695
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(b) by suit, action or proceeding in equity, to enjoin any acts or things which are unlawful, or the violation of any of the rights of the Trustee or the Owners; or (c) by suit, action or proceeding in any court of competent jurisdiction, to require the Community Facilities District and its officers and employees to account as if it and they were the trustees of an express trust.

Section 7.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.

Section 7.05. Application of Net Special Tax Revenues After Default. If an Event of Default shall occur and be continuing, all Net Special Tax Revenues and any other funds thereafter received by the Trustee under any of the provisions of this Indenture shall be applied by the Trustee as follows and in the following order:
(a) to the payment of any expenses incurred by the Trustee necessary in the opinion of the Trustee to protect the interests of the Owners and payment of reasonable fees, charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Indenture;
(b) to the payment of the principal and interest then due with respect to the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Indenture, as follows:

First: to the payment to the Persons entitled thereto of all installments of interest on the Bonds then due in the order of the maturity of such installments and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the Persons entitled thereto, without any discrimination or preference; and
Second: to the payment to the Persons entitled thereto of all installments of principal of the Bonds then due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective Bonds on the date of maturity or redemption, and, if the amount available shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the Persons entitled thereto, without any discrimination or preference; (c) any remaining funds shall be transferred by the Trustee to the Special Tax Fund.
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Section 7.06. Power of Trustee to Enforce. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of the Owners of such Bonds, subject to the provisions of this Indenture.

Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected.

Section 7.07. Owners’ Direction of Proceedings. Anything in this Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, and upon indemnification of the Trustee to its reasonable satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder; provided, however, that such direction shall not be otherwise than in accordance with the provisions of this Indenture, the Act and other applicable law and, provided, further, that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Owners not parties to such direction.

Section 7.08. Limitation on Owners’ Right to Sue. No Owner of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Act or any other applicable law with respect to such Bond, unless (a) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default, (b) the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name, (c) such Owner or said Owners shall have tendered to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request, and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.

Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder or under law; it being understood and intended that no one or more Owners shall have any right in any manner whatever by such Owner’s or Owners’ action to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners, or to enforce any right under the Bonds, this Indenture, the Act or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners, subject to the provisions of this Indenture.

Section 7.09. Absolute Obligation. Nothing in this Indenture or the Bonds contained shall affect or impair the obligation of the Community Facilities District, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective Owners as the 3697
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same become due, as herein provided, but only out of the Net Special Tax Revenues and other assets pledged therefor hereunder, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.

Section 7.10. Termination of Proceedings. In case any proceedings taken by the Trustee or any one or more Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Owners, then in every such case the Community Facilities District, the Trustee and the Owners, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Community Facilities District, the Trustee and the Owners shall continue as though no such proceedings had been taken.

Section 7.11. No Waiver of Default. No delay or omission of the Trustee or of any Owner to exercise any right or power arising upon the occurrence of any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or an acquiescence therein, and every power and remedy given by this Indenture to the Trustee or to the Owners may be exercised from time to time and as often as may be deemed expedient.
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ARTICLE VIII

TRUSTEE
Section 8.01. Duties and Liabilities of Trustee. The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of Default which may have occurred, perform such duties and only such duties as are expressly and specifically set forth in this Indenture. The Trustee shall, during the existence of any Event of Default which has not been cured or waived, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

Section 8.02. Qualifications; Removal and Resignation; Successors. (a) The Trustee initially a party hereto and any successor thereto shall at all times be a trust company, national banking association or bank having trust powers in good standing in or incorporated under the laws of the United States or any state thereof, which is (or if such trust company, national banking association or bank is a member of a bank holding company system, its parent bank holding company is) (i) a national banking association that is supervised by the Office of the Comptroller of the Currency and has at least $250 million of assets, or (ii) a state-chartered commercial bank that is a member of the Federal Reserve System and has at least $1 billion of assets. If such trust company, national banking association or bank publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining agency above referred to, then for the purpose of this subsection the combined capital and surplus of such trust company, national banking association or bank shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) The Community Facilities District may, by an instrument in writing, upon at least 30 days’ notice to the Trustee, remove the Trustee initially a party hereto and any successor thereto unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee initially a party hereto and any successor thereto if (i) at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing), or (ii) the Trustee shall cease to be eligible in accordance with subsection (a) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee.
(c) The Trustee may at any time resign by giving written notice of such resignation by first class mail, postage prepaid, to the Community Facilities District, and to the Owners at the respective addresses shown on the Registration Books. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of subsection (a) of this Section, the Trustee shall resign immediately in the manner and with the effect specified in this Section. (d) Upon removal or resignation of the Trustee, the Community Facilities District shall promptly appoint a successor Trustee by an instrument in writing. Any removal or 3699
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resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee; provided, however, that any successor Trustee shall be qualified as provided in subsection (a) of this Section. If no qualified successor Trustee shall have been appointed and have accepted appointment within 45 days following notice of removal or notice of resignation as aforesaid, the removed or resigning Trustee or any Owner (on behalf of such Owner and all other Owners) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice, if any, as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall signify its acceptance of such appointment by executing and delivering to the Community Facilities District and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Written Request of the Community Facilities District or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the successor Trustee shall, within 15 days after such acceptance, mail, by first class mail postage prepaid, a notice of the succession of such Trustee to the trusts hereunder to the Owners at the addresses shown on the Registration Books.
(e) Any trust company, national banking association or bank into which the Trustee may be merged or converted or with which it may be consolidated or any trust company, national banking association or bank resulting from any merger, conversion or consolidation to which it shall be a party or any trust company, national banking association or bank to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such trust company, national banking association or bank shall be eligible under subsection (a) of this Section, shall be the successor to such Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.

Section 8.03. Liability of Trustee. (a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Community Facilities District, and the Trustee shall not assume responsibility for the correctness of the same or incur any responsibility in respect thereof, other than as expressly stated herein in connection with the respective duties or obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. (b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of any Bonds, or in respect of the security afforded by this Indenture and the Trustee shall incur no responsibility in respect thereof. The Trustee shall be under no responsibility or duty with respect to the issuance of the Bonds for value, the application of the proceeds thereof except to the extent that such proceeds are received by it in its capacity as Trustee, or the 3700
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application of any moneys paid to the Community Facilities District or others in accordance with this Indenture.
(c) The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. (d) No provision of this Indenture or any other document related hereto shall require the Trustee to risk or advance its own funds.
(e) The Trustee may execute any of its powers or duties hereunder through attorneys, agents or receivers and shall not be answerable for the actions of such attorneys, agents or receivers if selected by it with reasonable care.
(f) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
(g) The immunities and protections extended to the Trustee also extend to its directors, officers, employees and agents.
(h) Before taking action under Article VII, under this Article or upon the direction of the Owners, the Trustee may require indemnity reasonably satisfactory to the Trustee be furnished to it to protect it against all fees and expenses, including those of its attorneys and advisors, and protect it against all liability it may incur. (i) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. (j) The Trustee may become the Owner of Bonds with the same rights it would have if it were not Trustee and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners, whether or not such committee shall represent the Owners of a majority in aggregate principal amount of the Bonds then Outstanding. (k) The Trustee shall have no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds. (l) The Trustee shall not be liable for the failure to take any action required to be taken by it hereunder if and to the extent that the Trustee’s taking such action is prevented by reason of an act of God, terrorism, war, riot, strike, fire, flood, earthquake, epidemic or other, similar occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care.
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(m) The Trustee shall not be deemed to have knowledge of an Event of Default hereunder unless it has actual knowledge thereof.
(n) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct.
(o) The Trustee shall not be responsible for or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof.

Section 8.04. Right to Rely on Documents and Opinions. (a) The Trustee shall be protected in acting upon any notice, resolution, request, requisition, facsimile, consent, order, certificate, report, opinion, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Each statement of facts contained in a Written Request of the Community Facilities District or a Written Certificate of the Community Facilities District shall be sufficient evidence to the Trustee of the facts so stated and the Trustee shall have no duty to confirm the accuracy of such facts. (b) The Trustee shall have the right to accept and act upon a Written Request of the Community Facilities District delivered using Electronic Means. If the Community Facilities District elects to deliver a Written Request of the Community Facilities District to the Trustee using Electronic Means and the Trustee acts upon such Written Request, the Trustee’s understanding of such Written Request shall be deemed controlling. The Community Facilities District understands and agrees that the Trustee cannot determine the identity of the actual sender of such Written Request and that the Trustee shall conclusively presume that Written Requests of the Community Facilities District that purport to have been sent by an Authorized Representative of the Community Facilities District have been sent by such Authorized Representative. The Community Facilities District shall be responsible for ensuring that only Authorized Representatives transmit such Written Requests of the Community Facilities District to the Trustee and that the Community Facilities District is solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt thereof by the Community Facilities District. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Written Requests of the Community Facilities District delivered using Electronic Means notwithstanding such directions conflict or are inconsistent with a subsequent written Written Requests of the Community Facilities District. The Community Facilities District agrees (i) to assume all risks arising out of the use of Electronic Means to submit Written Requests of the Community Facilities District to the Trustee, including the risk of the Trustee acting on unauthorized Written Requests of the Community Facilities District, and the risk of interception and misuse by third parties, (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Written Requests of the Community Facilities District to the Trustee and that there may be more secure methods of transmitting Written Requests of the Community Facilities District than the method selected by the Community Facilities District, (iii) that the security procedures, if any, to be followed in connection with its transmission of Written Requests of the Community Facilities District provide to it a commercially reasonable degree of protection in light of its particular needs and 3702
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circumstances, and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures. Notwithstanding the foregoing, the provisions of this subsection, and the Trustee’s actions pursuant hereto, are subject to the Trustee’s standard of care and limitations on liability set forth in Sections 8.03 and 8.04; provided, however, that the Trustee’s reliance on a Written Request of the Community Facilities District that purports to have been sent by an Authorized Representative of the Community Facilities District delivered in accordance with this Section using Electronic Means shall not, in and of itself, be construed as negligence.
(c) Whenever in the administration of the duties imposed upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the Community Facilities District, and such Written Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Written Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable.
(d) The Trustee may consult with counsel, who may be counsel to the Community Facilities District, with regard to legal questions, including with respect to compliance herewith of amendments hereto, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.

Section 8.05. Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with prudent corporate trust industry standards, in which accurate entries shall be made of all transactions made by it relating to the proceeds of the Bonds, the Special Tax Revenues received by it and all funds and accounts established by it pursuant to this Indenture. Such books of record and account shall be available for inspection by the Community Facilities District during regular business hours and upon reasonable notice and under reasonable circumstances as agreed to by the Trustee. The Trustee shall deliver to the Community Facilities District a monthly accounting of the funds and accounts it holds under this Indenture; provided, however, that the Trustee shall not be obligated to deliver an accounting for any fund or account that (a) has a balance of zero, and (b) has not had any activity since the last reporting date.

Section 8.06. Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject during business hours and upon reasonable notice to the inspection of the Community Facilities District, the Owners and their agents and representatives duly authorized in writing.

Section 8.07. Compensation and Indemnification. The Community Facilities District shall pay to the Trustee from time to time from Special Tax Revenues all reasonable compensation pursuant to a pre-approved fee letter for all services rendered under this Indenture, and also all reasonable expenses, charges, legal and consulting fees pursuant to a pre-approved fee letter and other disbursements pursuant to a pre-approved fee letter and those of its attorneys, 3703
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agents and employees, incurred in and about the performance of their powers and duties under this Indenture. The Community Facilities District shall, to the extent permitted by law, from Special Tax Revenues, indemnify and save the Trustee and its officers, directors and employees harmless against any costs, suits, judgments, damages, liabilities, claims, expenses, including legal fees and expenses, and liabilities which it may incur in the exercise and performance of its powers and duties hereunder, including the enforcement of any remedies and the defense of any suit, and which are not due to its negligence or its willful misconduct. The duty of the Community Facilities District to indemnify the Trustee shall survive the resignation or removal of the Trustee and the discharge and satisfaction of this Indenture. 3704
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ARTICLE IX

SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures. (a) This Indenture and the rights and obligations of the Community Facilities District, the Trustee and the Owners hereunder may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Community Facilities District and the Trustee may enter into when there are filed with the Trustee the written consents of the Owners of a majority of the aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 11.07. No such modification or amendment shall (i) extend the fixed maturity of any Bond, reduce the amount of principal thereof or the rate of interest thereon, extend the time of payment thereof or alter the redemption provisions thereof, without the prior written consent of the Owner of each Bond so affected, (ii) permit any pledge of, or the creation of any lien on, security interest in or charge or other encumbrance upon the assets pledged under this Indenture prior to or on a parity with the pledge contained in, and the lien and security interest created by, this Indenture or deprive the Owners of the pledge contained in, and the lien and security interest created by, this Indenture, except as expressly provided in this Indenture, without the prior written consents of the Owners of all Bonds then Outstanding, or (iii) modify or amend this Section without the prior written consents of the Owners of all Bonds then Outstanding.
(b) This Indenture and the rights and obligations of the Community Facilities District, the Trustee and the Owners hereunder may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Community Facilities District and the Trustee may enter into without the consent of any Owners for any one or more of the following purposes:
(i) to add to the covenants and agreements of the Community Facilities District in this Indenture contained, other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Community Facilities District;
(ii) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision contained in this Indenture, provided that such modification or amendment does not materially adversely affect the rights or interests of the Owners hereunder; (iii) to provide for the issuance of one or more Series of Additional Bonds, and to provide the terms and conditions under which such Series of Additional Bonds may be issued, subject to and in accordance with the provisions of Article III; (iv) to permit the qualification of this Indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect; (v) to cause interest on the Bonds to be excludable from gross income for purposes of federal income taxation by the United States of America; and 3705
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(vi) in any other respect whatsoever as the Community Facilities District may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the rights or interests of the Owners hereunder. (c) Promptly after the execution by the Community Facilities District and the Trustee of any Supplemental Indenture, the Trustee shall mail a notice (the form of which shall be furnished to the Trustee by the Community Facilities District), by first class mail postage prepaid, setting forth in general terms the substance of such Supplemental Indenture, to the Owners at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture.

Section 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Community Facilities District, the Trustee and the Owners shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the effective date of any Supplemental Indenture pursuant to this Article may and, if the Community Facilities District so determines, shall bear a notation by endorsement or otherwise in form approved by the Community Facilities District and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Owner of any Bond Outstanding at the time of such effective date and presentation of such Bond for such purpose at the Office of the Trustee a suitable notation shall be made on such Bonds. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Community Facilities District and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Community Facilities District and authenticated by the Trustee and, in that case, upon demand of the Owner of any Bond Outstanding at the time of such effective date, and presentation of such Bond for such purpose at the Office of the Trustee, such a new Bond in equal principal amount of the same Series, interest rate and maturity shall be exchanged for such Owner’s Bond so surrendered.

Section 9.04. Amendment of Particular Bonds. The provisions of this Article shall not prevent any Owner from accepting any amendment or modification as to any particular Bond owned by it, provided that due notation thereof is made on such Bond. 3706
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ARTICLE X

DEFEASANCE
Section 10.01. Discharge of Indenture. (a) If the Community Facilities District shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Bonds the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated herein and therein, then the Owners shall cease to be entitled to the pledge of the Net Special Tax Revenues and the other assets pledged therefor hereunder, and all agreements, covenants and other obligations of the Community Facilities District hereunder shall thereupon cease, terminate and become void and this Indenture shall be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Community Facilities District all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the Community Facilities District all money or securities held by it pursuant hereto that are not required for the payment of the principal of and interest and premium, if any, on the Bonds.
(b) Subject to the provisions of subsection (a) of this Section, if the Community Facilities District shall pay or cause to be paid to the Owner of an Outstanding Bond the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated herein and therein, such Owner shall cease to be entitled to the pledge of the Net Special Tax Revenues and the other assets pledged therefor hereunder and all agreements, covenants and other obligations of the Community Facilities District hereunder shall thereupon cease, terminate and become void and this Indenture shall be discharged and satisfied as to such Bond.
(c) Notwithstanding the discharge and satisfaction of this Indenture or the discharge and satisfaction of this Indenture in respect of any Bond, those provisions of this Indenture relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon the Trustee and the Owner of such Bond, and the Trustee shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for the payment of the principal of and interest and premium, if any, on such Bond, and to pay to the Owner of such Bond the funds so held by the Trustee as and when such payment becomes due. Notwithstanding the discharge and satisfaction of this Indenture, the obligation of the Community Facilities District to indemnify the Trustee pursuant to Section 8.07 shall remain in effect and be binding upon the Community Facilities District.

Section 10.02. Bonds Deemed To Have Been Paid. (a) If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bond and the payment of the interest thereon to the maturity or redemption date thereof, such Bond shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01. Any Outstanding Bond shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in Section 10.01 if (i) in case such Bond is to be redeemed on any date prior to its maturity date, the Community Facilities District shall have 3707
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given to the Trustee in form satisfactory to it irrevocable instructions to mail, on a date in accordance with the provisions of Section 4.02, notice of redemption of such Bond on said redemption date, said notice to be given in accordance with Section 4.02, (ii) there shall have been deposited with the Trustee either (A) money in an amount which shall be sufficient, or (B) Defeasance Securities, the principal of and the interest on which when due, and without any reinvestment thereof, together with the money, if any, deposited therewith, will provide moneys which shall be sufficient to pay when due the interest to become due on such Bond on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and premium, if any, on such Bond, and (iii) in the event such Bond is not by its terms subject to redemption within the next succeeding 60 days, the Community Facilities District shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the Owner of such Bond that the deposit required by clause (ii) above has been made with the Trustee and that such Bond is deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and premium, if any, on such Bond. (b) No Bond shall be deemed to have been paid pursuant to clause (ii) of subsection (a) of this Section unless the Community Facilities District shall have caused to be delivered to the Community Facilities District and the Trustee (i) an executed copy of a Verification Report with respect to such deemed payment, addressed to the Community Facilities District and the Trustee, in form and in substance acceptable to the Community Facilities District, (ii) a copy of the escrow agreement entered into in connection with the deposit pursuant to clause (ii)(B) of subsection (a) of this Section resulting in such deemed payment, which escrow agreement shall be in form and in substance acceptable to the Community Facilities District and which escrow agreement shall provide that no substitution of Defeasance Securities shall be permitted except with other Defeasance Securities and upon delivery of a new Verification Report, and no reinvestment of Defeasance Securities shall be permitted except as contemplated by the original Verification Report or upon delivery of a new Verification Report, and (iii) a copy of an opinion of Bond Counsel, dated the date of such deemed payment and addressed to the Community Facilities District and the Trustee, in form and in substance acceptable to the Community Facilities District, to the effect that such Bond has been paid within the meaning and with the effect expressed in this Indenture, all agreements, covenants and other obligations of the Community Facilities District hereunder have ceased, terminated and become void and the Indenture has been discharged and satisfied as to such Bonds.

Section 10.03. Unclaimed Moneys. Any moneys held by the Trustee in trust for the payment of the principal of, or premium or interest on, any Bond that remain unclaimed for two years after the date when such principal, premium or interest has become payable, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after the date when such principal, premium or interest become payable, shall be repaid by the Trustee to the Community Facilities District as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owner of such Bond shall look only to the Community Facilities District for the payment of such principal, premium or interest. The Trustee shall hold any such moneys uninvested.
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ARTICLE XI

MISCELLANEOUS
Section 11.01. Successor Is Deemed Included in All References to Predecessor.

Whenever in this Indenture either the Community Facilities District or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained required hereby to be performed by or on behalf of the Community Facilities District or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.

Section 11.02. Limitation of Rights. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any Person other than the Trustee, the Community Facilities District and the Owners, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained, and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Trustee, the Community Facilities District and the Owners.

Section 11.03. Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Community Facilities District of any Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy such Bonds.

Section 11.04. Severability of Invalid Provisions. If any one or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Community Facilities District hereby declares that it would have entered into this Indenture and each and every other Section, subsection, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, subsections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.

Section 11.05. Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely:
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If to the Community Facilities District:

City of Ontario Community Facilities District
No. 54 (Esperanza Facilities)
c/o City of Ontario
303 East “B” Street
Ontario, California 91764
Attention: Executive Director of Finance
If to the Trustee:

Zions Bancorporation, National Association
550 South Hope Street, Suite 2875
Los Angeles, California 90071
Attention: Corporate Trust Services
If to NMC Builders:

NMC Builders, LLC
c/o SC Ontario Development Corporation
1156 North Mountain Avenue
Upland, California 91786
Attention: Administrative Member
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 given by courier or delivery service or if personally served or delivered, upon delivery, (b) if given by telecopier, upon the sender’s receipt of an appropriate answerback or other written acknowledgment, (c) if given by electronic mail, on the date sent, but only if confirmation of the receipt of such electronic mail is received or if notice is concurrently sent by another means specified herein, (d) 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, or (e) if given by any other means, upon delivery at the address specified in this Section.

Section 11.06. Evidence of Rights of Owners. Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Owners may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Owners in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and the Community Facilities District if made in the manner provided in this Section.

The fact and date of the execution by any Person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the Person signing such request, consent or other instrument acknowledged to such notary public or 3710
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such officer the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer.

The ownership of Bonds shall be proved by the Registration Books.

Any request, consent or other instrument or writing of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Community Facilities District in accordance therewith or reliance thereon.

Section 11.07. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds that are actually known by the Trustee to be owned or held by or for the account of the Community Facilities District, or by any other obligor on the Bonds, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Community Facilities District or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided, however, that if 100% of the Bonds are so owned or held, such Bonds shall be deemed to be Outstanding. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Community Facilities District or any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Community Facilities District shall specify in a Written Certificate of the Community Facilities District delivered to the Trustee which Bonds, if any, are, as of the date of such Written Certificate, owned or held by or for the account of the Community Facilities District.

Section 11.08. Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owner entitled thereto, subject, however, to the provisions of Section 10.03, but without any liability for interest thereon.

Section 11.09. Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account, but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with prudent corporate trust industry standards, and with due regard for the requirements hereof and for the protection of the security of the Bonds and the rights of every Owner thereof. The Trustee may establish any such additional funds or accounts as it deems necessary to perform its obligations hereunder. 3711
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Section 11.10. Business Days. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Indenture, shall not be a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day, with the same force and effect as if done on the nominal date provided in this Indenture and, unless otherwise specifically provided in this Indenture, no interest shall accrue for the period from and after such nominal date.

Section 11.11. Waiver of Personal Liability. No member, officer, agent or employee of the Community Facilities District or the City shall be individually or personally liable for the payment of the principal of or premium or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof, but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by any applicable provision of law or by this Indenture.

Section 11.12. Conflict with Act. In the event of any conflict between any provision of this Indenture and any provision of the Act, the provision of the Act shall prevail over the provision of this Indenture.

Section 11.13. Conclusive Evidence of Regularity. Bonds issued pursuant to this Indenture shall constitute evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes.

Section 11.14. Governing Laws. This Indenture shall be governed by and construed in accordance with the laws of the State.

Section 11.15. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Indenture may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Indenture using an electronic signature, it is signing, adopting and accepting this Indenture and that signing this Indenture using an electronic signature is the legal equivalent of having placed its handwritten signature on this Indenture on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Indenture in a usable format.

Section 11.16. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 3712
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IN WITNESS WHEREOF, the Community Facilities District has caused this Indenture to be signed in its name by its representative thereunto duly authorized, and the Trustee, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.

CITY OF ONTARIO COMMUNITY
FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
By:

ZIONS BANCORPORATION,

NATIONAL ASSOCIATION, AS

TRUSTEE
By:
[Signature Page to Indenture]
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EXHIBIT A

PERMITTED INVESTMENTS
“Permitted Investments” means the following:
(1) (a) Direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America (“United States Treasury Obligations”), (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interests in future interest and principal payments on obligations described above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated.
(2) Federal Housing Administration debentures.
(3) The listed obligations of government-sponsored agencies which are not backed by the full faith and credit of the United States of America:
- Federal Home Loan Mortgage Corporation (FHLMC)
Senior debt obligations and participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts)
- Farm Credit System (formerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives)
Consolidated system wide bonds and notes
- Federal Home Loan Banks (FHL Banks)
Consolidated debt obligations
- Federal National Mortgage Association (FNMA)
Senior debt obligations
Mortgage-backed securities (excluded are
stripped mortgage securities which are purchased
at prices exceeding their principal amounts)
(4) Unsecured certificates of deposit, time deposits or other bank deposit products, and bankers’ acceptances (having maturities of not more than 365 days) of any bank, the short-term obligations of which are rated “A-1+” or better by S&P and “Prime1” by Moody’s. 3714
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(5) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation, in banks which have capital and surplus of at least $15 million.
(6) Commercial paper (having original maturities of not more than 270 days) rated at the time of purchase “A-1+” by S&P and “Prime-1” by Moody’s. (7) Money market mutual funds rated “AAm” or “AAm-G” by S&P, or better and, if rated by Moody’s, rated “Aa2” or better, including a fund for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee provide transfer agency, custodial, investment advisory or other management services, and, subject to the prior written consent of S&P and Moody’s, the investment pool maintained by the county in which the Community Facilities District is located or other investment pools, in either case so long as such pool is rated in one of the two highest rating categories by S&P and Moody’s.
(8) State Obligations, which means
(a) Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated at least “A3” by Moody’s and at least “A-” by S&P, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated.
(b) Direct, general short-term obligations of any state agency or subdivision or agency thereof described in (a) above and rated “A-1+” by S&P and “MIG-1” by Moody’s.
(c) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state or state agency in (a) above and rated “AA-” or better by S&P and “Aa3” or better by Moody’s.
(9) Pre-refunded municipal obligations rated “AA+” by S&P and “Aaa” by Moody’s meeting the following requirements:
(a) the municipal obligations are (i) not subject to redemption prior to maturity or (ii) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions;
(b) the municipal obligations are secured by cash or United States Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations;
(c) the principal of and interest on the United States Treasury Obligations (plus any cash in the escrow) has been verified by the report of 3715
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independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations (“Verification Report”);
(d) the cash or United States Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations;
(e) no substitution of a United States Treasury Obligation shall be permitted except with another United States Treasury Obligation and upon delivery of a new Verification Report; and
(f) the cash or the United States Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent.
(10) Repurchase agreements:

A. With (i) any domestic bank, or domestic branch of a foreign bank, the long term debt of which is rated at least “A-” by S&P and “Aa3” by Moody’s; (ii) any broker-dealer with “retail customers” or a related affiliate thereof which broker-dealer has, or the parent company (which guarantees the provider) of which has, long-term debt rated at least “A-” by S&P and “Aa3” Moody’s, which broker-dealer falls under the jurisdiction of the Securities Investors Protection Corporation; or (iii) any other entity rated at least “A-” by S&P and “A3” by Moody’s (each, an “Eligible Provider”), provided that:
a. The (i) permitted collateral shall include U.S. Treasury Obligations, or senior debt obligations of GNMA, FNMA or FHLMC (no collateralized mortgage obligations shall be permitted for these providers), and (ii) collateral levels must be at least 102% of the total principal when the collateral type is U.S. Treasury Obligations, 103% of the total principal when the collateral type is GNMAs and 104% of the total principal when the collateral type is FNMA and FHLMC (“Eligible Collateral”);
b. The Trustee or a third party acting solely as agent therefor or for the Community Facilities District (the “Custodian”) has possession of the collateral or the collateral has been transferred to the Custodian in accordance with applicable state and federal laws (other than by means of entries on the transferor’s books);
c. The collateral shall be marked to market on a daily basis and the provider or Custodian shall send monthly reports to the Trustee and the Community Facilities District setting forth the type of collateral, the collateral percentage required for that collateral type, the market value of the collateral on the valuation date and the name of the Custodian holding the collateral;
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d. The repurchase agreement shall state, and an opinion of counsel shall be rendered at the time such collateral is delivered that the Custodian has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof; and e. The repurchase agreement shall provide that if during its term the provider’s rating by either Moody’s or S&P is withdrawn or suspended or falls below “A-” by S&P or “A3” by Moody’s, as appropriate, the provider must, notify the Trustee and the Community Facilities District within five days of receipt of such notice. Within ten days of receipt of such notice, the provider shall either (i) post Eligible Collateral, or (ii) assign the agreement to an Eligible Provider. If the provider does not perform a remedy within ten business days, the provider shall, at the direction of the Trustee or the Community Facilities District repurchase all collateral and terminate the repurchase agreement, with no penalty or premium to the Trustee or the Community Facilities District. (11) Investment agreements with a domestic or foreign bank or corporation the long-term debt of which, or, in the case of a guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, of the guarantor is rated at least “AA” by S&P and “Aa3” by Moody’s (each, an “Eligible Provider”); provided, that, by the terms of the investment agreement:
(a) interest payments are to be made to the Trustee at times and in amounts as necessary to pay debt service on the Bonds;
(b) the invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven days’ prior notice; the Trustee and the Community Facilities District hereby agree to give or cause to be given notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid;
(c) the provider shall send monthly reports to the Trustee and the Community Facilities District setting forth the balance the Community Facilities District or the Trustee has invested with the provider and the amounts and dates of interest accrued and paid by the provider;
(d) the investment agreement shall state that it is an unconditional and general obligation of the provider, and is not subordinated to any other obligation of, the provider thereof or, if the provider is a bank, the agreement or the opinion of counsel shall state that the obligation of the provider to make payments thereunder ranks pari passu with the obligations of the provider to its other depositors and its other unsecured and unsubordinated creditors; (e) the Trustee and the Community Facilities District shall receive an opinion of domestic counsel to the provider that such investment agreement is 3717
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legal, valid and binding and enforceable against the provider in accordance with its terms;
(f) the Trustee and the Community Facilities District shall receive an opinion of foreign counsel to the provider (if applicable) that (i) the investment agreement has been duly authorized, executed and delivered by the provider and constitutes the legal, valid and binding obligation of the provider, enforceable against the provider in accordance with its terms, (ii) the choice of law of the state set forth in the investment agreement is valid under that country’s laws and a court in such country would uphold such choice of law, and (iii) any judgment rendered by a court in the United States would be recognized and enforceable in such country;
(g) the investment agreement shall provide that if during its term (i) the provider’s rating by either S&P or Moody’s falls below “AA-” or “Aa3”, respectively, the provider shall, at its option, within ten days of receipt of publication of such downgrade, either (A) post Eligible Collateral with the Trustee, the Community Facilities District or a third party acting solely as agent therefor (the “Custodian”) free and clear of any third party liens or claims, (B) assign the agreement to an Eligible Provider, or (C) repay the principal of and accrued but unpaid interest on the investment, and (ii) the provider’s rating by either S&P or Moody’s falls below “A-” or “A3”, respectively, the provider must, at the direction of the Trustee or the Community Facilities District, within ten days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the Trustee or the Community Facilities District;
(h) in the event the provider is required to collateralize, permitted collateral shall include U.S. Treasury Obligations, or senior debt obligations of GNMA, FNMA or FHLMC (no collateralized mortgage obligations shall be permitted for these providers) and collateral levels must be 102% of the total principal when the collateral type is U.S. Treasury Obligations, 103% of the total principal when the collateral type is GNMAs and 104% of the total principal when the collateral type is FNMA and FHLMC (“Eligible Collateral”). In addition, the collateral shall be marked to market on a daily basis and the provider or Custodian shall send monthly reports to the Trustee and the Community Facilities District setting forth the type of collateral, the collateral percentage required for that collateral type, the market value of the collateral on the valuation date and the name of the Custodian holding the collateral; (i) the investment agreement shall state, and an opinion of counsel shall be rendered, in the event collateral is required to be pledged by the provider under the terms of the investment agreement, at the time such collateral is delivered, that the Custodian has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof; and 3718
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(j) the investment agreement must provide that if during its term (i) the provider shall default in its payment obligations, the provider’s obligations under the investment agreement shall, at the direction of the Trustee or the Community Facilities District, be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Trustee or the Community Facilities District, as appropriate, and (ii) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. (“event of insolvency”), the provider’s obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Trustee or the Community Facilities District, as appropriate. 3719
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EXHIBIT B
FORM OF SERIES 2022 BOND
No. _____ $____________

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
SPECIAL TAX BOND, SERIES 2022

INTEREST RATE MATURITY DATE DATED DATE CUSIP
_____% September 1, 20__ __________, 2022 __________
REGISTERED OWNER:

PRINCIPAL AMOUNT:

City of Ontario Community Facilities District No. 54 (Esperanza Facilities) (the “Community Facilities District”), for value received, hereby promises to pay, solely from the sources hereinafter described, to the Registered Owner identified above or registered assigns (the “Registered Owner”), on the Maturity Date identified above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like lawful money from the date hereof payable semiannually on March 1 and September 1 in each year, commencing September 1, 2022 (the “Interest Payment Dates”), until payment of such Principal Amount in full.

This Bond is one of a series of a duly authorized issue of bonds approved by the qualified electors of the Community Facilities District, pursuant to the Mello-Roos Community Facilities Act of 1982, constituting Sections 53311 et seq. of the California Government Code (the “Act”), and issued for the purpose of financing certain public facilities, and is one of the series of bonds designated “City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022” (the “Series 2022 Bonds”) in the aggregate principal amount of $___________. The Series 2022 Bonds are issued pursuant to the Indenture, dated as of __________ 1, 2022 (the “Indenture”), by and between the Community Facilities District and Zions Bancorporation, National Association, as trustee (said entity or any successor thereto as trustee under the Indenture, the “Trustee”), and this reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Indenture, additional bonds (“Additional Bonds”) may be issued by the Community Facilities District on a parity with the Series 2022 Bonds. The Series 2022 Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is 3720
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entered into, and this Bond is issued under, the Act and the laws of the State of California.

Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture.

Interest on the Series 2022 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Series 2022 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interest thereon shall be payable from such Interest Payment Date, (ii) a Series 2022 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any Series 2022 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has previously been paid or duly provided for. Interest shall be paid in lawful money of the United States on each Interest Payment Date. Interest shall be paid by check of the Trustee mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the Series 2022 Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. Notwithstanding the foregoing, interest on any Series 2022 Bond that is not punctually paid or duly provided for on any Interest Payment Date shall, if and to the extent that amounts subsequently become available therefor, be paid on a payment date established by the Trustee to the Person in whose name the ownership of such Series 2022 Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which shall be given to such Owner not less than ten days prior to such special record date. The principal of the Series 2022 Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee.

The Bonds are special, limited obligations of the Community Facilities District, payable, as provided in the Indenture, solely from Net Special Tax Revenues and the other assets pledged therefor thereunder. Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth in the Indenture), the City of Ontario or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds.

Pursuant to and as more particularly provided in the Indenture, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, in order to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act, the Community Facilities District pledges to the Owners, and grants thereto a lien on and a security interest in, all of the Net Special Tax Revenues and any other amounts held in the Special Tax Fund, the Bond Fund and the Reserve Fund. Said pledge constitutes a first lien on and security interest in such assets, which shall immediately attach to such assets and be effective, binding and enforceable against the Community Facilities District, its successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the extent set forth in, and in accordance with, the Indenture, irrespective of whether those parties have notice of the pledge of, lien on and security interest in such assets and without the need for any physical delivery, recordation, filing or further act.

The Series 2022 Bonds are subject to redemption on the dates, at the Redemption Prices and pursuant to the terms set forth in the Indenture. Notice of redemption of any Series 2022 Bond or any portion thereof shall be given as provided in the Indenture. 3721
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The Series 2022 Bonds are issuable as fully registered Bonds without coupons in Authorized Denominations ($5,000 and any integral multiple thereof).

Any Series 2022 Bond may be transferred upon the Registration Books by the Person in whose name it is registered, in person or by such Person’s duly authorized attorney, upon surrender of such Series 2022 Bond to the Trustee for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Series 2022 Bond or Series 2022 Bonds shall be so surrendered for transfer, the Community Facilities District shall execute and the Trustee shall authenticate and shall deliver a new Series 2022 Bond or Series 2022 Bonds of the same maturity in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Series 2022 Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Series 2022 Bonds of the same maturity of other Authorized Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.

The Indenture and the rights and obligations of the Community Facilities District, the Owners and the Trustee may be modified or amended in the manner, to the extent, and upon the terms provided in the Indenture.

The Indenture contains provisions permitting the Community Facilities District to make provision for the payment of the principal of and the interest and premium, if any, on any of the Bonds so that such Bonds shall no longer be deemed to be Outstanding under the terms of the Indenture.

Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Trustee for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY

TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.
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IN WITNESS WHEREOF, the Community Facilities District has caused this Bond to be signed in its name and on its behalf by the manual or facsimile signature of the Mayor of the City of Ontario, attested by the manual or facsimile signature of the City Clerk of the City of Ontario, all as of the Dated Date identified above.

CITY OF ONTARIO COMMUNITY
FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
By:

Mayor of the City of Ontario
ATTEST:

Clerk
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CERTIFICATE OF AUTHENTICATION
This is one of the Series 2022 Bonds described in the within-mentioned Indenture and registered on the Registration Books.

Date: __________

ZIONS BANCORPORATION,

NATIONAL ASSOCIATION, AS

TRUSTEE
By:

Authorized Officer
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ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto __________________________________, whose address and social security or other tax identifying number is ____________________, the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) ______________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.

Dated:

Signature Guaranteed:

Note: Signature guarantee shall be made by a guarantor
institution participating in the Securities Transfer
Agents Medallion Program or in such other guarantee
program acceptable to the Trustee.

Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the face of the within Bond in every particular without alteration or
enlargement or any change whatsoever.
3725
Jones Hall Draft 3-28-2022
$[PAR]

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
SPECIAL TAX BONDS, SERIES 2022

BOND PURCHASE AGREEMENT
[Pricing Date]
City of Ontario
Community Facilities District No. 54
(Esperanza Facilities)
303 East “B” Street
Ontario, California 91764
Ladies and Gentlemen:

Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with City of Ontario Community Facilities District No. 54 (Esperanza Facilities) (the “Community Facilities District”), which upon acceptance will be binding upon the Underwriter and the Community Facilities District. The agreement of the Underwriter to purchase the Bonds (as hereinafter defined) is contingent upon the Community Facilities District satisfying all of the obligations imposed upon them under this Purchase Agreement. This offer is made subject to the Community Facilities District’s acceptance by the execution of this Purchase Agreement and its delivery to the Underwriter at or before 8:00 p.m., local time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Community Facilities District at any time prior to the acceptance hereof by the Community Facilities District. All capitalized terms used herein, which are not otherwise defined, shall have the meaning provided for such terms in the Indenture, dated as of [May] 1, 2022 (the “Indenture”), by and between the Community Facilities District and Zions Bancorporation, National Association, as trustee (the “Trustee”).

1. Purchase, Sale and Delivery of the Bonds.

Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase from the Community Facilities District and the Community Facilities District hereby agrees to sell to the Underwriter all (but not less than all) of the $[PAR] aggregate principal amount of the City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022 (the “Bonds”), dated the Closing Date (as hereinafter defined), bearing interest at the rates and maturing on the dates and in the principal amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be $_________ (being 100% of the aggregate principal amount thereof, plus original issue premium of $_________ and less an Underwriter’s discount of $_________). 3726
2 The Underwriter agrees to make a bona fide public offering of all of the Bonds initially at the public offering prices (or yields) set forth in Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds subject to Section 4 hereof, provided that the Underwriter shall not change the interest rates set forth in Exhibit A. The Bonds will be offered and sold to certain dealers at prices lower than such initial offering prices.

The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from the Net Special Tax Revenues as provided in the Indenture, the Preliminary Official Statement (as hereinafter defined), and the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Community Facilities District Act”). The issuance of the Bonds has been duly authorized by the City Council of the City of Ontario (the “City”), as the legislative body for the Community Facilities District, pursuant to a resolution (the “Community Facilities District Resolution of Issuance”) adopted on [April 19], 2022.

The net proceeds of the Bonds will be used to (i) provide financing for certain public facilities and costs with respect thereto related to the development within the Community Facilities District, (ii) fund a reserve fund with respect to the Bonds, and (iii) pay the costs of issuance with respect to the Bonds.

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

The Community Facilities District acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the Community Facilities District and the Underwriter, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as the agent or fiduciary of, or a municipal or financial advisor of, the Community Facilities District and has not assumed any advisory or fiduciary responsibility to the Community Facilities District with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided or is currently providing other services to the Community Facilities District on other matters), (iv) the Underwriter has financial interests that differ from those of the Community Facilities District, (v) the only obligations the Underwriter has to the Community Facilities District with respect to the transaction contemplated hereby are expressly set forth in this Purchase Agreement, except as otherwise provided by applicable rules and regulations of the Securities and Exchange Commission or the rules of the MSRB (as defined below) or other law, and (vi) the Community Facilities District has consulted its own legal, financial, accounting, tax, and other advisors to the extent they have deemed appropriate in connection with this transaction. The Community Facilities District acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (“MSRB”). The Community Facilities District acknowledges and represents that it has engaged CSG Advisors Incorporated as its municipal advisor 3727
3 (as defined in Securities and Exchange Commission Rule 15Ba1) and will rely solely on the financial advice of CSG Advisors Incorporated with respect to the Bonds.

B. Pursuant to the authorization of the Community Facilities District, the Underwriter has distributed copies of the Preliminary Official Statement dated [POS Date], relating to the Bonds, which, together with the cover page, inside cover page and appendices thereto is herein called the “Preliminary Official Statement.” By its acceptance of this Purchase Agreement, the Community Facilities District hereby ratifies the use by the Underwriter of the Preliminary Official Statement, and the Community Facilities District agrees to execute a final official statement relating to the Bonds (the “Official Statement”) which will consist of the Preliminary Official Statement with such changes as may be made thereto, with the approval of Orrick Herrington & Sutcliffe LLP, Bond Counsel (“Bond Counsel”), Stradling Yocca Carlson & Rauth, a Professional Corporation, Disclosure Counsel (“Disclosure Counsel”), and the Underwriter, and to provide copies thereof to the Underwriter as set forth herein. The Community Facilities District hereby authorizes and requires the Underwriter to use and promptly distribute, in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official Statement and any supplement or amendment thereto.

The Community Facilities District further authorizes the Underwriter to use and distribute, in connection with the offer and sale of the Bonds, the Indenture, the Continuing Disclosure Agreement executed by the Community Facilities District in connection with the Bonds (the “Continuing Disclosure Agreement”), this Purchase Agreement and all information contained herein, and all other documents, certificates and statements furnished by or on behalf of the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.

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

D. Except as the Underwriter and the Community Facilities District may otherwise agree, the Community Facilities District will deliver to the Underwriter, at the offices of Bond Counsel in Los Angeles, California, or at such other location as may be mutually agreed upon by the Underwriter and the Community Facilities District, the documents hereinafter mentioned; and the Community Facilities District will deliver to the Underwriter through the facilities of The Depository Trust Company (“DTC”), the Bonds, in definitive form (all Bonds bearing CUSIP numbers), duly executed by the Community Facilities District and authenticated by the Trustee in the manner provided for in the Indenture and the Community Facilities District Act at 8:00 a.m.

California time, on [Closing Date] (the “Closing Date”), and the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in paragraph (A) of this Section by wire transfer, payable in federal or other immediately available funds (such delivery and payment being herein referred to as the “Closing”). The Bonds shall be in fully registered book-entry form (which may be typewritten) and shall be registered in the name of Cede & Co., as nominee of DTC.

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

The Community Facilities District represents, warrants and covenants to the Underwriter on behalf of itself and the City that:
3728
4 A. The City is duly organized and validly existing as a general law city under the Constitution and laws of the State of California and has duly authorized the formation of the Community Facilities District and the incurring of bonded indebtedness thereby pursuant to resolutions duly adopted by the City Council (collectively, the “Community Facilities District Formation Resolutions” and, together with the Community Facilities District Resolution of Issuance, the “Community Facilities District Resolutions”) and the Community Facilities District Act. The City Council, as the legislative body of the City and the Community Facilities District, has duly adopted the Community Facilities District Formation Resolutions and an ordinance of the City Council levying Special Taxes within the Community Facilities District (the “Ordinance”), and has caused to be recorded in the real property records of the County of San Bernardino, a notice of special tax lien, and any required amendments thereof (collectively, the “Notice of Special Tax Lien” and, together with the Community Facilities District Formation Resolutions and the Ordinance, the “Formation Documents”), and has duly adopted the Community Facilities District Resolution of Issuance. Each of its Formation Documents remains in full force and effect as of the date hereof and has not been amended or rescinded. The Community Facilities District is duly organized and validly existing as a Community Facilities District under the laws of the State of California. The Community Facilities District has, and at the Closing Date will have, as the case may be, full legal right, power and authority: (i) to execute, deliver and perform its obligations under this Purchase Agreement, the Continuing Disclosure Agreement and the Indenture, and to carry out all transactions contemplated by each of such agreements; (ii) to issue, sell and deliver the Bonds as provided herein; and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents, the Indenture, the Bonds, the Continuing Disclosure Agreement, this Purchase Agreement, the Acquisition and Funding Agreement dated as of May 1, 2019 (the “GDC/CDG Esperanza Acquisition Agreement”), by and between the City and GDC/CDG Esperanza PA 4 Venture, L.P., a Delaware limited partnership (“GDC/CDG Esperanza”), the Acquisition and Funding Agreement, dated as of July 21, 2015, by and between the City and NMC Builders, LLC (the “NMC Builders Acquisition Agreement” and together with the GDC/CDG Esperanza Acquisition Agreement, the “Acquisition Agreements”), and the Official Statement.

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

C. The information in the Preliminary Official Statement and in the Official Statement relating to the Community Facilities District and the Bonds (other than statements pertaining to the book-entry system, as to which no view is expressed), is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, upon delivery and up to and including 25 days after the End of the Underwriting Period (as defined in paragraph (D) below), the Official Statement will be amended 3729
5 and supplemented so as to contain no misstatement of any material fact or omission of any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading.

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

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

G. The Community Facilities District Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement. 3730
6 H. The Bonds are payable from the Net Special Tax Revenues of the Community Facilities District, as set forth in the Indenture, the levy of which has been duly and validly authorized pursuant to the Community Facilities District Act and the Special Taxes within the Community Facilities District will be fixed and levied in an amount which, together with other available funds, is required for the payment of the principal of, and interest on, the Bonds when due and payable, all as provided in the Indenture. The Community Facilities District has covenanted to cause the Special Taxes to be levied and collected at the same time and in the same manner as ordinary ad valorem property taxes or in such other manner as the City Council shall determine.

I. The Indenture creates a valid pledge of, first lien upon and security interest in, the Net Special Tax Revenues of the Community Facilities District, and in the moneys in the Special Tax Fund, the Bond Fund, and the Reserve Fund established pursuant to the Indenture, on the terms and conditions set forth in the Indenture.

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

K. The information contained in the Preliminary Official Statement and in the Official Statement (other than statements therein pertaining to the DTC and its book-entry system, as to which no view is expressed) is true and correct in all material respects and such information does not and shall not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

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

M. At the time of acceptance hereof there is and as of the Closing there will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an “Action”) pending (notice of which has been served on the City or the Community Facilities District) or to the best knowledge of the Community Facilities District or the City threatened, in which any such Action:
(i) in any way questions the existence of the Community Facilities District or the titles of the officers of the Community Facilities District to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of the Bonds or the payment or collection of Special Taxes or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contests or affects the validity of the Community Facilities District Documents or the consummation of the transactions on the part of the Community Facilities District contemplated thereby; (iii) contests the exemption of interest on the Bonds from federal or State 3731
7 income taxation or contests the powers of the Community Facilities District which may result in any material adverse change relating to the financial condition of the Community Facilities District; or (iv) contests the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserts that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and as of the time of acceptance hereof there is and, as of the Closing Date, there will be no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence.

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

O. At or prior to the Closing, the Community Facilities District will have duly authorized, executed and delivered the Continuing Disclosure Agreement in substantially the form attached as an appendix to the Official Statement. Based upon a review of its previous undertakings, and except as disclosed in the Preliminary Official Statement, the City and the City Entities (as defined in the Preliminary Official Statement) have not failed to comply in all material respects with any previous undertakings with regard to the Rule to provide annual reports or notices of enumerated events in the last five years. The Community Facilities District has not previously entered into any undertaking pursuant to the Rule.

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

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

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

S. The City, on behalf of the Community Facilities District, has adopted local debt policies in accordance with Section 8855(i) of the California Government Code.

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

The Community Facilities District hereby ratifies any prior use of and authorizes the future use by the Underwriter, in connection with the offering and sale of the Bonds, of the Preliminary Official Statement, the Official Statement, this Purchase Agreement and all information contained 3732
8 herein, and all other documents, certificates and written statements furnished by the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.

The execution and delivery of this Purchase Agreement by the Community Facilities District shall constitute a representation by the Community Facilities District to the Underwriter that the representations and warranties contained in this Section 2 with respect to the Community Facilities District are true as of the date hereof.

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

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

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

C. At the Closing Date, except as described in the Preliminary Official Statement, the Community Facilities District shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or 3733
9 bound, and the performance by the Community Facilities District of its obligations under the Bonds, the Community Facilities District Resolutions, the Indenture, and any other instruments contemplated by any of such documents, and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed hereunder, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Indenture, the Bonds or the performance of the conditions precedent to be performed by the Community Facilities District hereunder.

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

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

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

2. Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission (“SEC”), or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, including any 3734
10 or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws as amended and then in effect;

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

4. The introduction, proposal or enactment of any amendment to the federal or California Constitution or any action by any federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Community Facilities District, its property, income, securities (or interest thereon), the validity or enforceability of Special Taxes, or the ability of the Community Facilities District to construct or acquire the improvements as contemplated by the Formation Documents, the Community Facilities District Documents or the Official Statement or the right of any owner of the property within the Community Facilities District to develop such property in the manner described in the Official Statement, or the ability of the Community Facilities District to issue the Bonds as contemplated by the Indenture and the Official Statement;

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

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

7. There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war, (2) any other calamity or crisis in the financial markets of the United States or elsewhere, or (3) the sovereign debt rating of the United States is downgraded by any major credit rating agency or a payment default occurs on United States Treasury obligations;

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

9. Any event or circumstance shall exist that either makes untrue or incorrect in any material respect any statement or information in the Official Statement (other than any statement provided by the Underwriter) or is not reflected in the Official Statement but should be reflected therein in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and, in either such event, the Community Facilities District refuses to permit the Official Statement to be supplemented to supply such statement or information, or 3735
11 the effect of the Official Statement as so supplemented is to materially adversely affect the market price or marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;

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

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

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

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

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

15. The commencement of any Action.

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

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

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

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

4. The Continuing Disclosure Agreement executed and delivered by the Community Facilities District and the Continuing Disclosure Agreement dated the Closing Date (the “Developer Continuing Disclosure Agreement”), executed and delivered by GDC/CDG Esperanza 3736
12 and Goodwin Consulting Group, Inc. (“Goodwin Consulting Group”), as dissemination agent, substantially in the form attached as an appendix to the Official Statement;

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

6. A supplemental opinion or opinions of Bond Counsel dated the Closing Date and addressed to the Underwriter to the effect that:
(i) this Purchase Agreement and the Continuing Disclosure Agreement have been duly executed and delivered by the Community Facilities District and, assuming due authorization, execution and delivery by the other parties thereto, constitute the valid and binding obligations of the Community Facilities District, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on legal remedies against public agencies in the State;
(ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended;
(iii) the statements contained in the Official Statement under the captions “THE SERIES 2022 BONDS,” “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2022 BONDS,” (except information under the captions “Special Taxes” and “Rate and Method of Apportionment” as to which no opinion is expressed), “TAX MATTERS,” and Appendix F - “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE,” excluding any material that may be treated as included under such captions by cross-reference or reference to other documents or sources, insofar as such statements expressly summarize certain provisions of the Indenture and certain matters addressed in Bond Counsel’s final approving opinion, are accurate in all material respects.

7. A letter, dated the Closing Date and addressed to the Underwriter, of Disclosure Counsel, to the effect that such counsel is not passing upon and has not undertaken to determine independently or to verify the accuracy or completeness of the statements contained in the Preliminary Official Statement or in the Official Statement, and is, therefore, unable to make any representation to the Underwriter in that regard, but on the basis of its participation in conferences with representatives of the City, Best Best & Krieger LLP, as issuer’s counsel (“Issuer’s Counsel”), Bond Counsel, the appraisal of the taxable properties within the Community Facilities District, dated [INSERT DATE] (the “Appraisal Report”), prepared by Kitty Siino & Associates, Inc. (the “Appraiser”), Empire Economics, Inc, Goodwin Consulting Group, CSG Advisors Incorporated, representatives of the Underwriter and others, during which conferences the content of the 3737
13 Preliminary Official Statement and the Official Statement and related matters were discussed, and its examination of certain documents, and, in reliance thereon and based on the information made available to it in its role as Disclosure Counsel and its understanding of applicable law, Disclosure Counsel advises the Underwriter as a matter of fact, but not opinion, that no information has come to the attention of the attorneys in the firm working on such matter which has led them to believe that the Preliminary Official Statement as of its date and the date hereof and the Official Statement as of its date and as of the Closing Date (in each case excluding therefrom the financial and statistical data, forecasts, charts, numbers, estimates, projections, assumptions and expressions of opinion included in the Preliminary Official Statement and the Official Statement, information regarding DTC and its book entry system and the information set forth in Appendices A, B, C, D, E, F, G, H and I, as to all of which no opinion is expressed) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

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

9. An opinion of Issuer’s Counsel dated the date of Closing and addressed to the Underwriter, the Trustee and the City, substantially in the form attached hereto as Exhibit D;

10. A certificate dated the Closing Date from the Appraiser addressed to the Community Facilities District and the Underwriter substantially to the effect that (i) the assumptions made in the Appraisal Report are reasonable; the Appraisal Report fairly and accurately described, as of the stated date of value, the market values of the properties in the Community Facilities District that are subject to the Special Taxes, (ii) the Appraiser is not aware of any event or act which occurred since the date of the Appraisal Report which, in its opinion, would materially and adversely affect the conclusions as to the market value of the appraised property in the Community Facilities District, (iii) the Appraiser consents to the reproduction of the Appraisal Report as an appendix to the Preliminary Official Statement and the final Official Statement, each with respect to the Bonds, and to the references to the Appraiser and the Appraisal Report made in the Preliminary Official Statement and the Official Statement, (iv) the Appraisal Report complies with the Appraisal Standards for Land-Secured Financings issued by the California Debt and Investment Advisory Commission dated July, 2004, (v) a true and correct copy of the Appraisal Report is attached as an appendix to the Preliminary Official Statement and the Official Statement; and (vi) neither the Appraisal Report nor the information in the Preliminary Official Statement or the Official Statement 3738
14 referring to it contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

11. A certificate dated the Closing Date from Goodwin Consulting Group addressed to the Community Facilities District and the Underwriter to the effect that: (i) the Special Tax, if levied and collected in the maximum amounts permitted pursuant to the Amended and Restated Rate and Method of Apportionment of Special Taxes of the Community Facilities District, as of the Closing Date, would generate at least 110% of the annual debt service payable with respect to the related issue of Bonds, net of estimated Administrative Expenses, based on such assumptions and qualifications as shall be acceptable to the Underwriter; (ii) the statements in the Preliminary Official Statement and the Official Statement provided by Goodwin Consulting Group concerning Special Taxes in the Community Facilities District and all information supplied by it for use in the Official Statement were as of the date of the Preliminary Official Statement, the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; (iii) all information supplied by Goodwin Consulting Group to the Appraiser is true and correct as of the date of the Preliminary Official Statement and the date of the Official Statement and as of the Closing Date, based on such assumptions as may have been supplied by it; and (iv) the information contained in the Appraisal Report with respect to taxes and tax rates applicable, and projected to be applicable, to the property in the Community Facilities District is consistent with such information provided by Goodwin Consulting Group to the Appraiser, which information so provided was based on information obtained by Goodwin Consulting Group from the Community Facilities District, GDC/CDG Esperanza, and the City;

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

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

14. An opinion of counsel to the Trustee dated the Closing Date, addressed to the Underwriter, and the Community Facilities District to the effect that (i) the Trustee 3739
15 is a national banking association duly organized and validly existing under the laws of the jurisdiction of its organization and has the corporate power to execute and deliver the Indenture, the Continuing Disclosure Agreement, and any other documentation relating to the Indenture, (ii) the execution and delivery by the Trustee of the Indenture, the Continuing Disclosure Agreement, and any other documentation relating to the Indenture, and its performance of its obligations under the Indenture, have been and are as of the date hereof duly authorized by all necessary corporate action, (iii) the Indenture and the Continuing Disclosure Agreement have been duly executed and delivered and constitute the valid and legally binding obligations of the Trustee enforceable against it in accordance with their terms except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought as a proceeding in equity or at law), and (iv) the Bonds have been duly authenticated and delivered by the Trustee;

15. A certificate of the Community Facilities District dated the Closing Date, in a form acceptable to Bond Counsel and the Underwriter, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended;

16. From counsel to GDC/CDG Esperanza, (i) a negative assurance letter of such counsel dated the date of the Closing, in form and substance acceptable to the Underwriter and Bond Counsel; and (ii) an opinion of such counsel, dated the date of the Closing, in form and substance acceptable to the Underwriter and Bond Counsel, to the effect that the Developer Continuing Disclosure Agreement has been duly authorized, executed and delivered by GDC/CDG Esperanza;

17. A Letter of Representations from GDC/CDG Esperanza dated the date of printing the Preliminary Official Statement, substantially in the form attached hereto as Exhibit B;

18. A Closing Certificate from GDC/CDG Esperanza dated the Closing Date, substantially in the form attached hereto as Exhibit C or as such Closing Certificate may be modified with the approval of the Underwriter and Disclosure Counsel;

19. A certificate dated the Closing Date from Empire Economics, Inc. addressed to the Community Facilities District and the Underwriter to the effect that the statements in the Official Statement provided by Empire Economics, Inc. and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

20. An opinion of Jones Hall, A Professional Law Corporation, counsel to the Underwriter, dated the date of Closing and addressed to the Underwriter in form and substance acceptable to the Underwriter;

21. A certificate of CSG Advisors Incorporated, the City’s municipal advisor (the “Municipal Advisor”) to the effect that the Municipal Advisor has participated in the preparation of the Preliminary Official Statement and the Official Statement and nothing has come to the attention of the Municipal Advisor which would lead it to believe that the Preliminary Official 3740
16 Statement or the Official Statement contain any untrue statement of a material fact or omits to state a fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and

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

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

4. Establishment of Issue Price.

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

All actions to be taken by the Community Facilities District under this section to establish the issue price of the Bonds may be taken on behalf of the Community Facilities District by the Municipal Advisor and any notice or report to be provided to the Community Facilities District may be provided to the Community Facilities District’s Municipal Advisor.

B. Except as otherwise set forth in Exhibit A attached hereto, the Community Facilities District will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity . At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Community Facilities District the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Community Facilities District the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date (as defined herein) has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public, provided that the Underwriter’s reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Community Facilities District or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds. For clarity, and notwithstanding any other condition to 3741
17 Closing set forth in this Purchase Agreement, the sale of 10% of each maturity of the Bonds to the public prior to the Closing Date shall not be a condition to Closing.

C. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Community Facilities District and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Community Facilities District to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

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

D. The Underwriter confirms that:
(1) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(a)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that the reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Underwriter, and (ii) to comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Underwriter, (b) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and
3742
18 (c) to acknowledge that, unless otherwise advised by the dealer or brokerdealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(2) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that the reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.

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

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

Further, for purposes of this section:
(1) “public” means any person other than an underwriter or a related party;
(2) “underwriter” means (A) any person that agrees pursuant to a written contract with the Community Facilities District (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to 3743
19 the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public); (3) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
(4) “sale date” means the date of execution of this Purchase Agreement by all parties.

5. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth herein:

A. The Underwriter shall be under no obligation to pay, and the Community Facilities District shall pay or cause to be paid (out of any legally available funds of the Community Facilities District) all expenses incident to the performance of the Community Facilities District’s obligations hereunder, including, but not limited to, the cost of printing, engraving and delivering the Bonds to DTC, the cost of preparation, printing, distributing and delivering of the Indenture, the Preliminary Official Statement, the Official Statement, any amendment or supplement to the Preliminary Official Statement or the Official Statement and this Purchase Agreement, and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; and the fees and disbursements of the Trustee, Bond Counsel, Disclosure Counsel and any financial advisors, special tax consultants, appraisers, accountants, engineers or any other experts or consultants the City or the Community Facilities District may have retained in connection with the Bonds; and
B. The Community Facilities District shall be under no obligation to pay, and the Underwriter shall pay, any fees of the California Debt and Investment Advisory Commission, the cost of preparation of any “blue sky” or legal investment memoranda and this Purchase Agreement; expenses to qualify the Bonds for sale under any “blue sky” or other state securities laws; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of its counsel, meals, transportation and lodging (but not entertainment expenses), and any advertising expenses in connection with the public offering of the Bonds.

6. Notices. Any notice or other communication to be given to the Community Facilities District or the Community Facilities District under this Purchase Agreement may be given by delivering the same in writing to the City of Ontario, 303 East “B” Street, Ontario, California 91764, Attention: City Manager; any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & 3744
20 Company, Incorporated, One Montgomery Street, 35th Floor, San Francisco, California 94104, Attention: Sara Brown.

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

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

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

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

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

12. Governing Law. This Purchase Agreement shall be governed by the laws of the State of California.
3745
S-1

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

Very truly yours,

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:

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

CITY OF ONTARIO COMMUNITY
FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
By:

Authorized Officer
Time of Execution: _____________ California time
3746
A-1

EXHIBIT A

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
SPECIAL TAX BONDS, SERIES 2022

MATURITY SCHEDULE
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not Satisfied
Subject to HoldThe-OfferingPrice Rule
T: Term Bond.

C: Priced to optional redemption date of September 1, 20__, at ___%. * At the time of execution of this Purchase Agreement and assuming orders are confirmed immediately after the execution of this Purchase Agreement.
3747
A-2

REDEMPTION PROVISIONS
Optional Redemption. The Bonds maturing on and after September 1, 20__, shall be subject to optional redemption, in whole, or in part in Authorized Denominations, on any Interest Payment Date on or after September 1, 20__, from any source of available funds, at the following respective Redemption Prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:

Redemption Dates Redemption Price
September 1, 20__ and March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment
Date thereafter
100
Mandatory Redemption from Special Tax Prepayments. The Bonds shall be subject to mandatory redemption, in whole, or in part in Authorized Denominations, on any Interest Payment Date, from and to the extent of prepaid Special Taxes required to be applied thereto pursuant to the Indenture and any amount required to be applied thereto pursuant to the Indenture, at the following respective Redemption Prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:

Redemption Dates Redemption Price
September 1, 2022 through March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment
Date thereafter
100
Mandatory Sinking Fund Redemption. The Bonds maturing September 1, 20__ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20__ at a Redemption Price equal to the principal amount of the Bonds maturing September 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:

Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed
(Maturity)
The Bonds maturing September 1, 20__ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20__ at a Redemption Price equal to the principal amount of the Bonds maturing September 1, 20__ to be redeemed, 3748
A-3
without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:

Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed
(Maturity)
3749
B-1
EXHIBIT B-1

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
SPECIAL TAX BONDS, SERIES 2022

LETTER OF REPRESENTATIONS OF
GDC/CDG ESPERANZA PA 4 VENTURE, L.P.
[POS Date]
City of Ontario Community Facilities District
No. 54 (Esperanza Facilities)
303 East B Street
Ontario, California 91764
Stifel, Nicolaus & Company, Incorporated
One Montgomery Street, 35th Floor
San Francisco, California 94104
Ladies and Gentlemen:

Reference is made to the City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022 (the “Bonds”) and to the Bond Purchase Agreement to be entered into in connection therewith (the “Bond Purchase Agreement”). This Letter of Representations of GDC/CDG Esperanza PA 4 Venture, L.P. (the “Letter of Representations”) is delivered pursuant to and in satisfaction of Section 3(F)(17) of the Bond Purchase Agreement.

Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Bond Purchase Agreement.

The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of GDC/CDG Esperanza PA 4 Venture, L.P., a Delaware limited partnership (the “Developer”), and the undersigned, on behalf of the Developer, further certifies as follows:

1. Developer is duly organized and validly existing under the laws of the State of Delaware and has all requisite right, power and authority (i) to execute and deliver this Letter of Representations, and (ii) to develop its property in the City of Ontario Community Facilities District No. 54 (Esperanza Facilities) (the “Community Facilities District”) as described in the Preliminary Official Statement.

2. As set forth in the Preliminary Official Statement, title to a certain portion of the property within the Community Facilities District is held in the name of the Developer (herein, the “Property”). The undersigned, on behalf of the Developer, makes the 3750
B-2
representations herein with respect to all such Property. Except as otherwise described in the Preliminary Official Statement, the Developer’s current expectation is that the Developer shall remain the party responsible for the construction and sale of homes within the Property.

Except as disclosed in the Preliminary Official Statement, the Developer has not entered into an agreement for development or management of the Property by any other entity, except such subcontracts, consultant agreements and similar agreements for land development activities associated with the Developer’s development plan as are entered into in the ordinary course of business.

3. Except as set forth in the Preliminary Official Statement, no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, regulatory agency, public board or body is pending against the Developer (with proper service of process to the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned,1 is pending against any current Affiliate2 (with proper service of process to such Affiliate having been accomplished) or to the Actual Knowledge of the Undersigned is threatened in writing against the Developer or any such Affiliate (a) to restrain or enjoin the collection of special taxes levied on the Property by the Community Facilities District (the “Special Taxes”) or other sums pledged or to be pledged to pay the principal of and interest on the Bonds (e.g., the reserve fund established under the Indenture (herein, the “Reserve Fund”)), (b) to restrain or enjoin the development of the Property as described in the Preliminary Official Statement, (c) to materially adversely affect the ability of the Developer to perform its obligations under the Continuing Disclosure Certificate (as hereinafter defined), (d) in any way contesting or affecting the validity of the Special Taxes, or (e) which is reasonably likely to materially and adversely affect the Developer’s ability to develop and sell the Property as described in the Preliminary Official Statement or to pay the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.

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

Individuals who are no longer employees of the Developer and its Affiliates have not been contacted. 2 “Affiliate” means, with respect to the Developer, any other Person (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Developer, and (ii) for whom information, including financial information or operating data, concerning such Person is material to potential investors in their evaluation of the Community Facilities District and investment decision regarding the Bonds (i.e., information relevant to (a) the Developer’s development plans with respect to the Property and ability to pay its Special Taxes on the Property (to the extent the responsibility of the Developer) prior to delinquency, or (b) such Person’s assets or funds that would materially affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay its Special Taxes on the Property). “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof. For purposes hereof, the term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. 3751
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4. As of the date of the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the information contained therein solely with respect to the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) as set forth under the sections of the Preliminary Official Statement captioned “PROPERTY OWNERSHIP AND THE DEVELOPMENT” and “CONTINUING DISCLOSURE – Developer Continuing Disclosure Certificate” (but in all cases under all captions excluding therefrom (i) information regarding the Appraisal Report (as defined herein), market value ratios and annual special tax ratios, and (ii) information which is identified as having been provided by a source other than the Developer), is true and correct in all material respects and did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

5. Except as described in the Preliminary Official Statement, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Affiliates, that are secured by an interest in the Property. Neither the Developer nor, to the Actual Knowledge of the Undersigned, any of its Affiliates is currently in material default on any loans, lines of credit or other obligation related to the development of the Property or any other project which default is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.

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

7. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Affiliates which it controls will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, that in any way seeks to challenge or overturn the formation of the Community Facilities District, to challenge the adoption of the ordinance of the Community Facilities District levying Special Taxes within the Community Facilities District, to invalidate the Community Facilities District or any of the Bonds or any refunding bonds related thereto, or to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating thereto. The foregoing covenant shall not prevent the Developer in any way from bringing any other action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes pursuant to which Special Taxes are levied, (b) an action or suit with respect to the application or use of the Special Taxes levied and collected or (c) an action or suit to enforce 3752
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the obligations of the City and/or the Community Facilities District under the Community Facilities District Resolutions, the Ordinance, the Indenture, or any other agreements among the Developer, an Affiliate, the City and/or the Community Facilities District or to which the Developer or an Affiliate is a party or beneficiary.

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

9. The Developer intends to comply with the provision of the Mello-Roos Community Facilities Act of 1982, as amended relating to the Notice of Special Tax described in Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof.

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

11. The Developer agrees to execute at Closing the Continuing Disclosure Certificate, substantially in the form attached as Appendix H to the Preliminary Official Statement (the “Continuing Disclosure Certificate”), with such additional changes as may be agreed to by the Developer and the Underwriter. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the Developer is not aware of any material failures by it or any entity under managerial control of the Developer to comply in all material respects with previous continuing disclosure undertakings in a written certificate or agreement executed by it or an entity under the managerial control of the Developer to provide periodic continuing disclosure reports or notices of material events respecting securities offerings in California within the past five years.

12. To the Actual Knowledge of the Undersigned, execution and delivery of the Continuing Disclosure Certificate, and the performance by the Developer of its obligations under the Continuing Disclosure Certificate, will not conflict with or constitute a breach of or default under any loans, lines of credit, agreements, or other contractual or financial obligations of the Developer, or any applicable law, regulation, judgment or decree.

13. To the Actual Knowledge of the Undersigned, Affiliates of the Developer are able to pay their bills as they become due and no legal proceedings are pending against any Affiliate of the Developer (with proper service of process having been accomplished) or to the Actual Knowledge of the Undersigned, threatened in writing in which the Affiliates of the Developer may be adjudicated as bankrupt or discharged from any or all of their debts or obligations, or granted an extension of time to pay their debt or obligations, or be allowed to reorganize or readjust their debts or obligations, or be subject to control or supervision of the Federal Deposit Insurance Corporation which could have a materially adverse impact on the ability of the Developer to develop the Property as described in the Preliminary Official Statement, to perform its obligations under the Continuing Disclosure Certificate, or to pay 3753
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the Special Taxes or ad valorem tax obligations with respect to the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency.

14. The Developer has been developing or has been involved in the development of numerous projects over an extended period of time. It is likely that the Developer and its Affiliates have been delinquent at one time or another in the payment of ad valorem property taxes, special assessments or special taxes. However, to the Actual Knowledge of the Undersigned, during the last five years, neither the Developer nor any current Affiliate has, during the period of its ownership, been delinquent to any material extent in the payment of any ad valorem property tax, special assessment or special tax on property included within the boundaries of a community facilities district or an assessment district in California that (a) caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being commenced against the Developer or its Affiliates in a court of law.

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

16. To the Actual Knowledge of the Undersigned, there are no claims, disputes, suits, actions or contingent liabilities by and among the Developer, its Affiliates or any contractors working on the development of the Property which is reasonably likely to materially and adversely affect the development of the Property as described in the Preliminary Official Statement, the performance of its obligations under the Continuing Disclosure Certificate , or the payment of the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.

17. Based upon the current development plans, including, without limitation, the current budget and subject to economic conditions and risks generally inherent in the development of real property, including, but not limited to, the risks described in the Preliminary Official Statement under the section entitled “SPECIAL RISK FACTORS,” the Developer presently anticipates that it will have sufficient funds to develop the Property as described in the Preliminary Official Statement and to pay Special Taxes levied against the Property (to the extent the responsibility of the Developer) prior to delinquency and does not anticipate that the City or the Community Facilities District will be required to resort to a draw on the Reserve Fund for payment of principal of or interest on the Bonds due to the Developer’s nonpayment of Special Taxes. However, neither the Developer nor any of its Affiliates are obligated to make any additional capital contribution or loan to the Developer at any time, and the Developer reserves the right to change its development plans and financing plans for the Property at any time without notice.

18. An appraisal of the taxable Property within the Community Facilities District, dated [INSERT DATE] (the “Appraisal Report”), was prepared by Kitty Siino & Associates, Inc. (the “Appraiser”). The Appraisal Report estimates the market value of the taxable Property within the Community Facilities District as of February 1, 2022 (the “Date of Value”). To the Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Appraiser and contained in the sections 3754
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of the Appraisal Report highlighted in yellow or circled in Exhibit A attached hereto, was true and correct in all material respects as of the Date of Value.

19. Solely as to the limited information described in the sections of the Preliminary Official Statement indicated in Paragraph 4 herein (and subject to the limitations and exclusions set forth in Paragraph 4), the Developer agrees to indemnify and hold harmless, to the extent permitted by law, the City, the Community Facilities District, and their officials and employees, and each Person, if any, who controls any of the foregoing within the meaning of Section 15 of the Securities Act of 1933, as amended, or of Section 20 of the Securities Exchange Act of 1934, as amended (each, an “Indemnified Party” and, collectively, the “Indemnified Parties”), against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Party may become subject under any statute or at law or in equity and shall reimburse any such Indemnified Party for any reasonable legal or other expense incurred by it in connection with investigating any such claim against it and defending any such action, insofar as and solely to the extent such losses, claims, damages, liabilities or actions, or legal or other expenses, arise out of or are based upon any untrue statement or alleged untrue statement of a material fact or the omission or alleged omission of a material fact by the Developer in the above-referenced information in the Preliminary Official Statement, as of its date, necessary to make the statements made by the Developer contained therein, in light of the circumstances under which they were made not misleading. This indemnity provision shall not be construed as a limitation on any other liability which the Developer may otherwise have to any Indemnified Party, provided that in no event shall the Developer be obligated for double indemnification, or for the negligence or willful misconduct of an Indemnified Party.

If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Indemnified Party in respect of which indemnification may be sought pursuant to the above paragraph, such Indemnified Party shall promptly notify the Developer in writing; provided that the failure to notify the Developer shall not relieve it from any liability that it may have hereunder except to the extent that it has been materially prejudiced by such failure; and provided, further, that the failure to notify the Developer shall not relieve it from any liability that it may have to an Indemnified Party otherwise than under the above paragraph unless such liability was also conditioned upon such notice. If any such proceeding shall be brought or asserted against an Indemnified Party and it shall have notified the Developer thereof, the Developer shall retain counsel reasonably satisfactory to the Indemnified Party and approved thereby to represent the Indemnified Party in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Developer and the Indemnified Party shall have mutually agreed to the contrary; (ii) the Developer has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Party; (iii) the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Developer such that a material conflict of interest exists for such counsel; or (iv) the named parties in any such proceeding (including any impleaded parties) include the Developer and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. It is understood and agreed that the Developer shall not, in connection with any proceeding or related 3755
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proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Parties, and that all such fees and expenses, to the extent reasonable, shall be paid or reimbursed as they are incurred.

Any such separate firm shall be designated in writing by such Indemnified Parties. The Developer shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Developer agrees to indemnify each Indemnified Party from and against any loss or liability by reason of such settlement or judgment as set forth above. If the Developer shall, after receiving notice of the indemnification obligation of the Developer and within a period of time necessary to preserve any and all defenses to any claim asserted, fails to assume the defense or to retain counsel for that purpose satisfactory to the Indemnified Party, the Indemnified Party shall have the right, but not the obligation, to undertake the defense of, and to compromise or settle the claim or other matter on behalf of, for the account of and at the risk of, the Developer. The Developer shall not, without the written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is a party and indemnification could have been sought hereunder by such Indemnified Party, unless such settlement (x) includes an unconditional release of such Indemnified Party, in form and substance reasonably satisfactory to such Indemnified Party, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.

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

21. The Developer agrees to deliver a Closing Certificate dated the date of issuance of the Bonds at the time of issuance of the Bonds in substantially the form attached as Exhibit C to the Bond Purchase Agreement. If any event related to or affecting the Developer, its Affiliates, or the ownership, development, or sale of the Property occurs, as a result of which it is necessary to modify the Closing Certificate, the Developer agrees to deliver a new Closing Certificate revised to reflect such event.

22. On behalf of the Developer, I have reviewed the contents of this Letter of Representations and have had the opportunity to discuss with counsel to the Developer the 3756
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meaning of the contents of this Letter of Representations. The Developer acknowledges and understands that a variety of state and federal securities laws, including, but not limited to the Securities Act of 1933, as amended, and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, as amended, may apply to the Developer and that under some circumstances, certification as to the matters set forth in this Letter of Representations, without additional disclosures or other action, may not fully discharge all duties and obligations of the Developer under such securities laws.

The undersigned has executed this Letter of Representations solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability arising from or relating to this Letter of Representations. Any liability arising from or relating to this Letter of Representations may only be asserted against the Developer.

GDC/CDG ESPERANZA PA 4 VENTURE, L.P.,
a Delaware limited partnership
By:

Name:

Title:
[EXECUTION PAGE OF THE LETTER OF REPRESENTATIONS]
3757
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EXHIBIT A
To

LETTER OF REPRESENTATIONS
OF GDC/CDG ESPERANZA PA 4 VENTURE, L.P.

DEVELOPER PROVIDED INFORMATION IN APPRAISAL REPORT
See attached.
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EXHIBIT C

FORM OF CLOSING CERTIFICATE
$[PAR]

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
SPECIAL TAX BONDS, SERIES 2022

CLOSING CERTIFICATE OF
GDC/CDG ESPERANZA PA 4 VENTURE, L.P.
[Closing Date]
City of Ontario Community Facilities District
No. 54 (Esperanza Facilities)
303 East B Street
Ontario, California 91764
Attn: City Manager
Stifel, Nicolaus & Company, Incorporated
One Montgomery Street, 35th Floor
San Francisco, California 94104
Ladies and Gentlemen:

Reference is made to the above-captioned bonds (the “Bonds”) and to the Bond Purchase Agreement, dated [Pricing Date] (the “Bond Purchase Agreement”), entered into in connection therewith. This Closing Certificate of GDC/CDG Esperanza PA 4 Venture, L.P. (the “Closing Certificate”) is delivered pursuant to Section 3(F)(18) of the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Letter of Representations of GDC/CDG Esperanza PA 4 Venture, L.P. (the “Letter of Representations”), dated [POS Date], delivered by GDC/CDG Esperanza PA 4 Venture, L.P., a Delaware limited partnership (the “Developer”).

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

1. The Developer has received the final Official Statement dated [Pricing Date] relating to the Bonds (the “Official Statement”). To the Actual Knowledge of the Undersigned, each 3759
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statement, representation and warranty made in the Letter of Representations is true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the Official Statement.

2. To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information described in Paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in Paragraph 4 of the Letter of Representations) relating to the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of its Affiliates), which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make such statements and information contained in the Official Statement not misleading in any material respect.

3. For the period through 25 days after the “End of the Underwriting Period” as defined in the Bond Purchase Agreement (provided the Developer may assume the End of the Underwriting Period is the Closing Date (as defined in the Bond Purchase Agreement), unless it receives written notice from the Underwriter that the End of the Underwriting Period is later than the Closing Date), if any event relating to or affecting the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of its Affiliates) shall occur as a result of which it is necessary, in the opinion of the Underwriter or counsel to the City or the Community Facilities District, to amend or supplement the Official Statement in order to make the information under the sections of the Official Statement indicated in Paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in Paragraph 4 of the Letter of Representations) not misleading in the light of the circumstances under which they were made, the Developer shall reasonably cooperate with the City, the Community Facilities District and the Underwriter in the preparation and publication of a supplement or amendment to the information under the sections of the Official Statement indicated in Paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in Paragraph 4 of the Letter of Representations), in form and substance satisfactory to the Underwriter and counsel to the City and the Community Facilities District which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

4. The Developer has duly authorized the execution and delivery of the Continuing Disclosure Certificate and is duly authorized to perform the obligation on its part to be performed thereunder, and the Continuing Disclosure Certificate constitutes the legal, valid and binding obligation of the Developer, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance and other similar laws affecting the rights of creditors and certain equitable, legal or statutory principles affecting enforcement of contractual rights generally, regardless of whether such enforcement is considered in a proceeding of law or equity.
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5. The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer.

GDC/CDG ESPERANZA PA 4 VENTURE, L.P.,
a Delaware limited partnership
By:

Name:

Title:
3761
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EXHIBIT D
FORM OF ISSUER’S COUNSEL OPINION
[Closing Date]
City of Ontario
Community Facilities District No. 54
(Esperanza Facilities)
Ontario, California
Stifel, Nicolaus & Company, Incorporated
San Francisco, California
Zions Bancorporation, National Association,
as Trustee
Los Angeles, California
ISSUER’S COUNSEL OPINION
Re: $[PAR] City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022
Ladies and Gentlemen:

We have acted as issuer’s counsel (“Issuer’s Counsel”) to the City of Ontario (the “City”) and the City of Ontario Community Facilities District No. 54 (Esperanza Facilities) (the “Community Facilities District”) in connection with the issuance of the above-referenced bonds (the “Bonds”). In such capacity, we have been asked to render this opinion in connection with Section 3(F)(9) of that certain Bond Purchase Agreement, dated [Pricing Date] (the “Bond Purchase Agreement”), by and between Stifel, Nicolaus & Company, Incorporated, as underwriter, and the Community Facilities District, relating to the Bonds. All capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Bond Purchase Agreement.

In rendering this opinion, we have examined and relied upon originals or copies of the following upon which, with your permission, we are relying, without further inquiry or investigation (although we advise you that we have no actual knowledge to the contrary of any matters related thereto): (i) the Community Facilities District Resolution of Issuance, (ii) Resolution No. 2020-034 (the “Resolution of Intention”), (iii) Resolution No. 2020-035 (the “Resolution to Incur Indebtedness”), (iv) Resolution No. 2020-051 (“Resolution Modifying RMA”) (v) Resolution No. 2020-052 (the “Resolution of Formation”), (vi) Resolution No. 2020-053 (the “Resolution Deeming it Necessary to Incur Indebtedness”), (vii) Resolution No. 2020-054 (the “Resolution Calling Election”), (viii) Resolution No. 2020-055 (the “Resolution Declaring Results”), (ix) Ordinance No. 3162 (the “Ordinance” and, together with the Resolution of Intention, the Resolution to Incur Indebtedness, the Resolution Modifying RMA, the Resolution of Formation, the Resolution Deeming it Necessary to Incur Indebtedness, the Resolution Calling Election and the Resolution Declaring Results, the “Formation Resolutions and Ordinance”), (x) the Community Facilities District Documents, and (xi) the Official Statement, relating to the Bonds, and we have made such other investigations of law and facts as we have deemed necessary to render the following opinions. 3762
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The opinions expressed herein are based on an analysis of existing statutes, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur.

In our examination, we have assumed, without independent investigation, the authenticity of all documents submitted to us as originals, of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents and the accuracy of the statements and representations contained in such documents. In addition, we have assumed the authority of and due execution by each of the parties to the documents other than the City and the Community Facilities District.

As used in this opinion, the phrase “current actual knowledge” means knowledge as we have obtained from (i) the incumbency and signature certificate of the Community Facilities District, (ii) the representations and warranties contained in each closing certificate of the Community Facilities District, and (iii) knowledge of facts or other information currently known to lawyers in our firm who have performed legal services for the City or the Community Facilities District.

Based on the foregoing, we hereby advise you that, as of the date hereof, we are of the opinion that:
(i) the City is a municipal corporation and general law city, duly organized and existing under the Constitution and the laws of the State of California; (ii) the Community Facilities District is duly organized and validly existing as a community facilities district under and by virtue of the Constitution and laws of the State of California (including the Community Facilities District Act); (iii) the Community Facilities District Resolution of Issuance and the Formation Resolutions and Ordinance have been duly adopted at meetings of the City Council of the City, which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Community Facilities District Resolution of Issuance and the Formation Resolutions and Ordinance are in full force and effect and have not been modified, amended, rescinded or repealed since the respective dates of their adoption; (iv) the Community Facilities District Documents and the Official Statement have been duly authorized, executed and delivered by the Community Facilities District and constitute the legal, valid and binding obligations of the Community Facilities District enforceable against the Community Facilities District in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, to the application of equitable principles where equitable remedies are sought and to the exercise of judicial discretion in appropriate cases or seeks to restrain or to enjoin the development of property within the Community Facilities District;
(v) except as may be stated in the Official Statement, to our current actual knowledge, there is no action, suit, proceeding or investigation before or by any court, public board or body pending (notice of which has been served on the City or the Community Facilities District) or threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, 3763
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organization, existence or powers of the City or the Community Facilities District, or the titles of their members and officers to their respective offices; or (b) affect the validity of the Community Facilities District Documents or restrain or enjoin the repayment of the Bonds or in any way contest or affect the validity of the Community Facilities District Documents or contest the authority of the Community Facilities District to enter into or perform its obligations under any of the Community Facilities District Documents or under which a determination adverse to the City or Community Facilities District would have a material adverse effect upon the financial condition or the revenues of the City or Community Facilities District, questions the right of the Community Facilities District to use Special Taxes levied within the Community Facilities District for the repayment of the Bonds or affects in any manner the right or ability of the Community Facilities District to collect or pledge the Special Taxes levied within the Community Facilities District for the repayment of the Bonds; (vi) to our current actual knowledge, the execution and delivery of the Bonds and the Community Facilities District Documents, and compliance with the provisions of each, will not conflict with or constitute a breach of or default under any loan agreement, note, ordinance, resolution, indenture, contract, agreement or other instrument of which the Community Facilities District is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the ability of the Community Facilities District to perform its obligations under the Bonds or the Community Facilities District Documents; and (vii) all approvals, consents, authorization, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the ability of the Community Facilities District, to perform its obligations under the Bonds or the Community Facilities District Documents, have been obtained or made, as the case may be, and are in full force and effect.

Our opinion is further qualified by the following:
(a) We express no opinion with respect to the laws of any state or jurisdiction other than California and the United States regarding the enforceability of any transaction mentioned herein or the interpretation, authorization, execution, validity, enforceability or effect of any of the documents mentioned herein; provided further that we express no opinion with respect to California or federal tax and securities law. (b) As Issuer’s Counsel in this matter, we have not rendered financial advice to the City or to the Community Facilities District and do not represent by this opinion, or otherwise, that we reviewed or made any assessment about, nor do we express any opinion about, the ability of the Community Facilities District to pay debt service or amounts due under the Indenture, and accordingly, we offer no opinion whatsoever regarding such financial feasibility or ability to repay the Bonds.
(c) We express no opinion with respect to any indemnification, contribution, lien priority or choice of law provisions contained in the foregoing documents.

This letter is furnished by us as Issuer’s Counsel. Other than the City and the Community Facilities District, no attorney-client relationship has existed or exists between our firm and you in connection with the Bonds or by virtue of this letter. Our engagement with respect to the Bonds has terminated as of the date hereof, and we disclaim any obligation to update this letter. This letter is 3764
D-4
delivered to you, is solely for your benefit and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person; provided, however, a copy may be included in the transcript of the proceedings for the Bonds. This letter is not intended to, and may not, be relied upon by owners of the Bonds.

We bring to your attention the fact that our conclusions are an expression of professional judgment and are not a guarantee of a result.

Best Best & Krieger LLP
City Attorney
3765
E-1

EXHIBIT E
$[PAR]

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
SPECIAL TAX BONDS, SERIES 2022

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

1. Bond Purchase Agreement. On [Pricing Date] (the “Sale Date”), Stifel and the Issuer executed a Bond Purchase Agreement (the “Purchase Agreement”) in connection with the sale of the Bonds. Stifel has not modified the Purchase Agreement since its execution on the Sale Date.

2. Price.
(a) As of the date of this Certificate, for each [Maturity] [[of the General Rule Maturities] of the Bonds, the first price at which at least 10% of each such Maturity of the Bonds was sold to the Public (the “10% Test”) was the respective price for such Maturity listed in Schedule A attached hereto.
(b) [Stifel offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(c) As set forth in the Bond Purchase Agreement, Stifel has agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-theoffering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-theOffering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.] (d) [** With respect to each of the General Rule Maturities of the Bonds:
(1) As of the date of this Certificate, Stifel has not sold at least 10% of the Bonds of these Maturities at any single price.
(2) As of the date of this Certificate, Stifel reasonably expects that the first sale to the Public of Bonds of these Maturities will be at or below the respective price or prices 3766
E-2
listed on the attached Schedule A as the “Reasonably Expected Sale Prices for Undersold Maturities.”
(3) Stifel will provide actual sales information (substantially similar to the information contained on Schedule B) as to the price at which the first 10% of each such Maturity (i.e., the Undersold Maturity or Maturities) is sold to the Public. (4) On the date the 10% Test is satisfied with respect to all Maturities of the Bonds, Stifel will execute a supplemental certificate substantially in the form attached hereto as Schedule C with respect to any remaining Maturities for which the 10% Test has not been satisfied as of the Closing Date.**]

2. Defined Terms.
(a) “General Rule Maturities” means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) “Hold-the-Offering-Price Maturities” means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (c) “Holding Period” means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date, or (ii) the date on which Stifel has sold at least 10% of such Hold-theOffering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.
(d) “Issuer” means the City of Ontario Community Facilities District No. 54 (Esperanza Facilities).
(e) “Maturity” means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(f) “Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.

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

3. Reserve Fund. The funding of the Reserve Fund under the Indenture, and as provided in the Tax Certificate, is reasonably required, was a vital factor in marketing the Bonds, facilitated the marketing of the Bonds at an interest rate comparable to that of bonds and other tax-exempt obligations of a similar type, and is not in excess of the amount necessary for such purpose. 3767
E-3

4. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate of the Issuer dated [Closing Date] and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:

Managing Director
By:

Director
Dated: [Closing Date]
3768
E-4

SCHEDULE A
TO

ISSUE PRICE CERTIFICATE
[Schedules to be updated at pricing in the event there are Hold-the-Offering-Price-Maturities] Actual Sales Information as of Closing Date
Maturity/CUSIP Coupon Date Sold Time Sold Par Amount Sale Price [**Reasonably Expected Sales Prices for Undersold Maturities as of Closing Date Maturity/CUSIP Coupon Par Amount Offering Prices
**]
3769
E-5
[**SCHEDULE B
TO

ISSUE PRICE CERTIFICATE
Actual Sales for Undersold Maturities as of the Closing Date Maturity/CUSIP Date Sold Time Sold Par Amount Sale Price **]
3770
E-6
[**SCHEDULE C
TO

ISSUE PRICE CERTIFICATE

SUPPLEMENTAL ISSUE PRICE CERTIFICATE OF UNDERWRITER
$[PAR]

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
SPECIAL TAX BONDS, SERIES 2022
The undersigned, Stifel, Nicolaus & Company, Incorporated (“Stifel”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).

1. Issue Price.
(a) Stifel sold at least 10% of the _______ Maturities of the Bonds to the Public at the price or prices shown on the Issue Price Certificate dated as of the Closing Date (the “10% Test”). With respect to each of the ______ Maturities of the Bonds, Stifel had not satisfied the 10% Test as of the Closing Date (the “Undersold Maturities”). (b) As of the date of this Supplemental Certificate, Stifel has satisfied the 10% Test with respect to the Undersold Maturities. The first price or prices at which at least 10% of each such Undersold Maturity was sold to the Public are the respective prices listed on Exhibit A attached hereto.

2. Defined Terms.
(a) “Issuer” means the City of Ontario Community Facilities District No. 54 (Esperanza Facilities).
(b) “Maturity” means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(c) “Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.

The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (d) “Underwriter” means (1) any person that agrees pursuant to a written contract with the Issuer (or with the lead Underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (2) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (1) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
3771
E-7

3. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate of the Issuer dated [Closing Date] and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:
[Title]
By:
[Title]
Dated:
3772
E-8

EXHIBIT A
TO
SUPPLEMENTAL ISSUE PRICE CERTIFICATE**]
3773
4165-3380-2548.1

CONTINUING DISCLOSURE AGREEMENT
by and between

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 54
(ESPERANZA FACILITIES)
and

ZIONS BANCORPORATION, NATIONAL ASSOCIATION,

AS TRUSTEE
Dated as of ___________ 1, 2022
City of Ontario
Community Facilities District No. 54
(Esperanza Facilities)
Special Tax Bonds, Series 2022
3774
4165-3380-2548.1

CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (this “Disclosure Agreement”), dated as of ___________ 1, 2022, is by and between CITY OF ONTARIO COMMUNITY FACILITIES DISTRICT NO. 54 (Esperanza FACILITIES), a community facilities district organized and existing under the laws of the State of California (the “Community Facilities District”), and ZIONS BANCORPORATION, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as Trustee (the “Trustee”).

W I T N E S S E T H :

WHEREAS, the Community Facilities District has issued its City of Ontario Community Facilities District No. 54 (Esperanza Facilities) Special Tax Bonds, Series 2022 (the “Series 2022 Bonds”), in the aggregate principal amount of $__________, pursuant to the Indenture, dated as of ___________ 1, 2022 (the “Indenture”), by and between the Community Facilities District and the Trustee; and
WHEREAS, this Disclosure Agreement is being executed and delivered by the Community Facilities District and the Trustee for the benefit of the owners and beneficial owners of the Series 2022 Bonds and in order to assist the underwriters of the Series 2022 Bonds in complying with Securities and Exchange Commission Rule 15c2-12(b)(5); NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the receipt whereof is hereby acknowledged, the parties hereto agree as follows:

Section 1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Disclosure Agreement have the meanings herein specified.

Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture.
“Annual Report” means any Annual Report provided by the Community Facilities District pursuant to, and as described in, Sections 2 and 3 hereof. “Annual Report Date” means the date in each year that is the first day of the month following the ninth month after the end of the Community Facilities District’s fiscal year, which date, as of the date of this Disclosure Agreement, is April 1. “Community Facilities District” means City of Ontario Community Facilities District No. 54 (Esperanza Facilities), a community facilities district organized and existing under the laws of the State, and its successors.
“Disclosure Representative” means the Deputy City Treasurer of the City, or his or her designee, or such other person as the Community Facilities District shall designate in writing to the Trustee from time to time.
3775
2 4165-3380-2548.1
“Dissemination Agent” means the Trustee, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Community Facilities District and which has filed with the Trustee a written acceptance of such designation. “Financial Obligation” means (a) a debt obligation of the Community Facilities District, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation of the Community Facilities District, or (c) a guarantee of (i) a debt obligation of the Community Facilities District, or (ii) a derivative instrument described in clause (b), above; provided, however, that the term “Financial Obligation” shall not include “municipal securities” (as such term is defined in the Securities Exchange Act of 1934, as amended) as to which a “final official statement” (as such term is defined in the Rule) has been provided to the MSRB consistent with the Rule. “Indenture” means the Indenture, dated as of ___________ 1, 2022, by and between the Community Facilities District and Zions Bancorporation, National Association, as Trustee, as originally executed and as it may be modified or amended from time to time in accordance with its terms.
“Listed Events” means any of the events listed in subsection (a) or subsection (b) of Section 4 hereof.
“MSRB” means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. “Participating Underwriter” means any of the original underwriters of the Series 2022 Bonds required to comply with the Rule in connection with the offering of the Series 2022 Bonds.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “Trustee” means Zions Bancorporation, National Association, as Trustee under the Indenture, or any successor thereto as Trustee thereunder substituted in its place as provided therein.

Ontario City CouncilApril 19, 2022

Ontario City Council
April 19, 2022