Ontario City Council
June 4, 2024

Principal of, premium, if any, and interest on the Series 2024 Bonds is payable by the Trustee to DTC.

Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry only system is no longer used with respect to the Series 2024 Bonds, the Beneficial Owners will become the registered owners of the Series 2024 Bonds and will be paid principal and interest by the Trustee, all as described herein.

See APPENDIX I — “INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY AND ITS BOOK-ENTRY SYSTEM” herein.

The Series 2024 Bonds are subject to optional redemption, mandatory redemption from Special Tax prepayments and mandatory sinking fund redemption as described herein. For a more complete description of the Series 2024 Bonds and the basic documentation pursuant to which they are being sold and delivered, see “THE SERIES 2024 BONDS” and APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE” herein.
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5 Appraisal Report
The District has obtained an appraisal of the Taxable Property (as defined herein) included in the District with a date of value as of April 1, 2024 (the “Appraisal” or “Appraisal Report”). The Appraisal was prepared for the District by Kitty Siino & Associates, Inc., Tustin, California (the “Appraiser”). Subject to the limitations set forth in the Appraisal, the Appraiser is of the opinion that, as of April 1, 2024, the minimum market value of the property within the District was not less than $117,479,057 (the “Appraised Value”). See “THE COMMUNITY FACILITIES DISTRICT— Property Values” and “THE COMMUNITY FACILITIES DISTRICT — Value-toLien Ratios.” A copy of the Appraisal is included as APPENDIX B to this Official Statement. It is a condition precedent to the issuance of the Series 2024 Bonds that the Appraiser deliver a certificate stating that nothing has come to the attention of the Appraiser subsequent to the date of value of the Appraisal that would lead the Appraiser to believe that the value of the Taxable Property in the District is less than the minimum market value of such property reported in the Appraisal. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT — Lennar Homes’ Development Plan.”
Price Point Study
In connection with the approval of the amendment to the Rate and Method, the City hired Empire Economics, Inc., Capistrano Beach, California (the “Price Point Consultant”), to prepare a price point study of the prices of the homes planned within the District, dated January 18, 2022 (the “Original Price Point Study”). The Special Tax rates set forth in the Rate and Method were based in part on the prices set forth in the Original Price Point Study. In connection with and in preparation for the issuance of the Series 2024 Bonds, the City hired the Price Point Consultant to conduct an update to the Original Price Point Study within the District, dated March 28, 2024 (the “Updated Price Point Study”). Pursuant to Section C of the Rate and Method, upon the issuance of Bonds, the City is required to amend the Assigned Special Tax (as defined in the Rate and Method) to the extent necessary to cause the total effective tax burden for residential property in the District to not exceed 1.95% of the minimum sales prices set forth in the Updated Price Point Study. Based on the Updated Price Point Study provided by the Price Point Consultant, the City will not reduce the Assigned Special Tax rates set forth in Section C of the Rate and Method, as the total effective tax burden applicable to each land use class of residential property to be constructed within the District will not exceed 1.95% of the minimum sales prices set forth in the Updated Price Point Study. A copy of the Updated Price Point Study is included as APPENDIX C to this Official Statement.

See “SECURITY AND SOURCES FOR THE SERIES 2024 BONDS — Amended and Restated Rate and Method of Apportionment.”
Professionals Involved in the Offering
Zions Bancorporation, National Association, Los Angeles, California, will act as Trustee under the Indenture. Samuel A. Ramirez & Co., Inc. is the Underwriter of the Series 2024 Bonds. The validity of the Series 2024 Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District. Urban Futures, Inc., Walnut Creek, California, is acting as Municipal Advisor for the District in connection with the Series 2024 Bonds. Kitty Siino & Associates, Inc., Tustin, California, is acting as the Appraiser to the District. Goodwin Consulting Group, Inc. is acting as the Special Tax Consultant to the District. Empire Economics, Inc. is acting as the Price Point Consultant to the District. Certain legal matters will be passed on for the City and the District by Best Best & Krieger LLP, Ontario, California, in its capacity as Issuer’s Counsel, and Best Best & Krieger LLP, Riverside, California, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California.

For information concerning respects in which certain of the above mentioned professionals, advisors, counsel and agents may have a financial or other interest in the offering of the Series 2024 Bonds, see “FINANCIAL INTERESTS” herein.
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6 Continuing Disclosure
The District will agree to provide, or cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system available on the Internet at http://emma.msrb.org (“EMMA”) certain annual financial information and operating data. The District will further agree to provide notice of certain listed events. These covenants will be made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2 12(b)(5) (the “Rule”). See “CONTINUING DISCLOSURE — District Continuing Disclosure Agreement” herein. See the form of District Continuing Disclosure Agreement attached as APPENDIX G hereto (the “District Continuing Disclosure Agreement”) for a description of the specific nature of the annual reports to be filed by the District and notices of listed events to be provided by the District.

In addition, the Developer will agree to provide or cause to be provided to EMMA certain information on a semi-annual basis with respect to the Developer and its property ownership and development within the District and notice of certain listed events until satisfaction of certain conditions set forth in the Developer Continuing Disclosure Agreement (the “Developer Continuing Disclosure Agreement”). See “CONTINUING DISCLOSURE — Developer Continuing Disclosure Certificate” herein. See the form of the Developer Continuing Disclosure Certificate attached as APPENDIX H hereto for a description of the specific nature of the semi-annual reports to be filed by the Developer, and notices of listed events to be provided by the Developer.

Series 2024 Bond Owners’ Risks
Certain events could affect the ability of the District to pay the principal of and interest on the Series 2024 Bonds when due. See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Series 2024 Bonds.

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

Brief descriptions of the Series 2024 Bonds and the Indenture are included in this Official Statement.

Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Series 2024 Bonds and the constitution and laws of the State as well as the proceedings of the City Council, acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the Series 2024 Bonds, by reference to the Indenture.

Copies of the Indenture, the District Continuing Disclosure Agreement and other documents and information referred to herein are available for inspection and (upon request and payment to the City of a charge for copying, mailing and handling) for delivery from the City at 303 East “B” Street, Ontario, California 91764, Attention: City Manager.
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7 ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth the expected sources and uses of Series 2024 Bond proceeds and certain other amounts.

Sources:

Principal Amount of the Series 2024 Bonds $___________
Plus: Net Original Issue Premium ___________
Less: Underwriter’s Discount ___________
Plus: Funds on Hand(1) ___________
Total $___________
Uses:

Lennar Acquisition Account of the Improvement Fund(2) $___________ NMC Acquisition Account of the Improvement Fund(3) ___________ City Park Account ___________
City Facilities Account ___________
Special Tax Fund ___________
Administrative Expense Fund ___________
Reserve Fund(4) ___________
Costs of Issuance Fund(5) ___________
Total $___________
____________________
(1) Includes a portion of the Special Tax collected for Fiscal Year 2023-24. (2) Reflects amounts owed or to be owed to Lennar Homes, for the construction of eligible facilities under the Act. (3) Reflects amounts owed or to be owed to NMC Builders, LLC for the construction of eligible facilities under the Act.
(4) Equal to the initial Reserve Requirement.
(5) Includes fees of Bond Counsel and Disclosure Counsel, printing costs, municipal advisor fees, Trustee fees, Appraiser fees, Price Point Consultant fees and other costs of issuance of the Series 2024 Bonds.

THE SERIES 2024 BONDS
General Provisions
The Series 2024 Bonds will be issued in fully registered form without coupons in denominations of $5,000 and any integral multiple thereof (“Authorized Denominations”). The Series 2024 Bonds will be dated the date of issuance thereof. The Series 2024 Bonds are scheduled to mature on September 1, in the years and in the principal amounts, and will bear interest at the rates per annum, shown on the inside front cover page of this Official Statement. Interest on the Series 2024 Bonds will be computed on the basis of a 360-day year comprised of twelve 30-day months and will be payable on March 1 and September 1 of each year, commencing March 1, 2025 (each an “Interest Payment Date”). Interest on each Series 2024 Bond will be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) such Series 2024 Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day (the “Record Date”) in which event interest thereon will be payable from such Interest Payment Date, (ii) such Series 2024 Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date or (iii) interest on such Series 2024 Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been previously paid or duly provided for.

The interest on, and principal of and redemption premiums, if any, on the Series 2024 Bonds are payable in lawful money of the United States of America. Interest is payable by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Series 2024 Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date (except that interest on any Series 2024 Bond which is not punctually paid or duly provided for on any Interest Payment Date will, if and to the extent that amounts subsequently become available therefor, be payable on a payment date 2268
8 established by the Trustee to the Person in whose name the ownership of such Series 2024 Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee pursuant to the Indenture). Payment of principal of any Series 2024 Bond will be made only upon presentation and surrender thereof at maturity or upon earlier redemption at the Office of the Trustee.

The Series 2024 Bonds will initially be issued in book-entry form, and DTC will act as securities depository. So long as the Series 2024 Bonds are held in book-entry form, principal of, premium, if any, and interest on the Series 2024 Bonds will be paid by the Trustee directly to DTC for distribution to the Beneficial Owners of the Series 2024 Bonds in accordance with procedures adopted by DTC. See APPENDIX I — “INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY AND ITS BOOK-ENTRY SYSTEM.”
The Bonds are not general or special obligations of the City but are special, limited obligations of the District payable solely from Net Special Tax Revenues and the other amounts held under the Indenture in the Special Tax Fund, the Bond Fund and the Reserve Fund. Neither the faith and credit nor the taxing power of the District (except to the limited extent set forth in the Indenture), the City, the State or any political subdivision thereof, is pledged to the payment of the Bonds. See “SPECIAL RISK FACTORS — Bonds Are Limited Obligations.”
Redemption
Optional Redemption. The Series 2024 Bonds maturing on and after September 1, 2032, shall be subject to optional redemption, in whole, or in part in Authorized Denominations, on any Interest Payment Date on or after September 1, 2031 from any source of available funds, at the following respective Redemption Prices (expressed as percentages of the principal amount of the Series 2024 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 Series 2024 Bonds are subject to mandatory redemption, in whole, or in part in Authorized Denominations, on any Interest Payment Date, from and to the extent of Special Tax prepayments required to be applied thereto and any related proportional amounts in the Reserve Fund required to be applied thereto pursuant to the Indenture (see “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024 BONDS — Reserve Fund”) at the following respective Redemption Prices (expressed as percentages of the principal amount of the Series 2024 Bonds to be redeemed), plus accrued interest thereon to the date of redemption:

Redemption Dates Redemption Price
September 1, 2031 and March 1, 2032 103%
September 1, 2032 and March 1, 2033 102
September 1, 2033 and March 1, 2034 101
September 1, 2034 and any Interest Payment Date thereafter 100 
Preliminary, subject to change.
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9 See the caption “SPECIAL RISK FACTORS — Potential Early Redemption of Bonds from Special Tax Prepayments” for a discussion of the potential for a lower than expected yield on the Series 2024 Bonds as a result of a special mandatory redemption from Special Tax prepayments.

Mandatory Sinking Fund Redemption. The Series 2024 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 2024 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
20__ $
20__
20__
20__
20__ (Maturity)
If some but not all of the Series 2024 Bonds maturing September 1, 20__ are redeemed pursuant to the optional redemption provisions of the Indenture described above, the principal amount of the Series 2024 Bonds maturing September 1, 20__ to be redeemed pursuant to mandatory sinking fund redemption as described above on any subsequent September 1 shall be reduced, by $5,000 or an integral multiple thereof, as designated by the District in a Written Certificate of the District filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Series 2024 Bonds maturing September 1, 20__ so optionally redeemed. If some but not all of the Series 2024 Bonds maturing September 1, 20__ are redeemed pursuant to the mandatory redemption from Special Tax prepayments provisions of the Indenture described above, the principal amount of the Series 2024 Bonds maturing September 1, 20__ to be redeemed pursuant to mandatory sinking fund redemption as described above on any subsequent September 1 shall be reduced by the aggregate principal amount of the Series 2024 Bonds maturing September 1, 20__ so redeemed, 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 District.

Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee will select the Bonds to be redeemed from all Bonds not previously called for redemption (i) with respect to any optional redemption of Bonds of a Series, among maturities of the Bonds of such Series as directed in a Written Request of the District, and (ii) with respect to any mandatory redemption of Bonds from Special Tax prepayments, among maturities of all Series of Bonds on a pro rata basis as nearly as practicable. The Trustee shall select for redemption the Bonds of the same Series with the same maturity by lot in any manner that the Trustee, in its sole discretion, shall deem appropriate. For purposes of such selection, all Bonds shall be deemed to be comprised of the greatest number of separate denominations that would result in each such denomination being an Authorized Denomination and each such separate denomination shall be treated as a separate Bond that may be separately redeemed.

Notice of Redemption. If the Bonds are held in book entry form, notice of redemption will be mailed to DTC and not to the Beneficial Owners of the Bonds under the DTC book entry system. Neither the District nor the Trustee is responsible for giving notice of redemption to the Beneficial Owners. See APPENDIX I — “INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY AND ITS BOOK-ENTRY SYSTEM” herein.

The Indenture provides that the Trustee on behalf and at the expense of the District will give notice of any redemption by first class mail to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption. Such notice of redemption will state the date of the notice, the redemption date, the redemption place 2270
10 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). The notice of redemption will require that the Bonds to be redeemed be surrendered at the Office of the Trustee for redemption at the Redemption Price, and give notice 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, will 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.

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, is held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof will have been mailed as aforesaid and not canceled, then, from and after said date, interest on said Bonds will cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds will be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon. With respect to any notice of any optional redemption of Bonds, unless at the time such notice is given the Bonds to be redeemed shall be deemed to have been paid within the meaning of the Indenture, such notice will 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 District will 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 will not be made and the Trustee will, 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. 2271
11 Debt Service Schedule
Year Ending
(September 1) Principal Interest Total
2025 $ $ $
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
Total
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024 BONDS General
The Bonds are special, limited obligations of the District payable solely from Net Special Tax Revenues and the other assets pledged therefor under the Indenture. The Indenture defines “Net Special Tax Revenues” to mean Special Tax Revenues less amounts required to pay Administrative Expenses. Under the Indenture, the portion of the Special Tax levied under the Rate and Method to pay for Services (as defined in the Rate and Method) is not pledged to the payment of the Bonds. Accordingly, the term “Special Tax Revenues” is defined in the Indenture to mean the proceeds of the Special Tax received by or on behalf of the District, other than proceeds of the Special Tax levied to pay the costs of Services received by or on behalf of the 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 Tax (which shall be limited to the amount of said lien and interest and penalties thereon). The Indenture defines the term “Special Tax” as the special tax described and defined in the Rate and Method as “Special Tax” approved by the qualified electors to be levied within the District pursuant to the Act and the Rate and Method. “Services” has the meaning set forth in the Rate and Method. See APPENDIX A — “AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” “Administrative Expenses” is defined in the Indenture to mean any reasonably necessary or appropriate expenses incurred in the administration of the District and the Bonds, including, but not limited to (a) 2272
12 the administrative and legal costs of levying and collecting the Special Tax (including costs incurred in connection with any appeals relating thereto and litigation expenses incurred in connection with the collection of such Special Tax), (b) the fees, costs and indemnification 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 Tax 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 District directly related to the foregoing and an allocable share of City general administrative overhead related thereto.

Under the Rate and Method, parcels of Taxable Property are classified as Developed Property (each as defined in the Rate and Method) if a building permit has been obtained for such parcel by May 1 of the fiscal year preceding the Special Tax levy. In Fiscal Year 2023-34, the first year the Special Tax was levied in the District, the Special Tax was levied in the amount of $282,165.00 on 73 parcels classified as Developed Property. As of May 1, 2024, all 235 parcels of Taxable Property were classified as Developed Property for Fiscal Year 2024-25.

See “THE COMMUNITY FACILITIES DISTRICT — Delinquency History.” Under no circumstances may the amount of Special Tax levied by the District in any year exceed the maximum rates approved by the qualified electors within the District, as set forth in the Rate and Method. A copy of the Rate and Method is attached to this Official Statement as APPENDIX A.

In addition to the Net Special Tax Revenues, any other amounts held by the Trustee in the Special Tax Fund, the Bond Fund and the Reserve Fund are pledged pursuant to the Indenture to secure the payment of the principal of, premium, if any, and interest on the Series 2024 Bonds and any Additional Bonds in accordance with their respective terms, the Indenture and the Act. However, those amounts are pledged subject to the provisions of the Indenture permitting the application thereof for the purposes set forth in the Indenture. Amounts on deposit in the Improvement Fund, the Costs of Issuance Fund, the Redemption Fund, the Administrative Expense Fund and the Rebate Fund are not pledged to the payment of any of the Series 2024 Bonds or any Additional Bonds.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT (EXCEPT TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE), THE CITY OR THE

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

OBLIGATIONS OF THE CITY BUT ARE SPECIAL, LIMITED OBLIGATIONS OF THE DISTRICT

PAYABLE SOLELY FROM NET SPECIAL TAX REVENUES AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.

Special Tax
Pursuant to the Act, on September 5, 2017 the City Council of the City (the “City Council”) adopted the necessary resolutions stating its intent to establish the District, to authorize the levy of a special tax on taxable property within the boundaries of the District based on a rate and method of apportionment, and to have the District incur bonded indebtedness.

Following public hearings conducted pursuant to the provisions of the Act, the City Council adopted resolutions establishing the District and calling a special election to submit the levy of a special tax and the incurring of bonded indebtedness to the qualified voters of the District. On October 17, 2017, at an election held pursuant to the Act, the qualified voter within the District at the time of the election, authorized the District to incur bonded indebtedness in the aggregate principal amount of not to exceed $27,000,000 and approved the Original Rate and Method for the District to pay, among other things, the principal of and interest on the bonds of the District.

On June 7, 2022, the City Council initiated change proceedings to amend the Original Rate and Method and increase the maximum bonded indebtedness to $45,000,000 by adopting the necessary resolutions stating its 2273
13 intention to implement such changes. On July 19, 2022, at an election held pursuant to the Act, Lennar Homes, the qualified voter within the District at the time of the election, authorized the District to modify the Rate and Method (the “Rate and Method”) and authorized an increase to the maximum indebtedness to $45,000,000.

Pursuant to Section C of the Rate and Method, prior to the issuance of the Series 2024 Bonds, the City is required to determine if the Assigned Special Tax (as defined in the Rate and Method) is required to be reduced to the extent necessary to cause the total effective tax burden for single family property in the District to not exceed

1.95% of the minimum sales prices set forth in the Updated Price Point Study, all as further described in Section C of the Rate and Method. A copy of the Updated Price Point Study is included as APPENDIX C to this Official Statement. Based on the conclusions of the Updated Price Point Study, the City will not amend the Rate and Method in connection with the issuance of the Series 2024 Bonds. See “— Amended and Restated Rate and Method of Apportionment” below.

Pursuant to the Indenture, the District has covenanted that it will fix and levy the Special Tax in each Fiscal Year in accordance with the Rate and Method in an amount sufficient (subject to the limitations contained in the Rate and Method as to the maximum Special Tax that may be levied on each parcel) 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. See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Certain Covenants Under the Indenture.” Notwithstanding this covenant, the amount of Special Tax actually collected each year may be less than the amount described for a variety of different reasons. See “SPECIAL RISK FACTORS — Levy of the Special Tax.” The Series 2024 Bonds have been structured so that Assigned Special Tax rates set forth in the Rate and Method that may be levied within the District, based on the expected buildout of the District, are at least 110% of debt service on the Series 2024 Bonds in each Bond Year, net of estimated Administrative Expenses. The Special Tax levied in any fiscal year may not exceed the maximum rates authorized pursuant to the Rate and Method. See APPENDIX A - “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” There is no assurance that the Net Special Tax Revenues will, in all circumstances, be adequate to pay the principal of and interest on the Series 2024 Bonds when due. Pursuant to the Act, the Special Tax levied in any fiscal year against any parcel of residential property in the District may not be increased as a consequence of delinquency or default by the owners of any other parcels within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or default. See “SPECIAL RISK FACTORS — Levy of the Special Tax” and “SPECIAL RISK FACTORS — Exempt Properties.” Amended and Restated Rate and Method of Apportionment
General. The Rate and Method is to be applied by the District each Fiscal Year for the purpose of determining the amount of the Special Tax to be levied against each Assessor’s Parcel of Taxable Property within the District. For purposes of the discussion of the Rate and Method only, terms with initial capital letters that are not otherwise defined in this Official Statement shall have the respective meanings assigned to them in the Rate and Method, a copy of which appears in APPENDIX A.

Under the terms of the Indenture, prior to August 1 of each year, the District will ascertain from the County Assessor the relevant parcels on which the Special Tax is to be levied, taking into account any parcel splits during the preceding and then current year. The District will levy the Special Tax by August 10 of each Fiscal Year that the Bonds are Outstanding, or otherwise such that the computation of the levy is complete before the final date on which the auditor of the County (the “Auditor”) will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the District will prepare, or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Tax on the next real property tax roll.
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14 The Special Tax levied in any Fiscal Year may not exceed the maximum rates authorized pursuant to the Rate and Method. See APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” hereto. There is no assurance that the proceeds of the Special Tax will, in all circumstances, be adequate to pay the principal of and interest on the Series 2024 Bonds when due. See “SPECIAL RISK FACTORS — Levy of the Special Tax” herein.

Rate and Method of Apportionment of Special Tax. The District is legally authorized and has covenanted to cause the levy of the Special Tax in an amount determined according to a methodology, i.e., the Rate and Method, which the City Council and the qualified elector within the District have approved. The Rate and Method apportions the total amount of the Special Tax to be collected among the Taxable Property in the District as more particularly described below.

The following is a synopsis of the provisions of the Rate and Method, which should be read in conjunction with the complete text of the Rate and Method which is attached as APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The meanings of the capitalized but undefined terms used in this section are as set forth in APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” hereto. This section provides only a summary of the Rate and Method, and is qualified by more complete and detailed information contained in the Rate and Method attached as APPENDIX A. “CFD Administrator” means an official of the City responsible for determining the Special Tax Requirement, providing for the levy and collection of the Special Taxes, and performing the other duties provided for in the Rate and Method.
“Developed Property” means for each Fiscal Year, all Taxable Property, exclusive of Final Mapped Property, Taxable Property Owner Association Property, and Taxable Public Property, for which a building permit or other applicable permit for new construction was issued after January 1, 2017, and before May 1 of the prior Fiscal Year.
“Final Mapped Property” means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Taxable Property Owner Association Property, and Taxable Public Property, which as of January 1 of the previous Fiscal Year was located within a Final Subdivision Map. The term Final Mapped Property shall include any parcel map or Final Subdivision Map, or portion thereof, that creates individual lots for which a building permit may be issued, including Parcels that are designated as a remainder Parcel (i.e., one where the size, location, etc., precludes any further subdivision or taxable use). “Lower Income Household Welfare Exemption Property” means, for each Fiscal Year, an Assessor’s Parcel within the boundaries of the District that is subject to a welfare exemption under subdivision (g) of Section 214 of the California Revenue and Taxation Code (or any successor statute), as indicated in the most recent County assessor’s roll finalized prior to such Fiscal Year.
“Residential Floor Area” means all of the Square Footage of living area within the perimeter of a Unit, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be as set forth in the building permit(s) issued for such Assessor’s Parcel, or as set forth in other official records maintained by the City’s Building Department or other appropriate means selected by the District. The actual Square Footage shall be rounded up to the next whole square foot. Once such determination has been made for an Assessor’s Parcel, it shall remain fixed in all future Fiscal Years unless an appeal pursuant to Section F of the Rate and Method is approved that results in a change in the actual Square Footage.
“Special Tax” means, the special tax authorized by the qualified electors of CFD No. 35 to be levied within the boundaries of the District.
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15 “Special Tax Requirement” means, for any Fiscal Year that amount required, after taking into account available amounts held in the funds and accounts established under the Indenture, for the District to: (i) pay debt service on all Outstanding Bonds which is due in the calendar year that commences in such Fiscal Year; (ii) pay periodic costs on the Bonds, including, but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) provide any amounts required to establish or replenish any reserve fund for the Bonds; (v) pay directly for acquisition or construction of Facilities, or the cost of Services, to the extent that the inclusion of such amounts does not increase the Special Tax levy on Final Mapped Property or Undeveloped Property; (vi) provide an amount equal to Special Tax delinquencies based on the historical delinquency rate for the Special Tax as determined by the CFD Administrator. “Taxable Property” means, for each Fiscal Year, all of the Assessor’s Parcels within the boundaries of the District which are not exempt from the Special Tax pursuant to law or described below under the subheading “— Exempt Property.”
“Taxable Property Owner Association Property” means, for each Fiscal Year, all Assessor’s Parcels of Property Owner Association Property that are not exempt from the Special Tax pursuant to Section E of the Rate and Method.
“Taxable Public Property” means, for each Fiscal Year, all Assessor’s Parcels of Public Property that are not exempt from the Special Tax pursuant to Section E of the Rate and Method. “Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Public Property, or Taxable Property Owner Association Property.

Exempt Property. No Special Tax shall be levied on up to 2.44 Acres of Public Property and up to 14.12 Acres of Property Owner Association Property. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Public Property or Property Owner Association Property.

Property Owner Association Property or Public Property that is not exempt from the Special Tax under this section shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fifth or sixth step, respectively, in Section D of the Rate and Method, up to 100% of the applicable Maximum Special Tax for Taxable Property Owner Association Property and Taxable Public Property. No Special Tax shall be levied in any Fiscal Year on Assessor's Parcels that have fully prepaid the Special Tax obligation pursuant to the formula set forth in Section H of the Rate and Method.

Under the Rate and Method, no Special Tax shall be levied on Lower Income Household Welfare Exemption Property; provided, however, that if, in any Fiscal Year, applicable law does not require that Lower Income Household Welfare Exemption Property be exempt from some portion, or all, of the Special Tax, such portion, or all, of the Special Tax shall be levied on such property in accordance with the Rate and Method based on the Land Use Class to which the Assessor’s Parcel is assigned. Senate Bill 1473, the “Local Government Omnibus Act of 2020,” amended Government Code Section 53340(c) to provide that in a community facilities district in which the levy of a special tax is authorized by an ordinance adopted on or after January 1, 2020, a property receiving a welfare exemption under subdivision (g) of Section 214 of the California Revenue and Taxation Code shall be exempt from the special tax unless debt is outstanding and the property was subject to the special tax prior to receiving the exemption, in which case the property shall remain subject to the special tax and the special tax shall be enforceable against the property. Therefore, pursuant to the Rate and Method and California law, and given that no property is subject to the welfare exemption as of the date hereof, the Special Tax shall be applicable to Lower Income Household Welfare Exemption Property so long as the Bonds are outstanding.

Maximum Special Tax, Assigned Special Tax and Backup Special Tax. The Maximum Special Tax, Assigned Special Tax and Backup Special Tax for the Special Tax provided for in the Rate and Method is as follows:
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16 Special Tax
Developed Property. The Maximum Special Tax that may be levied in any Fiscal Year for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. The Maximum Special Tax shall not increase in future years, other than as calculated pursuant to Section C.1.a.3 of the Rate and Method.

Assigned Special Tax. The Assigned Special Tax will be determined based on Land Use Class. Single Family Property will be assigned to Land Use Classes 1 through 7, Other Residential Property will be assigned to Land Use Class 8 and Non-Residential Property shall be assigned to Land Use Class 9 as listed in Table 1 in Section C of the Rate and Method. The Assigned Special Tax applicable to an Assessor’s Parcel classified as Single Family Property ranges from $3,342 per unit for units with a Residential Floor Area of less than 1,501 square feet to $4,262 per unit for units with a Residential Floor Area greater than 2,500 square feet. The Assigned Special Tax applicable to an Assessor’s Parcel classified as Other Residential Property and Non-Residential Property is $52,912 per acre. Based on the Updated Price Point Study provided by the Price Point Consultant, the Assigned Special Tax rates set forth in Section C of the Rate and Method are not required to be reduced so that the total effective tax burden applicable to each land use class of residential property to be constructed within the District will not exceed 1.95% of the minimum sale prices set forth in the Updated Price Point Study, as required by Section C of the Rate and Method. A copy of the Updated Price Point Study is included as APPENDIX C to this Official Statement.

Backup Special Tax. The Backup Special Tax for an Assessor’s Parcel of Developed Property is $3,846 per Unit for Single Family Property, although subject to adjustment as set forth in Section C.1.a.(3) of the Rate and Method.

Final Mapped Property, Taxable Public Property, Taxable Property Owner Association Property and Undeveloped Property. The Maximum Special Tax for Final Mapped Property, Taxable Public Property, Taxable Property Owner Association Property, and Undeveloped Property is $52,912 per acre, and shall not be subject to increase or reduction and, therefore, shall remain the same in every Fiscal Year.

Multiple Land Use Classes on an Assessor's Parcel. In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Maximum Special Tax levied on such Assessor's Parcel shall be the sum of the Maximum Special Tax for all Units of Single Family Property and Acres of Other Residential Property and Non-Residential Property (based on the pro rata share of Square Footage between Other Residential Property and Non-Residential Property, according to the applicable building permits, Final Subdivision Map, parcel map, condominium plan, or other recorded County map) located on that Assessor's Parcel.

Method of Apportionment of Special Tax. Each Fiscal Year, beginning with Fiscal Year 2018-19, the CFD Administrator will determine the Special Tax Requirement and, subject to the Maximum Special Tax rates described above, the Special Tax will then be levied as follows:

First: If needed to satisfy the Special Tax Requirement, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Developed Property up to 100% of the applicable Assigned Special Tax;
Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Final Mapped Property up to 100% of the Maximum Special Tax for Final Mapped Property; Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property up to 100% of the Maximum Special Tax for Undeveloped Property; 2277
17 Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the levy of the Special Tax on each Assessor’s Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor’s Parcel;
Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Taxable Property Owner Association Property up to the Maximum Special Tax for Taxable Property Owner Association Property; and
Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Taxable Public Property up to the Maximum Special Tax for Taxable Public Property.

Notwithstanding the above, under no circumstances shall the Special Tax levied in any Fiscal Year on any Assessor’s Parcel of Single Family Property or Other Residential Property for which an occupancy permit for private residential use has been issued be increased as a result of delinquency or default by the owner or owners of any other Assessor’s Parcel or Assessor’s Parcels within the District by more than ten percent above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults.

Special Tax used in this Official Statement, including the description of the apportionment of the Special Tax, the term “Special Tax Revenues” means the proceeds of the Special Tax received by or on behalf of the District, other than proceeds of the Special Tax levied to pay the costs of Services received by or on behalf of the 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 Tax, which will be limited to the amount of said lien and interest and penalties thereon.

Prepayment of Special Tax. The Special Tax obligation for an Assessor’s Parcel of Taxable Property for which a building permit has been issued, may be prepaid in full, or in part, and only if there are no delinquent Special Tax with respect to such Assessor’s Parcel at the time of prepayment, provided that the terms set forth under Section H of the Rate and Method are satisfied. The Prepayment Amount is calculated based on the Bond Redemption Amount plus Redemption Premium plus the Future Facilities Amount plus the Defeasance Amount plus the Administrative Fees and Expenses, less a credit for the resulting reduction in the Reserve Requirement for the Bonds (if any), all as specified in APPENDIX A — “AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX — Section H.”
Mandatory redemption of Series 2024 Bonds from Special Tax prepayments may result in the reduction in the otherwise expected yield on such Series 2024 Bonds if the Series 2024 Bonds were purchased at a price greater than par. See “SPECIAL RISK FACTORS — Potential Early Redemption of Bonds from Special Tax Prepayments.”
Estimated Debt Service Coverage. The principal amount of the Series 2024 Bonds has been established to produce debt service coverage on the Series 2024 Bonds from Net Special Tax Revenues of at least 110%. The District may levy up to the Maximum Special Tax rates on Taxable Property within the District. See “— Rate and Method of Apportionment — Maximum Special Tax, Assigned Special Tax and Backup Special Tax” and “— Rate and Method of Apportionment — Exempt Property.” Pursuant to the Rate and Method, the status of Developed Property is based on building permits issued as of May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Tax is levied. Based on the development status within the District as of May 1, 2023, 73 parcels of Taxable Property were classified as Developed Property for Fiscal Year 2023-24. Between May 1, 2023 and April 1, 2024, permits were issued the remainder of the 162 single family residential units, resulting in all 235 parcels of Taxable Property being 2278
18 classified as Developed Property for Fiscal Year 2024-25. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT” and “SPECIAL RISK FACTORS — Failure to Develop Properties.” In Fiscal Year 2023-24, the first year Special Tax was levied in the District. A Special Tax in the amount of $282,165.00 was levied on 73 parcels classified as Developed Property. As of April 1, 2024, building permits had been issued for all 235 units within the District. See “THE COMMUNITY FACILITIES DISTRICT — Delinquency History.”
Table 1 below sets forth the projected Special Tax levy for Fiscal Year 2024-25 by property classification as of April 1, 2024 and as expected at build out.

TABLE 1

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 35
(COUNTRYSIDE PHASE 2 SOUTH - FACILITIES)
SUMMARY OF PROJECTED FISCAL YEAR 2024-25

SPECIAL TAX LEVY AND EXPECTED LAND USES
Projected Fiscal Year 2024-25 Special Tax Levy(1) Buildout of Expected Land Uses Special Tax
Category
Residential
Floor Area
(Sq. Ft.)
No. of
Units or
Acres
Special Tax
Rate(2)
Per
Unit or
Acre
Annual
Special Tax
Revenues
No. of
Units or
Acres
Maximum or
Assigned
Special
Tax(2)(3)
Per
Unit or
Acre
Annual
Special Tax
Revenues(4)
Developed Property(5)
Single Family Property Units Units
<1,501 0 $3,342 per Unit $ 0 0 $ 3,342 per Unit $ 0
1,501-1,700 33 $3,454 per Unit 113,982 33 3,454 per Unit 113,982 1,701-1,900 37 $3,626 per Unit 134,162 37 3,626 per Unit 134,162 1,901-2,100 35 $3,849 per Unit 134,715 35 3,849 per Unit 134,715 2,101-2,300 81 $3,935 per Unit 318,735 81 3,935 per Unit 318,735 2,301-2,500 49 $4,073 per Unit 199,577 49 4,073 per Unit 199,577 >2,500 0 $4,262 per Unit 0 0 4,262 per Unit 0
Subtotal – Developed Property 235 $901,171 235 $901,171 Acres Acres
Final Mapped Property(6) 0 $52,912 per Acre $ 0 0 $52,912 per Acre $ 0 Undeveloped Property(7) 0 $52,912 per Acre $ 0 0 $52,912 per Acre $ 0 Grand Total $901,171 $901,171
___________________
(1) Based on the building permits issued as of May 1, 2024 and assumes no further development. Includes the debt service due in 2025 on the Series 2024 Bonds, estimated CFD administrative expenses in the amount of $89,244, and approximately $78,279 to directly fund facilities.
(2) Reflects the final Assigned Special Tax rates. No reductions were required pursuant to Section C.1 of the RMA. (3) For Developed Property, the Assigned Special Tax rates are shown. For Final Mapped Property, the Maximum Special Tax rate is shown.
(4) Does not include potential revenues from a Backup Special Tax Levy on Single Family Property. (5) For the projected Fiscal Year 2024-25 Special Tax levy, includes all taxable parcels which have had a building permit issued by the City prior to May 1, 2024 and assumes no further development. (6) For the projected Fiscal Year 2024-25 Special Tax levy, includes all taxable parcels which were located within a final subdivison map as of December 31, 2023 and assumes no new final maps will be recorded. (7) For the projected Fiscal Year 2024-25 Special Tax levy, no Special Tax is anticipated to be levied on Taxable Public Property, Taxable Property Owner Association Property, or Undeveloped Property.

Sources: City of Ontario; Goodwin Consulting Group, Inc.

Collection and Application of the Special Tax
The Special Tax is levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes; provided, however, that the District may directly bill the Special Tax, may collect the Special Tax at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor’s Parcels as permitted by the Act.
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19 The District has made certain covenants in the Indenture for the purpose of ensuring that the current maximum rates and method of collection of the Special Tax are not altered in a manner that would impair the District’s ability to collect sufficient Special Tax to pay debt service on the Bonds and Administrative Expenses when due. First, the District has covenanted that it will not initiate proceedings under the Act to modify the Rate and Method if such modification would adversely affect the security for the Bonds and 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 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. See “SPECIAL RISK FACTORS — Constitutional Limitations on Taxation and Appropriations.” Second, the District has covenanted not to authorize owners of taxable parcels within the District to satisfy Special Tax obligations by the tender of Bonds unless the District shall have first obtained a report of an Independent Consultant certifying that doing so would not result in the District having insufficient Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds when due.

Although the Special Tax constitutes a lien on Taxable Property within the District, it does not constitute a personal indebtedness of the owners of such property within the District. Moreover, other overlapping general obligation debt already exists on the property located within the District and other future special tax and assessment liens and overlapping general obligation debt could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners therein. See “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments” herein. There is no assurance that property owners will be financially able to pay the annual Special Tax or that they will pay such taxes even if financially able to do so, all as more fully described in the section of this Official Statement entitled “SPECIAL RISK FACTORS.” Under the terms of the Indenture, the Trustee shall establish and maintain a separate fund designated the “Special Tax Fund.” As soon as practicable after the receipt by the District of any Special Tax Revenues, but in any event no later than the date ten Business Days after such receipt, the District shall transfer such Special Tax Revenues to the Trustee for deposit in the Special Tax Fund; provided, however, that any portion of any such Special Tax Revenues that represent a Special Tax prepayment that is to be applied to the payment of the redemption price of Bonds in accordance with the provisions of the Indenture shall be identified to the Trustee as such by the District and shall be deposited in the Redemption Fund. See “— Special Tax Fund” below, “THE SERIES 2024 BONDS — Redemption — Mandatory Redemption from Special Tax Prepayments” and APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.” Covenant for Superior Court Foreclosure
Pursuant to Section 53356.1 of the Act, the District has covenanted in the Indenture 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 District are delinquent in the payment of the Special Tax levied thereon and that, if such delinquencies exist, the 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 the Special Tax or installment thereof not paid when due.

Notwithstanding the foregoing, the District is not required under the Indenture to order the commencement of foreclosure proceedings if (a) the total Special Tax delinquency in the District for such Fiscal Year is less than 5% of the total amount of the Special Tax levied in such Fiscal Year, and (b) the amount then on deposit in the Reserve Fund is equal to the Reserve Requirement. Notwithstanding the foregoing, if the District determines that any single parcel is delinquent in excess of $7,500 in the payment of the Special Tax, then the District will diligently institute, prosecute and pursue foreclosure proceedings against such parcel.

The mere commencement of foreclosure proceedings will not assure a prompt and favorable resolution of Special Tax delinquencies. The ability of the District to foreclose the lien of delinquent unpaid Special Tax may be limited. See “SPECIAL RISK FACTORS — Bankruptcy and Legal Delays” and “— FDIC/Federal Government Interests in Properties.” Moreover, even if a judgment of foreclosure and order of sale is obtained, the District must cause a notice of levy to be issued. Under current law, the property owner has 120 days from the date of service of the notice of levy in which to redeem the subject property. If the property owner fails to 2280
20 redeem the property and it is sold, the property owner’s only remedy is an action to set aside the sale, which action must be brought within 90 days of the date of sale. If such an action results in the setting aside of the foreclosure sale, the judgment is revived, and the District would be entitled to receive interest on the revived judgment as if the sale had not been made. Under former law a property owner had a period of one year within which to redeem property to be sold, and the constitutionality of the legislation that eliminated the one year redemption period has not been tested.

There can be no assurance that, even if the subject property is sold, the proceeds from such sale will be sufficient to pay the delinquent installments of the Special Tax. The Act does not require the District or any other governmental agency to purchase or otherwise acquire any Assessor’s Parcel being sold if there is no other purchaser at such sale. The Act does require that property being sold pursuant to foreclosure under the Act must be sold for not less than the judgment amount (which must include reasonable attorneys’ fees, together with interest, penalties, and other authorized charges and costs) plus post judgment interest and authorized costs, unless a lower bid price is authorized by the Owners of not less than 75% by value of the Series 2024 Bonds Outstanding.

Special Tax Fund
The Indenture provides that the Trustee will establish and maintain a separate Fund designated the “Special Tax Fund.” The Indenture requires that the District transfer Special Tax Revenues (other than Special Tax prepayments) to the Trustee for deposit into the Special Tax Fund as soon as practicable after the District’s receipt thereof, but in any event no later than ten Business Days after such receipt. No later than the Business Day immediately preceding each Interest Payment Date, after having made any requested transfers to the Administrative Expense Fund, as requested by the District, to have sufficient amounts available therein to pay Administrative Expenses, the Trustee is required by the Indenture to make transfers from the Special Tax Fund to the Interest Account in the Bond Fund, the Principal Account in the Bond Fund and the Reserve Fund in the amounts and in the priority specified in the Indenture. See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
As soon as practicable after the District’s receipt of Special Tax prepayments, but in any event no later than ten Business Days after such receipt, the District is required to transfer any Special Tax prepayments to the Trustee and, in connection therewith, submit to the Trustee a Written Certificate identifying such amounts as Special Tax prepayments, identifying the portion of such Special Tax prepayments so transferred that is to be applied to the Redemption Price of the Bonds and identifying the portion of such Special Tax prepayments that is to be applied to the payment of interest on the Bonds to be so redeemed. The portion of such Special Tax prepayments that is to be applied to the Redemption Price will be deposited by the Trustee in the Redemption Fund and will be applied to the redemption of the Bonds pursuant to the Indenture. The portion of such Special Tax prepayments that is to be applied to the payment of interest on the Bonds to be so redeemed will be deposited by the Trustee in the Interest Account and will be applied to the payment of such interest.

Reserve Fund
The Indenture provides that the Trustee will establish and maintain a separate Fund designated the “Reserve Fund.” On the Closing Date, the Trustee will deposit in the Reserve Fund the amount specified under the caption “ESTIMATED SOURCES AND USES OF FUNDS.” The Trustee is also required, no later than the Business Day immediately preceding each Interest Payment Date, to transfer from the Special Tax Fund (after the requisite transfers to the Administrative Expense Fund, the Interest Account and the Principal Account) the amount, if any, necessary to cause the amount on deposit in the Reserve Fund to be equal to the Reserve Requirement. The Indenture defines “Reserve Requirement” to mean, as of the date of any calculation, the least of (i) “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), (ii) Maximum Annual Debt Service and (iii) 125% of Average Annual Debt Service. 2281
21 Except as otherwise provided in the Indenture, all amounts in the Reserve Fund are to be used and withdrawn by the Trustee solely for the purpose of (i) making transfers to the Interest Account in accordance with the Indenture 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 the Indenture 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 Indenture as described in the following paragraph.

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 will, on the date on which amounts to redeem such Bonds are deposited in the Redemption Fund or otherwise deposited with the Trustee, be transferred by the Trustee from the Reserve Fund to the Redemption Fund or to such deposit held by the Trustee and will be applied to the redemption of said Bonds; provided that, such amount will 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 will 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.

Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Trustee will, upon receipt of a Written Request of the 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. If, as a result of the scheduled payment of principal of or interest on the Bonds, the Reserve Requirement is reduced, the Trustee will transfer an amount equal to the amount of such reduction to the Interest Account.

Investment of Moneys
All moneys held by the Trustee in any of the Funds or Accounts are required to be invested by the Trustee solely in Permitted Investments, as directed in writing by the District. As used in the Indenture, the phrase “Permitted Investments” includes a variety of investments, some of which may not be rated by a national rating service. See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Definitions.”
No Additional Bonds Except for Refunding Bonds
So long as any of the Series 2024 Bonds remain Outstanding, the District will not issue any Additional Bonds or obligations payable from Net Special Tax Revenues senior to the Series 2024 Bonds. The District may issue Additional Bonds or obligations payable on a parity with the Series 2024 Bonds, if, among other things: (i) upon the issuance of such Additional Bonds, no Event of Default will occur or be continuing under the Indenture; (ii) the proceeds of the Additional Bonds will be applied to refund the Series 2024 Bonds or Additional Bonds previously issued under the Indenture, pay Costs of Issuance incurred in connection with the issuance of such Additional Bonds, and/or make any requisite deposit to the Reserve Fund; and (iii) the 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 in the Indenture limits the issuance of any special tax bonds payable from the Special Tax if, after the issuance and delivery of such special tax bonds, none of the Bonds theretofore issued under the Indenture will be Outstanding. See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
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22 THE COMMUNITY FACILITIES DISTRICT
General Information Regarding the District
The District was formed to finance certain services, facilities and costs with respect thereto related to the development within the District. The qualified electors within the boundaries of the District, being the then owners of property in the District, authorized the District to incur bonded indebtedness to finance certain facilities to meet the needs of new development within the District and approved the Rate and Method for, and authorized the levy of, the Special Tax.

The District is located in the southwestern portion of the County, in the southwestern portion of the City within an area known as “Ontario Ranch.” The District consists of two neighborhoods known as “Shady Tree” and “Whispering Wind,” within a master planned community known as “Country Lane.” The District is located the south side of Chino Avenue, west of Archibald Avenue, just north of Schaefer Avenue. The Shady Tree site consists of approximately 18.723 gross acres, with all lots located within Final Tract Map No. 17449. The Whispering Wind site consists of approximately 16.827 gross acres, with all lots located within Final Tract Map 17450 .

The property within the District is currently under the ownership of Lennar Homes and individual homeowners. Lennar Homes purchased the property within the District for the Shady Tree and Whispering Wind sites from Forestar Countryside, LLC, a Delaware limited liability company, for $25,154,265 on December 31, 2020. The Developer is developing the District into two neighborhoods consisting of 235 single family detached residential units. The Shady Tree neighborhood is planned for 97 single family homes and the Whispering Wind neighborhood is planned for 138 single family homes. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT — The Developer.”
Country Lane is part of a multiple phase, multiple master-planned community development known as “Ontario Ranch.” Ontario Ranch is planned to contain over 8,200 acres. Within the Ontario Ranch, out of the total 8,200 acres, approximately 4,026 acres are approved within the above 18 specific plans. Within the approved 4,026 acres are 10,455 single family residences, 10,659 multi-family residences, 1.63 million square feet of commercial, 16.35 million square feet of industrial and 3.88 million square feet of business park. There is an additional 314 acres and 574 single family units in process for approval along with 4.42 million square feet of industrial space and nearly 920,000 square feet of business park. There are ten residential specific plans currently with approvals which include Grand Park, The Avenue, Parkside, Subarea 29, Rich Haven, Parkside, Esperanza, West Haven, Edenglen, Armstrong Ranch and Countryside.

As mentioned above, the Developer is building and selling homes in the District within two neighborhoods named “Shady Tree” and “Whispering Wind.” At full buildout the District is anticipated to include 235 singlefamily detached dwelling units. As of April 1, 2024, the date of value of the Appraisal (defined herein), the District included 137 completed residential units which had closed escrow to individual homeowners, and the Developer owned 6 completed model units (none of which were in escrow), 12 residential units that were over 95% complete (all of which were in escrow), 44 residential units that were in various stages of construction but less than 95% complete (26 of which were in escrow) and 36 finished lots without any home construction thereon (none of which were in escrow). As of May 6, 2024, a total of 148 residential units had been conveyed to individual homeowners, and the Developer owned 10 completed production units (all of which were in escrow), 6 completed model units (none of which were in escrow), 35 residential units that were in various stages of construction (24 of which were in escrow) and 36 finished lots without any home construction thereon (none of which were in escrow). Homes under contract may not result in closed escrows as sales contracts are subject to cancellation. At full buildout the District is anticipated to include 235 single-family detached dwelling units. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT — Lennar Homes’ Development Plan.” A detailed description of the status of the construction as of the date of value of the Appraisal is included in APPENDIX B — “APPRAISAL REPORT.”
2283
23 Under the City’s General Plan (Land Use Plan LU-01) land within the District is designated as “Low Medium Density Residential,” which allows for 5.1-11.0 dwelling units per acre. The General Plan Land Use Map also shows the southern portion of Tract No. 17450 as partially falling within the Chino Airport Influence Area overlay. As built and proposed, development within the District legally conforms to these requirements.

Water and sewer service to the property within the District will be supplied by the City. Electricity will be supplied by Southern California Edison, gas by Southern California Gas Company and schools by Mountain View District and Chaffey Joint Union High School District.

Like all of Southern California, the land within the District is subject to seismic activity. The District is not located in a designated Earthquake Study Zone and there are no known active faults crossing the site.

However, the Chino Fault is located approximately 6.6 miles southwest of the District and the Cucamonga Fault Zone is located approximately 12.6 miles north of the District. See “SPECIAL RISK FACTORS — Geologic, Topographic and Climatic Conditions.”
The Federal Emergency Management Agency has determined that the District is located in a Zone “X” flood area (an area of minimal flooding, within the 500-year flood plain), and flood insurance will not be required.

See “SPECIAL RISK FACTORS — Geologic, Topographic and Climatic Conditions.” An aerial photo showing the property within the District and a map showing the general location of the District and the surrounding area appears on the pages before Page 1 of this Official Statement. More detailed information about the property therein is contained in APPENDIX B — “APPRAISAL REPORT,” and information about the ownership of such property is set forth under the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” General information about the City is set forth in APPENDIX E.

The Facilities
The City and Forestar Countryside LLC (“Forestar”) entered into an Acquisition and Funding Agreement, dated as of October 1, 2017 (the “Original Acquisition Agreement”), which provides, among other things, the means by which certain facilities will be financed in connection with the development within the District, including water and recycled water improvements, fiber optic network improvements, street and traffic circulation system improvements (the “Facilities”). Pursuant to the Original Acquisition Agreement, Forestar agreed to construct, and the City agreed to accept, certain Facilities to be acquired with the proceeds of the Series 2024 Bonds and available Special Tax proceeds deposited into the Acquisition Account of the Improvement Fund under the Indenture pursuant to certain requirements contained in the Acquisition Agreement and the Indenture. The Acquisition Agreement also provides guidelines pursuant to which the City may acquire completed segments of the Facilities with the proceeds of the Series 2024 Bonds and available Special Tax proceeds deposited into Acquisition Account of the Improvement Fund. The Acquisition Agreement may be amended from time to time by the parties thereto.

Pursuant to the Original Acquisition Agreement, Forestar has agreed to pay all costs of the Facilities that it constructs pursuant to the Acquisition Agreement in excess of the moneys available therefor in the Acquisition Account of the Improvement Fund. Further, the Original Acquisition Agreement states any lack of availability of amounts in the Acquisition Account of the Improvement Fund to pay the acquisition costs of the Facilities shall in no way diminish any obligation of Forestar with respect to the construction of or contributions for public facilities and mitigation measures required by the conditions of approval or any subdivision, development, or other agreement to which Forestar is a party, or any governmental approval to which Forestar or any land within the District was subject, except to the extent expressly set forth in such agreement or approval.

Subsequently, Forestar and the Developer entered into the Assignment and Assumption Agreement, dated as of February 7, 2022, pursuant to which, in accordance with the terms set forth therein, the Developer accepted the assignment of the Original Acquisition Agreement from Forestar and unconditionally assumed all of the 2284
24 obligations, liabilities and responsibilities and agreed to perform all of the obligations of Forestar under the Original Acquisition Agreement
The Original Acquisition Agreement was amended and restated by the Amended and Restated Acquisition and Construction Agreement dated __________ 1, 2024 by and between the City and Lennar Homes to, among other things, expand the Facilities authorized to be purchased by the City through the proceeds of the Series 2024 Bonds.

As of April 1, 2024, all of the Facilities to be constructed by Lennar Homes that are required to serve the development within the District have been substantially completed, pending final approval and acceptance by the City.

Certain facilities (the “NMC Facilities”) were constructed pursuant to that certain First Amended and Restated Agreement for Financing and Construction of Limited Infrastructure Improvements to Serve an Easterly Portion of the New Model Colony, made as of August 21, 2012, by and between the City and NMC Builders (the “NMC Agreement”), by and between the City and NMC Builders, LLC, a California limited liability company (“NMC Builders”). Pursuant to the NMC Agreement bond proceeds may be deposited into an NMC Acquisition Account of the Improvement Fund under the Indenture to finance the costs of certain NMC Facilities constructed by NMC Builders and acquired by the City pursuant to the NMC Acquisition Agreement. NMC Builders is an entity established by certain current and previous landowners within Ontario Ranch for the purpose of jointly funding and managing the construction of much of the major public infrastructure required for the development of the eastern portion of Ontario Ranch, including some of the facilities being financed through the issuance of the Series 2024 Bonds.

Direct and Overlapping Debt
The District is included within the boundaries of numerous overlapping local agencies providing governmental services. Some of these local agencies have outstanding bonds, and/or the authority to issue bonds, payable from taxes or assessments. The existing and authorized indebtedness payable from taxes and assessments that may be levied upon the property within the District is shown in Table 2 below. In addition to current debt, new community facilities districts and/or special assessment districts could be formed in the future encompassing all or a portion of the property within the District; and such districts or the agencies that formed them could issue more bonds and levy additional special taxes or assessments. 2285
25 TABLE 2

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 35
(COUNTRYSIDE PHASE 2 SOUTH - FACILITIES)

DIRECT AND OVERLAPPING DEBT
2023-24 Assessed Valuation: $26,167,121
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/24 Metropolitan Water District General Obligation Bonds 0.001% $ 123 Chaffey Community College District General Obligation Bonds 0.016 46,856 Chaffey Union High School District General Obligation Bonds 0.031 182,051 Mountain View School District SFID No. 1 General Obligation Bonds 0.230 13,395 Mountain View School District SFID No. 2 General Obligation Bonds 0.474 87,602 City of Ontario Community Facilities District No. 35 100.000 0(1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $330,027 OVERLAPPING GENERAL FUND DEBT:

San Bernardino County General Fund Obligations 0.008% $ 10,807 San Bernardino County Flood Control District General Fund Obligations 0.008 3,064 Chaffey Community College District Certificates of Participation 0.016 3,851 City of Ontario General Fund Obligations 0.065 171,645
City of Ontario Pension Obligation Bonds 0.065 145,912
West Valley Vector Control District Certificates of Participation 0.023 337 TOTAL OVERLAPPING GENERAL FUND DEBT $335,616
COMBINED TOTAL DEBT $665,643(2)
Ratios to 2023-24 Local Secured Assessed Valuation:

Direct Debt ($0) .................................................................. 0.00% Total Direct and Overlapping Tax and Assessment Debt:.... 1.26% Combined Total Debt: .......................................................... 2.54% _______________________
(1) Excludes Mello-Roos Act bonds to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

As shown in Table 3, the projected Fiscal Year 2024-25 average total effective tax rate for completed single family homes conveyed to individual homeowners as of April 1, 2024 in the District range from approximately 1.84% to 1.90% of the base sales price of sample lots within the Shady Tree and Whispering Wind neighborhoods. The following table sets forth sample tax bills for selected completed homes owned by individual homeowners within the Shady Tree and Whispering Wind neighborhoods of the District for Fiscal Year 2024-25. 2286
26 TABLE 3

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 35
(COUNTRYSIDE PHASE 2 SOUTH - FACILITIES)

SAMPLE TAX BILLS
Residential Floor Area (Sq. Ft.): 2,315 2,067
Type of Property: Detached (Plan 2) Detached (Plan 3)
Community Name: Shady Tree Whispering Wind
Net Taxable Value
Base Price(1) $694,500.00 $620,100.00
Less: Homeowner’s Exemption (7,000.00) (7,000.00)
Net Taxable Value $687,500.00 $613,100.00
Ad Valorem Property Taxes Rate
Base Property Tax 1.0000% $ 6,875.00 $ 6,131.00
Chaffey College Bond 0.0100 68.75 61.31
Chaffey High Bond 0.0316 217.25 193.74
Mountain View Elementary SFID #1 0.0069 47.44 42.30
Mountain View Elementary SFID #2 0.0021 14.44 12.88
Metro Water Mid-Valley Debt 0.0035 24.06 21.46
Total Ad Valorem Property Taxes 1.0541% $ 7,246.94 $ 6,462.69 Parcel Charges, Assessments, and Special Taxes
Vector Control Assessment #1 $ 36.74 $ 36.74
City of Ontario CFD No. 19 (Countryside Phase 1 - Services)(2) 1,443.71 1,443.71 City of Ontario CFD No. 35 (Countryside Phase 2 South - Facilities)(3) 4,073.00 3,849.00 Total Parcel Charges, Assessments, and Special Taxes $ 5,553.45 $ 5,329.45 Total Taxes $12,800.39 $11,792.14
Total Effective Tax Rate 1.84% 1.90%
_______________________
(1) Represents base market values for sample lots as reported in the Appraisal Report. (2) Equal to the actual Special Tax levied for CFD No. 19 for Fiscal Year 2023-24. The Maximum Special Tax for CFD No. 19 may increase by 4% per year.
(3) Equal to the applicable Assigned Special Tax rate for CFD No. 35. Reflects the final Assigned Special Tax rates. No reductions were required pursuant to Section C.1 of the RMA.

Sources: San Bernardino County Tax Collector’s Office; Kitty Siino & Associates, Inc.; Goodwin Consulting Group, Inc.

Property Values
Appraisal. In order to provide information with respect to the value of the land within the District, the District engaged the Appraiser to prepare the Appraisal. The principal of the Appraiser, who was actively involved in the preparation of the Appraisal, has an “MAI” designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land secured municipal bonds. The Appraiser was selected by the District and has no material relationships with the City, the District or the owners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal and other similar engagements for the City.

The City instructed the Appraiser to prepare its analysis and report in conformity with City-approved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the commission now known as California Debt and Investment Advisory Commission. A copy of the Appraisal is included as APPENDIX B to this Official Statement.

The purpose of the Appraisal was to estimate the minimum market value of the fee simple estate, subject to special tax and special assessment liens, of the property within the District in its current condition. Subject to the contingencies, assumptions and limiting conditions set forth in the Appraisal, the Appraiser concluded that, as of April 1, 2024, the minimum market value of the property within the District was not less than $117,479,057 including $88,072,375 for the 137 completed units conveyed to individual homeowners and $29,406,682 for the homes and lots owned by the Developer as of such date. See APPENDIX B — “APPRAISAL REPORT.” 2287
27 Reference is made to APPENDIX B for a complete list and full discussion of the applicable contingencies, assumptions and limiting conditions and the methodology employed by the Appraiser. In the event that any of the contingencies, assumptions and limiting conditions are not actually realized, the value of the property within the District may be less than the amount reported in the Appraisal. In any case, there can be no assurance that any portion of the property within the District would actually sell for the amount indicated by the Appraisal.

The Appraisal merely indicates the Appraiser’s opinion as to the minimum market value of the property referred to therein as of the date and under the conditions specified therein. The Appraiser’s opinion reflects conditions prevailing in the applicable market as of the date of value. The Appraiser’s opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not further adversely change in the future. See “SPECIAL RISK FACTORS.” It is a condition precedent to the issuance of the Series 2024 Bonds that the Appraiser deliver to the District a certification to the effect that nothing has come to the attention of the Appraiser subsequent to the date of value of the Appraisal that would cause the Appraiser to believe that the value of property in the District is less than the minimum value reported in the Appraisal. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT — Lennar Homes’ Development Plan — Shady Tree.” Value-to-Lien Ratios
The value of the property within the District is significant because, in the event of a delinquency in the payment of the Special Tax, the District may foreclose only against delinquent parcels. Likewise, the ratio of the value of a parcel to its “share” of the Series 2024 Bonds is important because it provides an indication of the extent of the relative burden imposed on each parcel by the applicable Special Tax. As indicated above, the minimum appraised value of the property within the District is not less than $117,479,057. The ratio of that value to the $11,040,000 total principal amount of the Series 2024 Bonds is approximately 10.64*-to-1. Taking other overlapping tax and assessment debt within the District into account, the ratio of the minimum appraised value to the total amount of existing tax and assessment debt for the District plus the Series 2024 Bonds of $11,370,027 is approximately 10.33-to-1. See “— Direct and Overlapping Debt.” Table 4 sets forth the appraised value to lien ratios of all the taxable property within the District by ownership and development status as of April 1, 2024.

Additionally, Table 5 below sets forth the stratification of value-to-liens of the parcels within the District, based on the appraised value of such parcels set forth in the Appraisal and such parcels’ respective shares of the principal amount of the Series 2024 Bonds (allocated to each parcel based upon its respective share of the total projected Fiscal Year 2023-24 Special Tax levy) and the ratio of the appraised value to its share of the Series 2024 Bonds.

Preliminary, subject to change.
2288
28 TABLE 4

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 35
(COUNTRYSIDE PHASE 2 SOUTH - FACILITIES)

APPRAISED VALUE-TO-LIEN RATIOS BY OWNERSHIP AND STATUS OF DEVELOPMENT Owner
Status of
Development(1)
No. of
Planned
Units
Projected
Fiscal Year
2024-25
Special Tax Levy(2)
Percent of
Projected Fiscal
Year 2024-25
Special Tax Levy
Appraised
Value(3) District Debt(4)*
Average
Appraised
Value-to-Lien*
Individual Homeowners Completed and Sold 137 $528,586 58.66% $ 88,072,375 $ 6,475,563 13.60 Lennar Homes Model Homes 6 $ 23,491 2.61% $ 2,875,503 $ 287,782 9.99 Over 95% Complete 12 44,592 4.95 5,008,023 546,284 9.17 Under Construction 44 169,745 18.84 11,837,736 2,079,500 5.69 Finished Lots(5) 36 134,757 14.95 9,685,420 1,650,871 5.87 Subtotal – Lennar Homes 98 $372,585 41.34% $29,406,682 $ 4,564,437 6.44 Grand Total 235 $901,171 100.00% $117,479,057 $11,040,000 10.64 _______________________
* Preliminary, subject to change.
(1) Construction status as provided in the Appraisal Report. May not reflect classification of properties for purposes of the Special Tax levy. (2) Based on the building permits issued as of December 31, 2023 and assumes no further development. Includes the debt service due in 2025 on the Series 2024 Bonds, estimated CFD administrative expenses in the amount of $89,244, and approximately $78,279 to directly fund facilities. (3) Represents an allocation of the bulk market values reported in the Appraisal Report. The allocated values are not indicative of the market values of the groupings or the individual lots.
(4) Equal to the principal amount of the Series 2024 Bonds. Does not include overlapping debt secured by ad valorem taxes on the property. Allocated based on the proportionate share of the Projected Fiscal Year 2024-25 Special Tax Levy. (5) Under the Rate and Method, parcels of Taxable Property are classified as Developed Property if a building permit has been obtained for such parcel by May 1 of the fiscal year preceding the Special Tax levy. Accordingly, because all 235 parcels of Taxable Property have obtained building permits prior to May 1, 2024, all such lots will be classified as Developed Property for the Fiscal Year 2024-25 Special Tax levy.

Sources: Kitty Siino & Associates, Inc.; Ramirez & Co., Inc.; Goodwin Consulting Group, Inc.

TABLE 5

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 35
(COUNTRYSIDE PHASE 2 SOUTH - FACILITIES)

APPRAISED VALUE-TO-LIEN RATIOS
Appraised
Value-to-Lien
Category
No. of
Planned
Units
Projected Fiscal
Year 2024-25
Special Tax Levy(1)
Percent of
Projected Fiscal
Year 2024-25
Special Tax Levy
Appraised
Value(2) District Debt(3)*
Average
Appraised
Value-to-Lien*
10:1 to 15:1 140 $540,667 60.00% $ 89,587,422 $ 6,623,564 13.53 5:1 to 10:1 95 360,504 40.00 27,891,635 4,416,436 6.32
Total 235 $901,171 100.00% $117,479,057 $11,040,000 10.64 ________________________
* Preliminary, subject to change.
(1) Construction status as provided in the Appraisal Report. May not reflect classification of properties for purposes of the Special Tax levy. (2) Represents an allocation of the bulk market values reported in the Appraisal Report. The allocated values are not indicative of the market values of the groupings or the individual lots.
(3) Equal to the principal amount of the Series 2024 Bonds. Does not include overlapping debt secured by ad valorem taxes on the property. Allocated based on the proportionate share of the Projected Fiscal Year 2024-25 Special Tax Levy.

Sources: Kitty Siino & Associates, Inc.; Ramirez & Co., Inc.; Goodwin Consulting Group, Inc.

Delinquency History
The District commenced the levy of Special Taxes within the District in Fiscal Year 2023-24. The amount levied for Fiscal Year 2023-24 was $282,165.00 on 73 parcels of Taxable Property. The total delinquency amount for Fiscal Year 2023-24 was $5,816.50 accounting for approximately two percent (2%) of the total Special Tax levy for Fiscal Year 2023-24.
2289
29 PROPERTY OWNERSHIP AND THE DEVELOPMENT
The information provided in this section has been included because it may be considered relevant to an informed evaluation and analysis of the Series 2024 Bonds and the District. No assurance can be given, however, that the proposed development of the property within the District will occur in a timely manner or in the configuration or to the density described herein, or that Lennar Homes, any owners or affiliates thereof, or any other property owner will or will not retain ownership of its respective property within the District. There may be material adverse changes to this information after the date of the Official Statement. Neither the Series 2024 Bonds nor any of the Special Tax are personal obligations of any property owner within the District and, in the event that any property owner defaults in the payment of its Special Tax, the District may proceed with judicial foreclosure on the delinquent property but has no direct recourse to the assets of any property owner or any affiliate thereof. The Series 2024 Bonds are secured solely by the Net Special Tax Revenues and amounts on deposit in certain of the funds and accounts maintained by the Trustee under the Indenture. See “SPECIAL RISK FACTORS” for a discussion of certain of the risk factors that should be considered in evaluating the investment quality of the Series 2024 Bonds. The following information regarding ownership and planned development of the District has been provided by Lennar Homes. No representation is made by the District or the Underwriter as to the accuracy or adequacy of such information so provided.

The Developer
Lennar Homes of California, LLC, a California limited liability company (previously defined as “Lennar Homes”) is based in Irvine, California, and has been in the business of developing residential real estate communities in California since 1996. Lennar Homes is wholly-owned by U.S. Home, LLC, a Delaware limited liability company (“U.S. Home”). U.S. Home is wholly-owned by Lennar Corporation, which is based in Miami, Florida (“Lennar Corporation”). Founded in 1954, Lennar Corporation completed its initial public offering in 1971 and listed its common stock on the New York Stock Exchange in 1972. Lennar Corporation’s Class A and Class B common stock are listed on the New York Stock Exchange under the symbols “LEN” and “LEN.B.” respectively. Lennar Corporation is one of the largest homebuilders in the United States based on home sales revenues and net earnings, and operates under a number of brand names, including Lennar Homes and U.S. Home.

Lennar Corporation primarily develops residential communities both within the Lennar Corporation family of builders and through consolidated and unconsolidated partnerships in which Lennar Corporation maintains an interest.

Lennar Corporation is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, files reports, proxy statements, and other information, including financial statements, with the Securities and Exchange Commission (the “SEC”). Such filings, particularly Lennar Corporation’s annual report on Form 10-K and its most recent quarterly report on Form 10 Q, may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such filings can also be accessed over the internet at the SEC’s website at www.sec.gov.

This internet address is included for reference only and the information on the internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on the internet site.

Copies of Lennar Corporation’s annual report and related financial statements are available from Lennar Corporation’s website at www.lennar.com. This internet address is included for reference only and the information on the internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement.

Lennar Homes’ Development Plan
General Description of the District. The District includes approximately 35.550 gross acres and approximately 33.116 net acres and is located in the southern portion of the City. Lennar Homes is developing the property within the District into two neighborhoods, “Shady Tree,” and “Whispering Wind,” within a master 2290
30 planned community known as “Country Lane.” Country Lane is part of a multiple phase, multiple master-planned community development known as “Ontario Ranch.” Ultimately, Ontario Ranch is planned to contain over 8,200 acres developed as single family residences, multi-family residences, and commercial, industrial and business park property.

Tract Map Status. On December 16, 2021, Final Map Nos. 17449 (Shady Tree) and 17450 (Whispering Wind) for the District were recorded in the recorder’s office of San Bernardino County, creating the 235 residential lots that comprise the District.

Current Activity. As of April 1, 2024, the date of value of the Appraisal (defined herein), the District included 137 completed residential units which had closed escrow to individual homeowners, and the Developer owned 6 completed model units (none of which were in escrow), 12 residential units that were over 95% complete (all of which were in escrow), 44 residential units that were in various stages of construction but less than 95% complete (26 of which were in escrow) and 36 finished lots without any home construction thereon (none of which were in escrow). As of May 6, 2024, a total of 148 residential units had been conveyed to individual homeowners, and the Developer owned 10 completed production units (all of which were in escrow), 6 model units (none of which were in escrow), 35 residential units that were in various stages of construction (24 of which were in escrow), and 36 finished lots without any home construction thereon (none of which were in escrow). Homes under contract may not result in closed escrows as sales contracts are subject to cancellation.

Shady Tree. The Shady Tree neighborhood includes 97 proposed single-family dwellings. As of May 6, 2024, Lennar Homes has pulled all 97 building permits in the Shady Tree neighborhood.

The following table sets forth the estimated number of lots, home sizes, and base sales prices for the Shady Tree product line as of May 6, 2024. Sales of homes within the Shady Tree neighborhood began in October 2022 and Lennar Homes expects that construction will be complete within the Shady Tree neighborhood in November 2024.

TABLE 6

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 35
(COUNTRYSIDE PHASE 2 SOUTH - FACILITIES)
STATUS OF OWNERSHIP – SHADY TREE
(AS OF MAY 6, 2024)
Floor Plan
Approximate.

Square Footage
Total Number
of Planned
Units(1)
Units
Closed to
Homeowners
Units Completed
But Not Closed to
Homeowners(2)
Units Under
Construction(3)
Finished
Lots(4)
Estimated
Base Price(5)
1 2,213 48 34 6 6 2 $733,000
2 2,315 22 15 2 3 2 799,000
3 2,409 27 19 4 3 1 809,000
Totals 97 68 12 12 5
_______________________
(1) The number of units in each plan is an estimate and is subject to change as the market dictates. (2) Includes 3 model units (completed) owned by Lennar Homes. (3) Of the 29 Shady Tree residential units owned by Lennar Homes as of May 6, 2024, 21 were under contract to be sold to homeowners. (4) Finished lot means that such lot has finish grade certification and is able to start home construction. (5) Base sale prices are estimated as of May 6, 2024. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered.

Source: The Developer.

No assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation. See “SPECIAL RISK FACTORS — Failure to Develop Properties.” Moreover, rising interest rates may affect prospective buyers’ willingness 2291
31 or ability to close escrow or enter into future sales contracts. See “SPECIAL RISK FACTORS — Increasing Mortgage Interest Rates.”
Whispering Wind. The Whispering Wind neighborhood includes 138 proposed single family dwellings.

As of April 1, 2024, Lennar Homes has pulled all 138 building permits in the Whispering Wind neighborhood..

The following table sets forth the estimated number of lots, home sizes, and base sales prices for the Whispering Wind product line as of May 6, 2024. Sales of homes within the Whispering Wind neighborhood began in October 2022 and Lennar Homes expects that construction will be complete within the Whispering Wind neighborhood in April 2025.

TABLE 7

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 35
(COUNTRYSIDE PHASE 2 SOUTH - FACILITIES)
STATUS OF OWNERSHIP – WHISPERING WIND
(AS OF MAY 6, 2024)
Floor Plan
Approximate.

Square Footage
Total Number
of Planned
Units(1)
Units
Closed to
Homeowners
Units Completed
But Not Closed to
Homeowners(2)
Units Under
Construction(3)
Finished
Lots(4)
Estimated
Base Price(5)
1 1,618 33 19 1 5 8 $644,250
2 1,800 38 21 1 6 10 689,000
3 2,067 34 20 1 6 7 703,000
4 2,202 33 20 1 6 6 732,000
Totals 138 80 4 23 31
_______________________
(1) The number of units in each plan is an estimate and is subject to change as the market dictates. (2) Includes 3 model units (completed) owned by Lennar Homes, one in each Floor Plan 2, 3 and 4. (3) Of the 58 Whispering Wind residential units and lots owned by Lennar Homes as of May 6, 2024, 13 homes were under contract to be sold to homeowners.
(4) Finished lot means that such lot has finish grade certification and is able to start home construction. (5) Base sale prices are estimated as of May 6, 2024. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered.

Source: The Developer.

No assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation. See “SPECIAL RISK FACTORS — Failure to Develop Properties.”
Entitlements and Infrastructure. Lennar Homes has obtained all approvals and permits required for development of property within the District except for the remaining approvals required in the normal course of home construction. As of May 6, 2024, all approvals and all construction on backbone infrastructure was complete. Final approval and take over by agencies is pending.

Lennar Homes has completed the major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District. The substantial majority of the in-tract infrastructure within the District, which primarily consists of streets for individual lot access and associated gutters and landscape improvements, is complete. Other than in-tract infrastructure, no other significant site work infrastructure remains to be constructed in order to complete the development in the District. Lennar Homes expects to complete construction of the in-tract improvements associated with the remaining lots that it owns within the District as home construction on such lots is completed. 2292
32 Lennar Homes’ Financing Plan
To date, Lennar Homes has financed its land acquisition and various site development and home construction costs related to its property in the District through internally generated funds and homes sales revenues. As of May 6, 2024, Lennar Homes had expended approximately $___________ on land acquisition, land development, homebuilding, marketing and sales costs. As of May 6, 2024, Lennar Homes expected to incur approximately $_________ on remaining homebuilding, marketing, and sales costs for its property in the District.

Lennar Homes expects to use home sales revenues and internal funding to complete its development in the District. Lennar Homes believes that it will have sufficient funds available to complete its planned development in the District in accordance with the development schedule described in this Official Statement.

Notwithstanding the belief of Lennar Homes that it will have sufficient funds to complete its planned development in the District, no assurance can be given that sources of financing available to Lennar Homes will be sufficient to complete the property development and home construction as currently anticipated. While Lennar Homes has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Lennar Homes nor any of its affiliates has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of Lennar Homes to provide internal financing in the past, Lennar Homes has not represented in any way that it will do so in the future. If and to the extent that internal financing and home sales revenues are inadequate to pay the costs to complete Lennar Homes’ planned development in the District and other financing by Lennar Homes is not put into place, there could be a shortfall in the funds required to complete the proposed development by Lennar Homes and portions of the project may not be developed.

SPECIAL RISK FACTORS
The principal source of payment of debt service on the Series 2024 Bonds will be payments of the Special Tax made with respect to the Taxable Property. As discussed under “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024 BONDS — Special Tax,” the Special Tax is to be levied annually against all such Taxable Property either at the maximum rate authorized by the Rate and Method or at such lower rates as are determined by the District Administrator to raise sufficient funds to comply with the agreements, conditions, covenants and terms contained in the Indenture, and in accordance with the Act. The Special Tax is to be collected on the tax roll of the District at the same time and in the same manner as general ad valorem real property taxes are collected. The Special Tax cannot be levied at a tax rate higher than the maximum tax rate even if the maximum tax rate will not produce sufficient Net Special Tax Revenues to pay the principal and interest then payable with respect to the Series 2024 Bonds. See discussions below under “— Levy of the Special Tax” and “— Collection of the Special Tax.”
Payment of the Special Tax levied on a parcel is secured by a continuing lien against such parcel. In the event an installment of the Special Tax included in the tax bill for a parcel of Taxable Property is not paid when due, the District has covenanted to institute foreclosure proceedings in court to cause the parcel to be sold in order to attempt to recover the delinquent amount from the sale proceeds. Foreclosure and sale may not always result in the recovery of the full amount of delinquent installments of the Special Tax. See “— Collection of the Special Tax.” The sufficiency of the foreclosure sale proceeds to cover the delinquent amount depends in part upon the market for and the value of the parcel at the time of the sale. Sufficiency of the foreclosure sale proceeds to cover a delinquency may also depend upon the value of prior or parity liens and similar claims. Further, other governmental claims, such as hazardous substance claims, may affect the realizable value even though such claims may not rise to the status of liens. See “— Hazardous Substances.” Timely foreclosure and sale proceedings with respect to a parcel of Taxable Property may be forestalled or delayed by a stay in the event the owner of the parcel becomes the subject of bankruptcy proceedings. Not only may foreclosure and sale proceedings be forestalled or delayed, but the sale of a parcel may also be similarly 2293
33 affected by a bankruptcy stay. Further, should the stay not be lifted, payment of the Special Tax may be subordinated to bankruptcy law priorities. See “— Bankruptcy and Legal Delays.” Although bankruptcy proceedings may forestall or delay a foreclosure and sale or a tax sale of a delinquent parcel of Taxable Property, the Special Tax is secured by a lien which, assuming proper procedures are followed, may be enforced against the parcel. There may not be any recourse against a bankrupt property owner since the owner is not personally obligated to pay the Special Tax. Further, if proper disclosure of the authorization of the Special Tax is not made to the owner, the willingness or ability of an owner to pay the Special Tax may be adversely affected. See “— Payment of the Special Tax is Not a Personal Obligation of the Owners.” The District is not obligated to advance funds to pay such debt service except from moneys on deposit in the Reserve Fund. See “— Bonds Are Limited Obligations.” Even if debt service is timely paid, interest on the Series 2024 Bonds may have to be included in the gross income of the owner of the Series 2024 Bonds by reason of some circumstance occurring subsequent to issuance of the Series 2024 Bonds, thereby reducing the after-tax yield. See “— Loss of Tax Exemption.” Risks of Real Estate Secured Investments Generally – Declines in Value Purchasers of the Series 2024 Bonds will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes, wildfires and floods), which may result in uninsured losses. See the caption “— Increasing Mortgage Interest Rates” below.

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

Levy of the Special Tax
The principal source of money with which to pay debt service on the Series 2024 Bonds is the proceeds derived from the annual levy and collection of the Special Tax applicable to the Taxable Property in the District.

The amount of the Special Tax that can be levied is limited to the maximum tax rates authorized pursuant to the Rate and Method. Additionally, pursuant to Section 53321(d) of the Act, the Special Tax levied against any Assessor’s parcel for which an occupancy permit for private residential use has been issued shall not be increased as a consequence of delinquency or default by the owner of any other Assessor’s parcel within the District by more than ten percent above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. As a result, it is possible that the District may not be able to increase the tax levy to the Assigned Special Tax on residential parcels in all years. The levies cannot be made at higher rates even if the failure to do so would result in insufficient Net Special Tax Revenues to pay the principal of and interest on the Series 2024 Bonds as the same become due and payable.

The levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of a particular parcel and the amount of the levy of the Special Tax against such parcel. Thus, there will rarely, if ever, be a uniform relationship between the value of a parcel and its proportionate share of the debt service on the Series 2024 Bonds. The Special Tax levied in any particular Fiscal Year on a parcel is based upon the revenue needs of the District and the application of the Rate and Method. The application of the Rate and Method will, in turn, be dependent upon certain development factors with respect to each parcel by comparison with similar development factors with respect to the other parcels in the District. Thus, in addition to annual variations in the revenue needs 2294
34 of the District that must be met from the Special Tax, the following are some of the factors which might cause the levy of the Special Tax on any particular parcel to vary from the Special Tax that might otherwise be expected:

Reduction in the number of parcels of Taxable Property, for reasons such as acquisition of such parcels by a governmental entity and failure of the governmental entity to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from taxation, thereby resulting in an increased tax burden on the remaining parcels of Taxable Property; and Failure of the owners of certain parcels of Taxable Property to pay the applicable Special Tax and delays in the collection of or inability to collect such Special Tax by tax sale or foreclosure and sale of the delinquent parcels, thereby resulting in an increased tax burden on the remaining parcels of Taxable Property.

Collection of the Special Tax
The timely payment of the principal of and interest on the Series 2024 Bonds is ultimately dependent upon the timely payment of the Special Tax. Any money on deposit in the Reserve Fund can be used to make such payment in the event of delinquencies, but the replenishment of the Reserve Fund will be dependent on the recovery of such delinquencies. The Indenture provides that the Special Tax is to 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, except as provided in the special covenant for foreclosure described under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024 BONDS — Covenant for Superior Court Foreclosure” and in the Act, is to be subject to the same proportionate penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem taxes on real property.

Pursuant to the Act, in the event of any delinquency in the payment of the Special Tax, the District may order the institution of a superior court action to foreclose the lien therefor within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at judicial foreclosure sale. Such judicial foreclosure action is not mandatory. However, the District has covenanted for the benefit of the owners of the Series 2024 Bonds that it will institute foreclosure proceedings as authorized by the Act in order to enforce the lien of the delinquent installments of the Special Tax under certain circumstances. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024 BONDS — Covenant for Superior Court Foreclosure.” In the event that foreclosure proceedings are commenced, such foreclosure proceedings could be stayed by the commencement of bankruptcy proceedings by or against the owner of the property being foreclosed. In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Series 2024 Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the District of the proceeds of sale if the Reserve Fund is depleted.

The District may be unable to make full or timely payment of debt service on the Series 2024 Bonds if property owners in the District fail to pay installments of the Special Tax when due, if the Reserve Fund is depleted, or if the District is unable to sell foreclosed parcels for amounts sufficient to cover the delinquent installments of the Special Tax.

Failure to Develop Properties
Development of property within the District may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of the Developer or any other property owner to pay the Special Tax prior to delinquency. Land development is subject to comprehensive federal, State and local regulations.

Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. Failure to obtain any such agency approval or satisfy such governmental 2295
35 requirements would adversely affect planned land development. Development of land in the District is also subject to the availability of water. Finally, development of land is subject to economic considerations.

As of April 1, 2024, the District included 137 completed residential units which had closed escrow to individual homeowners and the Developer owned 6 completed model homes (none of which were in escrow) 12 residential units that were over 95% complete (12 which were in escrow), 44 residential units in various stages of construction but less than 95% complete (26 of which were in escrow) and 36 finished lots without any home construction thereon (none of which were in escrow). See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” A detailed description of the status of the construction as of the date of value of the Appraisal is included in APPENDIX B — “APPRAISAL REPORT.”
As of April 1, 2024, all of the property within the District had been rough-graded and all sewer, water, storm drains, streets, curbs and gutters were complete to serve all 235 homes planned within the District. See “THE COMMUNITY FACILITIES DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” However, no assurance can be given that the remaining planned residential development will be partially or fully completed; and for purposes of evaluating the investment quality of the Series 2024 Bonds, prospective purchasers should consider the possibility that such parcels will remain vacant and unimproved.

Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to the Series 2024 Bond Owners should it be necessary for the District to foreclose on the property due to the nonpayment of the Special Tax. The failure to complete development in the District as planned, or substantial delays in the completion of the development may reduce the value of the property within the District and increase the length of time during which the Special Tax will be payable from undeveloped property, and may affect the willingness and ability of the owners of property within the District to pay the Special Tax prior to delinquency.

There can be no assurance that land development operations within the District will not be adversely affected by a future deterioration of the real estate market and economic conditions or future local, State and federal governmental policies relating to real estate development, an increase in mortgage interest rates, the income tax treatment of real property ownership, or the national economy. A slowdown of the development process and the absorption rate could adversely affect land values and reduce the ability or desire of the property owners to pay the annual Special Tax. In that event, there could be a default in the payment of principal of, and interest on, the Series 2024 Bonds when due.

Series 2024 Bond Owners should assume that any event that significantly impacts the ability to develop land in the District would cause the property values within the District to decrease substantially from those estimated by the Appraiser and could affect the willingness and ability of the owners of land within the District to pay the Special Tax prior to delinquency.

The payment of principal of and interest on the Series 2024 Bonds is dependent upon the receipt of the Special Tax levied on Developed Property, which includes lots in a finished lot condition. Lots in a finished lot condition also provide less security to the Series 2024 Bond Owners should it be necessary for the District to foreclose on such lot due to the nonpayment of the Special Tax. Furthermore, an inability to develop the land within the District as currently planned will make the Series 2024 Bond Owners dependent upon timely payment of the Special Tax levied on Developed Property, which includes lots in a finished lot condition. A slowdown or stoppage in the continued development of the District could reduce the willingness and ability of the Developer to make Special Tax payments on lots in a finished lot condition and could greatly reduce the value of such property in the event it has to be foreclosed upon.

Concentration of Property Ownership
Based on the ownership status as of April 1, 2024, the Developer is projected to be responsible for approximately 41.34% of the total projected Fiscal Year 2024-25 Special Tax to be levied within the District. 2296
36 Based on the ownership status as of June 1, 2024, the Special Tax Consultant estimates that the Developer is projected to be responsible for approximately 41.34% of the total projected Fiscal Year 2024-25 Special Tax levy.

While the District includes completed homes owned by individual homeowners as of April 1, 2024, the inability or refusal of the Developer to pay the Special Tax applicable to its property when due could result in the depletion of the Reserve Fund prior to replenishment thereof from sale or foreclosure proceedings, and/or insufficient money with which to pay the principal of and interest on the Series 2024 Bonds as the same became due. Additionally, pursuant to the Act, the Special Tax levied in any fiscal year against any parcel of residential property in the District may not be increased as a consequence of delinquency or default by the owners of any other parcels within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or default. As a result, while the Maximum Special Tax pursuant to the Rate and Method may be higher, the Maximum Special Tax on parcels of residential parcels cannot be greater than 110% of the projected actual Special Tax levy on such parcels.

Exempt Properties
Certain properties are exempt from the Special Tax in accordance with the Rate and Method. In addition, the Act provides that properties or entities of the State, federal or local government are exempt from the Special Tax; provided, however, that property in the District acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. In addition, the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment. The constitutionality and operation of these provisions of the Act have not been tested.

In particular, insofar as the Act requires payment of the Special Tax by a federal entity acquiring property in the District, it may be unconstitutional. If for any reason property in the District becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal government or another public agency, subject to the limitation of the maximum authorized rates, the Special Tax will be reallocated to the remaining Taxable Properties in the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the timely payment of the Special Tax. Moreover, if a substantial portion of property in the District becomes exempt from the Special Tax because of public ownership, or otherwise, the Maximum Annual Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Series 2024 Bonds when due and a default would occur with respect to the payment of such principal and interest.

Constitutional Limitations on Taxation and Appropriations Articles XIIIA and XIIIB of the California Constitution. On June 6, 1978, California voters approved an amendment to the California Constitution, commonly known as Proposition 13 (the Jarvis/Gann Initiative), which added Article XIIIA to the California Constitution. The effect of Article XIIIA is to significantly limit the imposition of new ad valorem taxes, special taxes, transaction taxes, and sales taxes. On November 7, 1978, California voters approved Proposition 8, which made certain clarifications to Article XIIIA.

Article XIIIA of the California Constitution limits the amount of ad valorem taxes on real property to 1% of “full cash value” as determined by the county assessor. Article XIIIA defines “full cash value” to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The “full cash value” is subject to annual adjustment to reflect increases, not to exceed 2% per year, or decreases in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage, destruction or other factors.

Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness approved by the voters prior to July 1, 1978, and allows local governments to raise their property tax rates above the constitutionally 2297
37 mandated 1% ceiling for the purpose of paying off certain new general obligation debt issued for the acquisition or improvement of real property and approved by two-thirds of the votes cast by the qualified electorate. Article XIIIA requires a vote of two-thirds of the qualified electorate to impose special taxes on real property, while otherwise generally precluding the imposition of any additional ad valorem taxes, special taxes, transaction taxes, and sales taxes. In addition, Article XIIIA requires the approval of two-thirds of all members of the California Legislature to change any State laws resulting in increased tax revenues.

Enactment of Article XIIIA has reduced the amount of general property tax revenues received by the City.

This reduction in such revenues makes it less likely that the City or the District will have surplus funds, other than the Reserve Fund for the Series 2024 Bonds, with which to advance funds to make any payments or to cure any deficiency in the Interest Account or Principal Account of the Special Tax Fund, should the City or the District, as applicable, in the exercise of its discretion, choose to do so. If there are additional delinquencies after exhaustion of funds in the Reserve Fund for the Series 2024 Bonds, none of the City or the District has any obligation to transfer into the Interest Account or Principal Account of the Special Tax Fund the amount of any such delinquencies out of any surplus moneys of the City.

On July 2, 1979, the Fifth District Court of Appeal rendered a 3-0 decision in the case of County of Fresno v. Malmstrom (94 Cal.App.3d 974), that determined that special assessments are not subject to the limitations of Article XIIIA (Proposition 13). The Court held the one percent tax limitation imposed by California Constitution Article XIIIA on ad valorem taxes does not apply to special assessments levied pursuant to the Improvement Act of 1911 (Streets and Highways Code, Section 5000 et seq., the relevant portions of which are incorporated in the 1915 Act) and the 1913 Act. The Court further held that because special assessments pursuant to such acts are not within the definition of “special taxes” in Article XIIIA, the Constitution does not require the levy of assessments and the issuance of bonds to be approved by a two-thirds vote of the qualified electors in an assessment district. On September 12, 1979, the California Supreme Court refused to hear an appeal of the lower court’s decision.

At the November 6, 1979, general election, Proposition 4 (the Gann Initiative) was approved by the voters of California. Such proposition added Article XIIIB to the California Constitution.

Article XIIIB of the California Constitution limits the annual appropriations of the State and of any city, county, school district, authority, or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the governmental entity. The “base year” for establishing such appropriation limit is the Fiscal Year 1978-79 and the limit is to be adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by these public agencies.

Appropriations subject to Article XIIIB generally include the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance, and disability insurance funds. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to an entity of government from (i) regulatory licenses, user charges, and user fees (but only to the extent such proceeds exceed the cost of providing the service or regulation), and (ii) the investment of tax revenues. Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amounts permitted to be spent, the excess would have to be allocated to fund schools or be returned by revising tax rates or fee schedules over the subsequent two years.

On December 17, 1980, the Third District Court of Appeal rendered a 3-0 decision in the case County of Placer v. Corin (113 Cal. App. 3d 443) that determined that special assessments are not subject to the limitation of Article XIIIB (Proposition 4). The Court held that the definition of “proceeds of taxes” imposed by California Constitution Article XIIIB does not apply to special assessments and improvement bonds issued pursuant to the 1915 Act and the 1913 Act. The decision of the Court was not appealed. 2298
38 The enactment of Article XIIIA of the California Constitution (Proposition 13) and subsequent legislative enactments effectively repeal the otherwise mandatory duty on the part of the City, under the 1915 Act, to levy and collect a special tax (in an amount necessary to meet delinquencies, but not to exceed ten cents on each $100 of assessable property within the City in any one year) if other funds are not available to cover delinquencies.

In early 1990, the U.S. Supreme Court struck down as a violation of equal protection certain property tax assessment practices in West Virginia, which had resulted in vastly different assessments of similar properties.

Since Article XIIIA provides that property may only be assessed up to 2%, per year, except upon change of ownership or new construction, recent purchasers may pay substantially higher property taxes than long-time owners of comparable property in a community. The Supreme Court in the West Virginia case expressly declined to comment in any way on the constitutionality of Article XIIIA.

Based on this decision, however, property owners in California brought three suits challenging the acquisition value assessment provisions of Article XIIIA. Two cases involve residential property and one case involves commercial property. In all three cases, State trial and appellate courts have upheld the constitutionality of Article XIIIA’s assessment rules and concluded that the West Virginia case did not apply to California’s laws.

On June 3, 1991, the U.S. Supreme Court agreed to hear the appeal in the challenge relating to commercial property, but the plaintiff subsequently decided to drop the case.

On October 7, 1991, the U.S. Supreme Court granted the plaintiff’s petition for a writ of certiorari and agreed to hear the Nordlinger v. Lynch case. On June 18, 1992, the U.S. Supreme Court affirmed the Nordlinger decision (112 U.S. 2326) of the California Court of Appeal, Second Appellate District, which previously held that Article XIIIA does not violate the U.S. Constitution.

The City cannot predict whether any other pending or future challenges to the State’s present system of property tax assessment will be successful, when the ultimate resolution of any challenge will occur, or the ultimate effect any decision regarding the State’s present system of property tax assessment will have on the City’s revenues or on the State’s financial obligations to local governments.

Articles XIIIC and XIIID of the California Constitution. Proposition 218, a state ballot initiative known as the “Right to Vote on Taxes Act,” was approved by California voters on November 6, 1996. Proposition 218 added Articles XIIIC and XIIID to the State Constitution, and, with the exception of certain provisions, Articles XIIIC and XIIID became effective on November 6, 1996.

Among other things, Proposition 218 imposed certain voting requirements and other limitations on the imposition of new or increased taxes, assessments, and property-related fees and charges. Under Proposition 218 (i) all taxes imposed by local governments are deemed to be either general taxes, or special taxes, (ii) no local government may impose, extend, or increase any general tax unless and until such tax is submitted to the electorate and approved by a majority vote, and (iii) no local government may impose, extend, or increase any special tax unless and until such tax is submitted to the electorate and approved by a two-thirds vote. Special purpose districts, including community facilities districts and assessment districts, have no power to levy general taxes. The City believes that the issuance of the Series 2024 Bonds does not require the conduct of further proceedings under the Mello-Roos Act, or Proposition 218, as applicable, other than as described herein.

Proposition 218 provides that the initiative power shall “not be prohibited or otherwise limited in matters reducing or repealing any local tax, assessment, fee or charge...” Thus, Proposition 218 removes limitations on the initiative power in matters of, among other things, the Special Tax. Consequently, it is conceivable that the voters of the City or the District could, by future initiative, repeal, reduce, or prohibit the future imposition or increase of any Special Tax, subject to overriding federal constitutional principles relating to impairment of contracts.

On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the 2299
39 ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Special Taxes for general governmental purposes require a majority vote and taxes for specific purposes require a two-thirds vote.

Although the applicable provisions of Article XIIIC have not been interpreted by the courts, the City believes that the initiative power cannot be used to reduce or repeal the unpaid Special Tax that are pledged as security for payment of the Series 2024 Bonds or to otherwise interfere with the mandatory, statutory duty of the City and the County Auditor with respect to the unpaid Special Tax that are pledged as security for payment of the Series 2024 Bonds.

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

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

The facts of the San Diego Decision show that there were hundreds of thousands of registered voters within the CCFD (viz., all of the registered voters in the City of San Diego). There were no registered voters in the District at the time of formation. In the San Diego Decision, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court’s holding does not apply to the Special Tax elections in the District. Moreover, Section 53341 of the Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax…shall be commenced within 30 days after the special tax is approved by the voters.” Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds.

On May 19, 2020, Esperanza PA 4 Venture and Esperanza PA 10 Venture, the qualified voters within the District at the time of the election, approved the Special Tax and the issuance of bonds. Based on Sections 53341 and 53359 of the Act and analysis of existing laws, regulations, rulings and court decisions, the City believes the Special Tax is being levied in accordance with the Rate and Method.

The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination.

Taxpayer Protection and Government Accountability Act Initiative From time to time constitutional initiatives or other initiative measures may be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State or any political subdivision thereof, including the City, to increase revenues or to increase appropriations, or might affect the ability of the District to collect the Special Taxes.
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40 One such proposed voter initiative, titled “The Taxpayer Protection and Government Accountability Act” (“Initiative 1935”) has been determined to be eligible for the November 2024 Statewide general election and, unless withdrawn by its proponent prior to June 27, 2024, will be certified as qualified for the ballot in such election. Initiative 1935 would, among other things, amend the State Constitution to impose additional requirements for the imposition of taxes by State and local governments, such as requirements that the title and summary and ballot label or question for each tax measure identify the type, amount or rate, duration, and use of revenue of the tax (the “Initiative 1935 Ballot Label Requirements”). Additionally, Initiative 1935 would provide that any tax imposed after January 1, 2022, not in compliance with its requirements is void 12 months after the effective date of Initiative 1935 unless subsequently reenacted in accordance therewith. If adopted, the scope and impact of Initiative 1935 would be subject to future judicial interpretation. The District is unable to predict how Initiative 1935, if adopted, might be interpreted by the courts, and there can be no assurance that any such interpretation would not have an adverse impact on the District’s ability to levy and collect the Special Taxes.

As described in this Official Statement, at the election held on October 17, 2017, the qualified electors within the District, consisting solely of the landowner that at the time owned all of the property within the boundaries of the District not exempt from the Special Taxes levied pursuant to the Original Rate and Method, voted to approve the measure to levy the Special Taxes pursuant to the Original Rate and Method. The Special Taxes levied pursuant to the Original Rate and Method were imposed prior to January 2, 2022 and, therefore, would not , if Initiative 1935 is adopted, be subject to the provisions thereof. At the election held on July 19, 2022, the qualified electors within the District, consisting solely of the landowner that at the time owned all of the property within the boundaries of the District not exempt from the Special Taxes levied pursuant to the Rate and Method (the “Landowner Elector”), voted to approve the measure to levy the Special Taxes pursuant to the Rate and Method, which increased certain of the rates of the Special Taxes above those in the Original Rate and Method.

As the Special Taxes levied pursuant to the Rate and Method were imposed after January 1, 2022, such Special Taxes would, if Initiative 1935 is adopted, be subject to the provisions thereof.

In connection with the July 19, 2022 election to approve the measure to levy the Special Taxes pursuant to the Rate and Method, the Landowner Elector, as the sole qualified elector, waived all requirements as to the form of the ballot for such election, any requirement pertaining to the conduct of such election, including any requirements as to form or content of election materials and any and all defects in procedure in any proceedings to levy the Special Taxes pursuant to the Rate and Method or in the conduct of such election, whether known or unknown (other than, in the case of the election, the right to have ballots accurately counted). In its Affirmation of Waiver, dated March 1, 2024, the Landowner Elector acknowledged, confirmed and agreed that each such waiver the Landowner Elector was a knowing, intelligent and voluntary waiver and that such waivers by the Landowner Elector encompass, and constitute, a waiver of the Initiative 1935 Ballot Label Requirements and the Landowner Elector affirmed therein that it had waived the Initiative 1935 Ballot Label Requirements.

Maximum Special Tax
Within the limits of the Special Tax, the District may adjust the Special Tax levied on all property in the District to provide an amount required to pay interest on and principal of the Series 2024 Bonds, and the amount, if any, necessary to cure delinquencies and replenish the Reserve Fund to an amount equal to the Reserve Requirement for the respective Bonds and to pay Administrative Expenses. However, the amount of the Special Tax that may be levied against any property in the District is subject to the Maximum Special Tax applicable to it. There is no assurance that the Maximum Special Tax on the property in the District will be sufficient to pay the amounts required to be paid by the Indenture at all times. Additionally, pursuant to the Act, the Special Tax levied in any fiscal year against any parcel of residential property in the District may not be increased as a consequence of delinquency or default by the owners of any other parcels within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024 BONDS — Special Tax.” 2301
41 Payment of the Special Tax is Not a Personal Obligation of the Owners An owner of a parcel of Taxable Property is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation only against the parcel of Taxable Property. If the value of a parcel is not sufficient, taking into account other obligations also payable thereby, to fully secure the Special Tax, the District has no recourse against the owner.

Disclosures to Future Purchasers
The District has recorded a notice of the Special Tax lien in the Office of the County Recorder. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a parcel of land, a home or a commercial or industrial facility in the District or the lending of money thereon. The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello–Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute.

Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.

Parity Taxes and Special Assessments
The ability or willingness of a property owner in the District to pay the Special Tax could be affected by the existence of other taxes and assessments imposed upon the property. The Special Tax and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all special tax and special assessments levied by other agencies and is coequal to and independent of the lien for general property taxes, other special taxes, and certain special assessments regardless of when they are imposed upon the same property. The Special Tax has priority over all existing and future private liens imposed on the property. In addition, other public agencies whose boundaries overlap those of the District could, with or in some circumstances without the consent of the owners of the land in the District, impose additional taxes or assessment liens on the property in the District in order to finance public improvements to be located inside or outside of the District.

The District has no control over the ability of other entities and districts to issue indebtedness secured by special tax or assessments payable from all or a portion of the property in the District. In addition, the City is not prohibited itself from establishing assessment districts, community facilities districts or other districts which might impose assessments or taxes against property in the District. In the event any additional improvements are financed pursuant to the establishment of an assessment district, community facilities district or other district, any taxes or assessments levied to finance such improvements will have a lien on a parity with the lien of the Special Tax. The imposition of additional liens on a parity with the Special Tax could reduce the ability or willingness of the property owners to pay the Special Tax and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Tax or the principal of and interest on the Series 2024 Bonds when due.

Depletion of Reserve Fund
The Reserve Fund is to be maintained at an amount equal to the Reserve Requirement. Money in said fund may be used to pay debt service on the Series 2024 Bonds in the event the proceeds of the levy and collection of the Special Tax against property in the District are insufficient. If funds in the Reserve Fund are used to pay debt service on the Series 2024 Bonds, the funds can be replenished from the proceeds of the levy and collection of the Special Tax that are in excess of the amount required to pay all amounts to be paid pursuant to the Indenture.

However, no replenishment from the proceeds of a levy of the Special Tax can occur as long as the proceeds that 2302
42 are collected from the levy of the Special Tax at the maximum tax rates, together with other available funds, remain insufficient to pay all such amounts. Thus, it is possible that the Reserve Fund will be depleted by its use to pay such amounts and will not be replenished by the levy of the Special Tax. There is no assurance that the amount in the Reserve Fund will, at any particular time, be sufficient to pay all such amounts or that any amounts of the Reserve Requirement used for debt service on the Series 2024 Bonds will be fully replenished from the proceeds of the levy and collection of the Special Tax.

Bankruptcy and Legal Delays
The payment of the Special Tax and the ability of the District to foreclose the lien of a delinquent unpaid tax, as discussed in “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024 BONDS,” may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State of California relating to judicial foreclosure. In addition, the prosecution of a foreclosure action could be delayed due to crowded local court calendars or delays in the legal process. The various legal opinions to be delivered concurrently with the delivery of the Series 2024 Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Although bankruptcy proceedings would not cause the obligation to pay the Special Tax to become extinguished, the bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings because federal bankruptcy laws may provide for an automatic stay of foreclosure and sale of tax sale proceedings. Any such delays could increase the likelihood of a delay or default in payment of the principal of and interest on the Series 2024 Bonds and the possibility of delinquent tax installments not being paid in full.

Moreover, if the value of the subject property is less than the lien of the Special Tax, such excess could be treated as an unsecured claim by the bankruptcy court. Further, should remedies be exercised under the federal bankruptcy laws against Taxable Property, payment of the Special Tax may be subordinated to bankruptcy law priorities. Thus, certain claims may have priority over the Special Tax in a bankruptcy proceeding even though they would not outside of a bankruptcy proceeding.

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

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

The FDIC has taken a position similar to that expressed in the Policy Statement in legal proceedings brought against Orange County, California, in United States Bankruptcy Court and in Federal District Court. The Bankruptcy Court issued a ruling in favor of the FDIC on certain of such claims. Orange County appealed that 2303
43 ruling, and the FDIC cross-appealed. On August 28, 2001, the Ninth Circuit Court of Appeals issued a ruling favorable to the FDIC except with respect to the payment of pre-receivership liens based upon delinquent property tax.

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

In the case of Fannie Mae and Freddie Mac, in the event a parcel of Taxable Property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or in the event a private deed of trust secured by a parcel of Taxable Property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Tax may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal government entity owns a parcel of Taxable Property but does not pay taxes and assessments levied on the parcel (including the Special Tax), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Tax, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Tax and preserve the federal government’s mortgage interest.

The District’s remedies may also be limited in the case of delinquent Special Tax with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement Administration) have or obtain an interest.

Geologic, Topographic and Climatic Conditions
The District, like all California communities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads, bridges and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. The District is not located within an identified earthquake study zone.

No known active earthquake faults cross the District and the nearest active earthquake fault to the District is the Chino Fault, located approximately 6.6 miles southwest of the District. Other known regional active faults that could affect the site include the Whittier, Elsinore-Glen Ivy, San Jose, Cucamonga, Sierra Madre, San JacintoSan Bernardino segment, Puente Hills and San Andreas faults.

The Federal Emergency Management Agency has determined that the District is located in a Zone “X” flood area (an area of minimal flooding, within the 500-year flood plain), and flood insurance will not be required.

The area is protected by a levee.

In recent years, portions of Southern California have experienced wildfires that have burned thousands of acres and destroyed thousands of homes and structures, even in areas not previously thought to be prone to wildfires. While the District is not aware of any particular risk of wildfire within the District, there can be no assurances that wildfires won’t occur within the District. Property damage due to wildfire could result in a significant decrease in the market value of property in District and in the ability or willingness of property owners to pay the Special Tax when due.
2304
44 In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Tax when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Tax.

Hazardous Substances
While governmental taxes, assessments, and charges are a common claim against the value of a parcel of Taxable Property, other less common claims may be relevant. One example is a claim with regard to a hazardous substance.

In general, the owners and operators of a parcel of Taxable Property may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the Taxable Property be affected by a hazardous substance is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of the property that is realizable upon a delinquency and foreclosure.

While the District is not aware that the owner (or operator) of any of Taxable Property has such a current liability with respect to any of the Taxable Property, it is possible that such liabilities do currently exist and that the District is not aware of them. The Developer has also represented to the District that it is not aware of any federally or State classified hazardous substances located on its property within the District.

Further, it is possible that liabilities may arise in the future with respect to any of the Taxable Property resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel of Taxable Property that is realizable upon a delinquency.

No Acceleration Provision
The Indenture does not contain a provision allowing for the acceleration of the Series 2024 Bonds in the event of a payment default or other default under the terms of the Series 2024 Bonds or the Indenture.

Bonds Are Limited Obligations
Neither the faith and credit nor the taxing power of the District (except to the limited extent set forth in the Indenture), the City, the State, or any political subdivision thereof, is pledged to the payment of the Series 2024 Bonds. The Series 2024 Bonds are limited obligations of the District; and, except as provided in the Indenture, they are payable solely from Net Special Tax Revenues and the other assets pledged therefor under the Indenture. Net Special Tax Revenues could be insufficient to pay debt service on the Series 2024 Bonds as a result of delinquencies in the payment of the Special Tax or the insufficiency of proceeds derived from the sale of land within the District following a delinquency in the payment of the applicable Special Tax. Neither the City nor the District has any obligation to pay debt service on the Series 2024 Bonds in the event of insufficient Net 2305
45 Special Tax Revenues, except to the extent that money is available for such purpose in the Reserve Fund. The District’s only obligation with respect to delinquent Special Tax is to pursue judicial foreclosure proceedings under the circumstances described in the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024 BONDS — Covenant for Superior Court Foreclosure.” Loss of Tax Exemption
As discussed under “TAX MATTERS,” interest on the Series 2024 Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance, as a result of acts or omissions of the District subsequent to the issuance of the Series 2024 Bonds in violation of the District’s covenants with respect to the Series 2024 Bonds. Should interest become includable in gross income, the Series 2024 Bonds are not subject to redemption by reason thereof and will remain outstanding until maturity or unless earlier redeemed pursuant to optional or mandatory redemption or redemption upon prepayment of the Special Tax.

Potential Early Redemption of Bonds from Special Tax Prepayments Property owners within the District are permitted to prepay their Special Tax at any time. Such payments will result in a mandatory redemption of Series 2024 Bonds from Special Tax prepayments on the Interest Payment Date for which timely notice may be given under the Indenture following the receipt of such Special Tax prepayment. The resulting redemption of Series 2024 Bonds purchased at a price greater than par could reduce the otherwise expected yield on such Series 2024 Bonds. See “THE SERIES 2024 BONDS — Redemption — Mandatory Redemption from Special Tax Prepayments.”
No Teeter Plan
Although the San Bernardino County Board of Supervisors has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) which allows each entity levying secured property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, the District is not included in the Teeter Plan. Consequently, the District may not draw on the County Tax Loss Reserve Fund in the event of delinquencies in Special Tax payments.

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

The City employs a multi-layer cyber protection scheme that includes third party consultant assistance, next-generation firewalls, anti-virus software, anti-spam/malware software, intrusion detection/prevention, domain name system filtering services, duplicate systems in a disaster recovery site and multiple copies of all information that is backed up. The City implements recommended strategies suggested by security vendors and makes internal system changes as needed. To date, the City has not experienced a significant attack on its computer operating systems. However, there is no assurance that a future attack or attempted attack would not result in disruption of City operations. The City expects that any such disruptions would be temporary in nature.

Impact of Economic Conditions on the Development in the District Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which the merchant builders are able to complete and sell homes and demand by and the ability of individuals to purchase homes within the District. Such events and factors could include rising 2306
46 inflation and interest rates, persistent supply chain issues, further impacts of the COVID-19 pandemic and global market instability caused by the war in Ukraine. Any adverse impact of the foregoing and other economic factors on the projects in the District and the real estate market in general cannot be predicted.

Increasing Mortgage Interest Rates
Thirty-year fixed mortgage interest rates have increased substantially within the past year and are expected to continue to increase in the near term. Increases in mortgage interest rates could have a negative impact on the estimated absorption rates of the planned for-sale residential units in the District described herein. With respect to entry-level households, increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for owning a lower-priced home relative to renting a residence, thereby making purchasing less attractive. With respect to move-up households, higher mortgage interest rates may impact the desire of current homeowners to move from their present home due to the fact that their present home likely has a relatively low mortgage interest rate. In addition, the new home would likely have a higher interest rate on a new mortgage loan as well as higher purchase price and property taxes. Such considerations may decrease the desire for move-up households to purchase a new home.

CONTINUING DISCLOSURE
District Continuing Disclosure Agreement
Pursuant to the District Continuing Disclosure Agreement, the District has agreed to provide, or cause to be provided, to the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found on the Internet at www.emma.msrb.org (“EMMA”) on an annual basis, commencing April 1, 2025, certain financial information and operating data concerning the District. The District has further agreed to provide notice to EMMA of certain listed events. The District’s covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12 adopted by the Securities and Exchange Commission.

The District has not previously entered into any undertaking with respect to Rule 15c2-12. However, the City and its related governmental entities (the “City Entities”) for whom City staff is responsible for undertaking compliance with continuing disclosure undertakings have previously entered into numerous disclosure undertakings under the Rule 15c2-12 in connection with the issuance of long-term obligations.

In order to ensure ongoing compliance with its continuing disclosure undertakings, the City has designated staff members within the Financial Services Agency with the responsibility of ensuring timely and complete filings. In addition, the City has retained an outside consultant to conduct periodic reviews of City compliance.

Within the last five years, the City and the City Entities have not failed to timely comply with their respective prior continuing disclosure obligations under Rule 15c2-12 in all material respects except that certain information with respect to outstanding indebtedness of the City was not included in the Fiscal Year 2021 annual report for the Ontario Public Financing Authority 2017 Lease Revenue Refunding Bonds, the City of Ontario 2020 Taxable Pension Obligations Bonds and the Ontario Public Financing Authority 2021 Lease Revenue Refunding Bonds, Series A (Federally Taxable); the City’s Fiscal Years 2020-21 and 2022-23 audited financial statements were not available at the time of the filing of 2021 and 2023 respective annual reports. The 2021 audited financial statement has since been posted and such information is included in the notes to the City’s Fiscal Year 2020-21 audited financial statements. However, the 2023 audited financial statements have not yet been finalized. The City anticipates filing 2023 audited financial statements upon completion and presentation to the City Council. The full text of the form of the District Continuing Disclosure Agreement is set forth in APPENDIX G.

Developer Continuing Disclosure Certificate
Although the Underwriter has concluded that Lennar Homes is not an obligated person under Rule 15c2- 12, pursuant to the Developer Continuing Disclosure Certificate, Lennar Homes has agreed to provide, or cause 2307
47 to be provided, to EMMA, on a semi-annual basis certain information concerning Lennar Homes and its property ownership and development within the District. Lennar Homes has further agreed to provide notice to EMMA of certain listed events. Lennar Homes’ obligation to provide semi-annual reports and notices of certain listed events will terminate upon the earlier to occur of certain events, including at such time as Lennar Homes owns no more than __ of the residential lots in the District subject to the Special Tax levy. A default under the Developer Continuing Disclosure Certificate will not, in itself, constitute an Event of Default under the Indenture, and the sole remedy under the Developer Continuing Disclosure Certificate in the event of any failure of Lennar Homes or the dissemination agent, as applicable, to comply with the Developer Continuing Disclosure Certificate will be an action to compel performance. See APPENDIX H — “FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE” for a description of the specific nature of the semi-annual reports to be filed by Lennar Homes and notices of listed events to be provided by Lennar Homes.

Neither the District nor the City has considered, or reached any conclusion as to, whether or not Lennar Homes is an obligated person under Rule 15c2-12 and takes no responsibility for any such conclusion.

Additionally, neither the District nor the City has participated in the preparation, negotiation or implementation of the Developer Continuing Disclosure Certificate or in discussions regarding the form or content thereof. The District and the City take no responsibility for such form or content or for the adequacy of the Developer Continuing Disclosure Certificate for its intended purpose.

None of the District, the City or the Trustee is a party to the Developer Continuing Disclosure Certificate, and none of the District, the City or the Trustee has any obligation or responsibility to monitor, nor any right or obligation to enforce, compliance by Lennar Homes with its undertaking pursuant to the Developer Continuing Disclosure Certificate, and none of the District, the City or the Trustee will be so monitoring or enforcing such compliance.

Lennar Homes Continuing Disclosure Compliance. To the actual knowledge of Lennar Homes, other than as disclosed below, in the last five years, Lennar Homes has not failed to comply in any material respects with its previous continuing disclosure undertakings, specifically regarding its requirement to provide developer periodic reports or to provide notice of occurrence of enumerated events. However, (i) in connection with the $16,780,000 California Municipal Finance Authority Special Tax Revenue Bonds BOLD Program Series 2020B, Lennar Homes inadvertently failed to file the initial semi-annual report by the due date of May 1, 2021, but filed a curative report on May 21, 2021 and (ii) in connection with the $5,795,000 City of Rancho Cordova Grantline 208 Community Facilities District No. 2018-1 Special Tax Bonds, Series 2021B, Lennar Homes inadvertently failed to file the initial annual report by the due date of April 1, 2023, but filed a curative report on September 21, 2023.

TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District (“Bond Counsel”), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2024 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Series 2024 Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that interest on the Series 2024 Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Series 2024 Bonds. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX D hereto.

To the extent the issue price of any maturity of the Series 2024 Bonds is less than the amount to be paid at maturity of such Series 2024 Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2024 Bonds), the difference constitutes “original issue discount,” the accrual of which, to 2308
48 the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Series 2024 Bonds which is excluded from gross income for federal income tax purposes and exempt from State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Series 2024 Bonds is the first price at which a substantial amount of such maturity of the Series 2024 Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Series 2024 Bonds accrues daily over the term to maturity of such Series 2024 Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Series 2024 Bonds to determine taxable gain or loss upon trade or business disposition (including sale, redemption, or payment on maturity) of such Series 2024 Bonds. Beneficial Owners of the Series 2024 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2024 Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Series 2024 Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2024 Bonds is sold to the public.

Series 2024 Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Series 2024 Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Series 2024 Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner’s basis in a Premium Series 2024 Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Series 2024 Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2024 Bonds. The District has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Series 2024 Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Series 2024 Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series 2024 Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Series 2024 Bonds may adversely affect the value of, or the tax status of interest on, the Series 2024 Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.

Although Bond Counsel is of the opinion that interest on the Series 2024 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Series 2024 Bonds may otherwise affect a Beneficial Owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.

Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2024 Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Series 2024 Bonds. Prospective purchasers of the Series 2024 Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. 2309
49 The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Series 2024 Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the District, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The District has covenanted, however, to comply with the requirements of the Code.

Bond Counsel’s engagement with respect to the Series 2024 Bonds ends with the issuance of the Series 2024 Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the District or the Beneficial Owners regarding the tax-exempt status of the Series 2024 Bonds in the event of an audit examination by the IRS.

Under current procedures, Beneficial Owners would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the District legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Series 2024 Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Series 2024 Bonds, and may cause the District or the Beneficial Owners to incur significant expense.

Payments on the Series 2024 Bonds generally will be subject to U.S. information reporting and possibly to “backup withholding.” Under Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non-corporate Beneficial Owner of Series 2024 Bonds may be subject to backup withholding with respect to “reportable payments,” which include interest paid on the Series 2024 Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Series 2024 Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number (“TIN”) to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a “notified payee underreporting” described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against a Beneficial Owner’s federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain Beneficial Owners (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. The failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.

ABSENCE OF LITIGATION
In connection with the issuance of the Series 2024 Bonds, Best Best & Krieger LLP (“Issuer’s Counsel”) will deliver an opinion to the effect that, to Issuer’s Counsel’s current actual knowledge, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending (notice of which has been served on the City or the District) or to the Issuer’s Counsel’s current actual knowledge, threatened, wherein an unfavorable decision, ruling or finding, against or affecting the City or the District, would adversely impact the ability of the City or the District to complete the transactions described in, or contemplated by, the Indenture or this Official Statement, restrain or enjoin the collection of the Special Tax, or in any way contest or affect the validity of the Series 2024 Bonds, the Indenture, the Special Tax, or the transactions described herein.

ABSENCE OF RATINGS
The District has not made, and does not contemplate making, application to any rating organization for a rating on the Series 2024 Bonds.
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50 CERTAIN LEGAL MATTERS
The validity of the Series 2024 Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District. A copy of the form of such approving opinion is attached hereto as APPENDIX D. Copies of such approving opinion will accompany each Series 2024 Bond. Bond Counsel has not undertaken any responsibility for the accuracy, completeness or fairness of the Official Statement or other offering materials relating to the Series 2024 Bonds and expresses no opinion relating thereto. Certain legal matters will be passed upon for the City and the District by Best Best & Krieger LLP, Ontario, California, as the Issuer’s Counsel and by Best Best & Krieger LLP, Riverside, California, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California.

Although it is serving as Bond Counsel to the District in connection with the issuance and sale of the Series 2024 Bonds, Bond Counsel represents the Underwriter in connection with other financings and matters unrelated to the Series 2024 Bonds.

UNDERWRITING
The Series 2024 Bonds are being purchased by Samuel A. Ramirez & Co., Inc. (the “Underwriter”). The Underwriter has agreed to purchase the Series 2024 Bonds at a price of $___________being the $__________ aggregate principal amount thereof, [plus/less] net original issue [premium/discount] of $______ and less Underwriter’s discount of $________). The purchase agreement relating to the Series 2024 Bonds provides that the Underwriter will purchase all of the Series 2024 Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in the purchase agreement, the approval of certain legal matters by counsel and certain other conditions.

The Underwriter may offer and sell the Series 2024 Bonds to certain dealers and others at prices lower than the offering price stated on the cover page thereof. The offering price may be changed from time to time by the Underwriter.

FINANCIAL INTERESTS
The fees being paid to the Municipal Advisor, Bond Counsel, Disclosure Counsel, Underwriter, and Underwriter’s Counsel are contingent upon the issuance and delivery of the Series 2024 Bonds.

MUNICIPAL ADVISOR
The District has retained Urban Futures, Inc., Walnut Creek, California, as municipal advisor (the “Municipal Advisor”) for the sale of the Series 2024 Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.

Urban Futures, Inc. is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

ADDITIONAL INFORMATION
The purpose of this Official Statement is to supply information to prospective buyers of the Series 2024 Bonds. Quotations and summaries and explanations of the Series 2024 Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete statements and their provisions.

The execution and delivery of this Official Statement by the City Manager of the City has been duly authorized by the City Council of the City of Ontario acting in its capacity as the legislative body of the District. 2311
51 CITY OF ONTARIO COMMUNITY FACILITIES DISTRICT
NO. 35 (COUNTRYSIDE PHASE 2 SOUTH - FACILITIES)
By:

City Manager
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APPENDIX A

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
A Special Tax shall be levied on all Assessor’s Parcels in the City of Ontario Community Facilities District No. 35 (Countryside Phase 2 South – Facilities) (“CFD No. 35”) and collected each Fiscal Year, commencing in Fiscal Year 2018-19, in an amount determined by the City Council of the City of Ontario through the application of the Rate and Method of Apportionment, as described below. All of the real property in CFD No. 35, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided.

A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Acre” or “Acreage” means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable Final Subdivision Map, parcel map, condominium plan, or other recorded County map. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the California Government Code. “Administrative Expenses” means the following actual or reasonably estimated costs directly related to the administration of CFD No. 35: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or CFD No. 35 or both); the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City or CFD No. 35 of complying with arbitrage rebate requirements; the costs to the City or CFD No. 35 of complying with City, CFD No. 35, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City or CFD No. 35 related to the analysis and reduction, if any, of the Special Tax on Single Family Property in accordance with Section C.1 herein; the costs of the City or CFD No. 35 related to an appeal of the Special Tax; the costs associated with the release of funds from any escrow account; the City’s administration fees and third party expenses; the costs of City staff time and reasonable overhead relating to CFD No. 35; and amounts estimated or advanced by the City or CFD No. 35 for any other administrative purposes of the CFD, including attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. “Assessor’s Parcel” means a lot or parcel shown in an Assessor’s Parcel Map with an assigned Assessor’s Parcel Number.
“Assessor’s Parcel Map” means an official map of the Assessor of the County designating parcels by Assessor’s Parcel Number.
“Assessor’s Parcel Number” means, with respect to an Assessor’s Parcel, that number assigned to such Assessor’s Parcel by the County for purposes of identification. “Assigned Special Tax” means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.1.a.2 below.
“Backup Special Tax” means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.1.a.3 below.
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“Bonds” means any bonds or other debt (as defined in Section 53317(d) of the Act) issued by CFD No. 35 under the Act and payable from Special Taxes.
“Buildable Lot” means an individual lot, within a Final Subdivision Map or an area expected by CFD No. 35 to become Final Mapped Property, such as the area within a Tentative Tract Map, for which a building permit may be issued without further subdivision of such lot. “CFD Administrator” means an official of the City responsible for determining the Special Tax Requirement, providing for the levy and collection of the Special Taxes, and performing the other duties provided for herein.
“CFD No. 19” means City of Ontario Community Facilities District No. 19 (Countryside Phase 1 – Services).
“CFD No. 35” means City of Ontario Community Facilities District No. 35 (Countryside Phase 2 South – Facilities).
“City” means the City of Ontario, California.
“City Council” means the City Council of the City, acting as the legislative body of CFD No. 35. “Contractual Impositions” means (a) a voluntary contractual assessment established and levied on an Assessor’s Parcel pursuant to Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (commencing with Section 5898.10 et seq.), as amended from time to time, (b) a special tax established and levied on an Assessor’s Parcel pursuant to Section 53328.1 of the California Government Code and related provisions of the Act, as amended from time to time, and (c) any other fee, charge, tax, or assessment established and levied on an individual Assessor’s Parcel pursuant to a contractual agreement or other voluntary consent by the owner thereof (e.g., property owner association assessments). “County” means the County of San Bernardino.
“Designated Buildable Lot” means a Buildable Lot for which a building permit has not been issued by the City as of the date of calculation of the Backup Special Tax. “Developed Property” means for each Fiscal Year, all Taxable Property, exclusive of Final Mapped Property, Taxable Property Owner Association Property, and Taxable Public Property, for which a building permit or other applicable permit for new construction was issued after January 1, 2017, and before May 1 of the prior Fiscal Year.
“Expected Residential Lot Count” means 235 Buildable Lots of Single Family Property or, as determined by the CFD Administrator, the number of Buildable Lots of Single Family Property based on the most recent Tentative Tract Map(s) or most recently recorded Final Subdivision Map(s) or modified Final Subdivision Map(s).
“Facilities” means the public facilities authorized to be financed, in whole or in part, by CFD No. 35. “Final Mapped Property” means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Taxable Property Owner Association Property, and Taxable Public Property, which as of January 1 of the previous Fiscal Year was located within a Final Subdivision Map. The term Final Mapped Property shall include any parcel map or Final Subdivision Map, or portion thereof, that creates individual lots for which a building permit may be issued, including Parcels that are designated as a remainder Parcel (i.e., one where the size, location, etc., precludes any further subdivision or taxable use). 2314
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“Final Subdivision Map” means a final tract map, parcel map, or lot line adjustment approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or a condominium plan recorded in accordance with California Civil Code Section 4285 that, in either case, creates individual lots for which building permits may be issued without further subdivision. “Fiscal Year” means the period starting July 1 and ending on the following June 30. “Indenture” means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which Bonds are issued, as modified, amended, and/or supplemented from time to time. “Land Use Class” means any of the classes listed in Table 1 below. “Lower Income Household Welfare Exemption Property” means, for each Fiscal Year, an Assessor’s Parcel within the boundaries of CFD No. 35 that is subject to a welfare exemption under subdivision (g) of Section 214 of the California Revenue and Taxation Code (or any successor statute), as indicated in the most recent County assessor’s roll finalized prior to such Fiscal Year. “Maximum Special Tax” means, with respect to an Assessor’s Parcel of Taxable Property, the Maximum Special Tax determined in accordance with Section C.1 below that can be levied in any Fiscal Year on such Assessor’s Parcel of Taxable Property.
“Minimum Sale Price” means the minimum price at which Units of a given Land Use Class have sold or are expected to be sold in a normal marketing environment and shall not include prices for such Units that are sold at a discount to expected sales prices for the purpose of stimulating the initial sales activity with respect to such Land Use Class.
“Non-Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit was issued by the City permitting the construction of one or more non-residential structures or facilities.
“Other Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit was issued by the City for purposes of constructing Units, excluding Single Family Attached Property and Single Family Detached Property.
“Outstanding Bonds” means all Bonds which are outstanding under and in accordance with the provisions of the Indenture.
“Price Point Consultant” means any consultant or firm of such consultants selected by CFD No. 35 that (a) has substantial experience in performing price point studies for residential units within community facilities districts established under the Act or otherwise estimating or confirming pricing for residential units in such community facilities districts, (b) has recognized expertise in analyzing economic and real estate data that relates to the pricing of residential units in such community facilities districts, (c) is in fact independent and not under the control of CFD No. 35 or the City, (d) does not have any substantial interest, direct or indirect, with or in (i) CFD No. 35, (ii) the City, (iii) any owner of real property in CFD No. 35, or (iv) any real property in CFD No. 35, and (e) is not connected with CFD No. 35 or the City as an officer or employee thereof, but who may be regularly retained to make reports to CFD No. 35 or the City. “Price Point Study” means a price point study or a letter updating a previous price point study prepared by the Price Point Consultant pursuant to Section C herein. “Property Owner Association Property” means, for each Fiscal Year, any property within the boundaries of CFD No. 35 that was owned by a property owner association, including any master or subassociation, as of January 1 of the prior Fiscal Year. 2315
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“Proportionately” means (a) for Developed Property in the first step of Section D below, that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for all Assessor’s Parcels of Developed Property; however, for Developed Property in the fourth step of Section D below, Proportionately means that the amount of the increase above the Assigned Special Tax, if necessary, is equal for all Assessor’s Parcels of Developed Property, except that if the Backup Special Tax limits the increase on any Assessor’s Parcel(s), then the amount of the increase shall be equal for the remaining Assessor’s Parcels; (b) for Final Mapped Property, that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for all Assessor’s Parcels of Final Mapped Property; (c) for Undeveloped Property, that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for all Assessor's Parcels of Undeveloped Property; (d) for Taxable Property Owner Association Property, that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for all Assessor’s Parcels of Taxable Property Owner Association Property; and (e) for Taxable Public Property, that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for all Assessor’s Parcels of Taxable Public Property.
“Public Property” means, for each Fiscal Year, property within the boundaries of CFD No. 35 that is (a) owned by, irrevocably offered to, or dedicated to the federal government, the State, the County, the City, or any local government or other public agency or (b) encumbered by an easement for purposes of public or utility right-of-way that makes impractical its use for any purpose other than that set forth in such easement, provided that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use. “Rate and Method of Apportionment” means this Amended and Restated Rate and Method of Apportionment of Special Tax.
“Residential Floor Area” means all of the Square Footage of living area within the perimeter of a Unit, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be as set forth in the building permit(s) issued for such Assessor’s Parcel, or as set forth in other official records maintained by the City’s Building Department or other appropriate means selected by CFD No. 35. The actual Square Footage shall be rounded up to the next whole square foot. Once such determination has been made for an Assessor’s Parcel, it shall remain fixed in all future Fiscal Years unless an appeal pursuant to Section F below is approved that results in a change in the actual Square Footage.
“Services” means the services authorized to be financed, in whole or in part, by CFD No. 35. “Single Family Attached Property” means all Assessor’s Parcels of Developed Property for which a building permit or use permit was issued for construction of a residential structure consisting of two or more Units that share common walls, have separate Assessor’s Parcel Numbers assigned to them (except for a duplex unit, which may share an Assessor’s Parcel with another duplex unit), and may be purchased by individual homebuyers (which shall still be the case even if the Units are purchased and subsequently offered for rent by the owner of the Unit), including such residential structures that meet the statutory definition of a condominium contained in California Civil Code Section 4125. “Single Family Detached Property” means all Assessor’s Parcels of Developed Property for which a building permit was issued for construction of a Unit, on one legal lot, that does not share a common wall with another Unit.
“Single Family Property” means all Assessor’s Parcels of Single Family Attached Property and Single Family Detached Property.
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“Special Tax” means the special tax authorized by the qualified electors of CFD No. 35 to be levied within the boundaries of CFD No. 35.
“Special Tax Requirement” means for any Fiscal Year that amount required, after taking into account available amounts held in the funds and accounts established under the Indenture, for CFD No. 35 to: (i) pay debt service on all Outstanding Bonds which is due in the calendar year that commences in such Fiscal Year; (ii) pay periodic costs on the Bonds, including, but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) provide any amounts required to establish or replenish any reserve fund for the Bonds; (v) pay directly for acquisition or construction of Facilities, or the cost of Services, to the extent that the inclusion of such amounts does not increase the Special Tax levy on Final Mapped Property or Undeveloped Property; (vi) provide an amount equal to Special Tax delinquencies based on the historical delinquency rate for the Special Tax as determined by the CFD Administrator.
“Square Footage” or “Sq. Ft.” means the floor area square footage reflected on the original construction building permit, or as set forth in other official records maintained by the City’s Building Department or other appropriate means selected by CFD No. 35, issued for construction of Single Family Property, Other Residential Property, or Non-Residential Property, plus any square footage subsequently added to a building of Non-Residential Property after issuance of a building permit for expansion or renovation of such building.
“State” means the State of California.
“Taxable Property” means, for each Fiscal Year, all of the Assessor’s Parcels within the boundaries of CFD No. 35 that are not exempt from the Special Tax pursuant to law or Section E below. “Taxable Property Owner Association Property” means, for each Fiscal Year, all Assessor’s Parcels of Property Owner Association Property that are not exempt from the Special Tax pursuant to Section E below.
“Taxable Public Property” means, for each Fiscal Year, all Assessor’s Parcels of Public Property that are not exempt from the Special Tax pursuant to law or Section E below. “Tentative Tract Map” means a map: (i) showing a proposed subdivision of an Assessor’s Parcel(s) and the conditions pertaining thereto; (ii) that may or may not be based on a detailed survey; and (iii) that is not recorded by the County to create legal lots.
“Total Tax Burden” means, for a Unit within a Land Use Class, for the Fiscal Year in which Total Tax Burden is being calculated, the sum of (a) the Assigned Special Tax for such Land Use Class for such Fiscal Year, plus (b) the CFD No. 19 special tax for such Land Use Class for such Fiscal Year, plus (c) the ad valorem property taxes, special assessments, special taxes for any other overlapping community facilities districts, and any other governmental fees, charges (other than fees or charges for services such as sewer and trash), taxes, and assessments (which do not include Contractual Impositions) collected by the County on ad valorem tax bills and that the CFD Administrator estimates would be levied or imposed on such Unit in such Fiscal Year if the residential dwelling unit thereon or therein had been completed and sold, and was subject to such fees, charges, taxes, and assessments in such Fiscal Year. “Trustee” means the trustee or fiscal agent under the Indenture. “TTM 17449” means Tentative Tract Map No. 17449, the area of which is located within CFD No. 35. “TTM 17450” means Tentative Tract Map No. 17450, the area of which is located within CFD No. 35. 2317
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“Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Public Property, or Taxable Property Owner Association Property.
“Unit” means an individual single-family detached or attached home, townhome, condominium, apartment, or other residential dwelling unit, including each separate living area within a half-plex, duplex, triplex, fourplex, or other residential structure.

B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, beginning with Fiscal Year 2018-19, all Taxable Property within CFD No. 35 shall be classified as Developed Property, Final Mapped Property, Taxable Public Property, Taxable Property Owner Association Property, or Undeveloped Property and shall be subject to Special Taxes in accordance with the Rate and Method of Apportionment as determined pursuant to Sections C and D below.

Assessor’s Parcels of Single Family Property shall be assigned to Land Use Classes 1 through 7, as listed in Table 1 below based on the Residential Floor Area of the Units on such Assessor’s Parcels. Other Residential Property shall be assigned to Land Use Class 8, and Non-Residential Property shall be assigned to Land Use Class 9.

C. MAXIMUM SPECIAL TAX

1. Special Tax
At least 30 days prior to the issuance of the first series of Bonds, the Assigned Special Tax on Developed Property (set forth in Table 1 below) shall be analyzed in accordance with and subject to the conditions set forth in this Section C. At such time, CFD No. 35 shall select and engage a Price Point Consultant and the CFD Administrator shall request the Price Point Consultant to prepare a Price Point Study setting forth the Minimum Sale Price of Units within each Land Use Class. If based upon such Price Point Study the CFD Administrator calculates that the Total Tax Burden applicable to Units within one or more Land Use Classes of Single Family Property to be constructed within CFD No. 35 exceeds 1.95% of the Minimum Sale Price of such Units, the Assigned Special Tax shall be reduced to the extent necessary to cause the Total Tax Burden that shall apply to Units within such Land Use Class(es) not to exceed 1.95% of the Minimum Sale Price of such Units.

Each Assigned Special Tax reduction for a Land Use Class shall be calculated by the CFD Administrator separately, and it shall not be required that such reduction be proportionate among Land Use Classes. In connection with any reduction in the Assigned Special Tax, the Backup Special Tax shall also be reduced by the CFD Administrator based on the percentage reduction in Maximum Special Tax revenues within the Tentative Tract Map area(s) where the Assigned Special Tax reductions occurred. Upon determining the reductions, if any, in the Assigned Special Tax and Backup Special Tax required pursuant to this Section C, the CFD Administrator shall complete the Certificate of Modification of Special Tax substantially in the form attached hereto as Exhibit A (the “Certificate of Modification”), shall execute such completed Certificate of Modification, and shall deliver such executed Certificate of Modification to CFD No. 35.

Upon receipt thereof, if in satisfactory form, CFD No. 35 shall execute such Certificate of Modification. The reduced Assigned Special Tax and Backup Special Tax specified in such Certificate of Modification shall become effective upon the execution of such Certificate of Modification by CFD No. 35.

The Special Tax reductions required pursuant to this section shall be reflected in an amended notice of Special Tax lien, which CFD No. 35 shall cause to be recorded with the County Recorder 2318
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as soon as practicable after execution of the Certificate of Modification by CFD No. 35. The reductions in this section apply to Single Family Property, but not to Other Residential Property or Non-Residential Property.
a. Developed Property
1) Maximum Special Tax
The Maximum Special Tax that may be levied in any Fiscal Year for each Assessor’s Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. The Maximum Special Tax shall not increase in future years, other than as calculated pursuant to Section C.1.a.3 below.
2) Assigned Special Tax
The Assigned Special Tax that may be levied in any Fiscal Year for each Land Use Class is shown below in Table 1.

TABLE 1
ASSIGNED SPECIAL TAX – DEVELOPED PROPERTY
3) Backup Special Tax
The Backup Special Tax shall be $3,846 per Unit for Single Family Property.

However, if the Expected Residential Lot Count does not equal 235 for Single Family Property, and the City has not issued Bonds, then the Backup Special Tax for Designated Buildable Lots of Single Family Property shall be calculated according to the following formula:

Backup Special Tax = $903,846  Expected Residential Lot Count for Single Family Property
Land
Use
Class
Description
Residential
Floor Area
(Square
Footage)
Assigned
Special Tax
1 Single Family Property < 1,501 $3,342 per Unit
2 Single Family Property 1,501 – 1,700 $3,454 per Unit
3 Single Family Property 1,701 – 1,900 $3,626 per Unit
4 Single Family Property 1,901 – 2,100 $3,849 per Unit
5 Single Family Property 2,101 – 2,300 $3,935 per Unit
6 Single Family Property 2,301 – 2,500 $4,073 per Unit
7 Single Family Property > 2,500 $4,262 per Unit
8 Other Residential Property $52,912 per Acre
9 Non-Residential Property $52,912 per Acre
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If any portion of a Final Subdivision Map, or any area expected by CFD No. 35 to become Final Mapped Property, such as the area within TTM 17449, TTM 17450, or any other Tentative Tract Map, changes any time after the City has issued Bonds, causing an adjustment to the number of Designated Buildable Lots, then the Backup Special Tax for all Designated Buildable Lots of Single Family Property subject to the change shall be calculated according to the following steps:

Step 1: Determine the total Backup Special Taxes that could have been collected from Designated Buildable Lots of Single Family Property prior to the Final Subdivision Map or expected Final Mapped Property change.

Step 2: Divide the amount determined in Step 1 by the number of Designated Buildable Lots of Single Family Property that exists after the Final Subdivision Map or expected Final Mapped Property change.

Step 3: Apply the amount determined in Step 2 as the Backup Special Tax per Unit for Single Family Property.

The Backup Special Tax for an Assessor’s Parcel shall not change once an Assessor’s Parcel is classified as Developed Property.
b. Final Mapped Property, Taxable Public Property, Taxable Property Owner Association Property, and Undeveloped Property
The Maximum Special Tax for Final Mapped Property, Taxable Public Property, Taxable Property Owner Association Property, and Undeveloped Property shall be $52,912 per Acre, and shall not be subject to increase or reduction and, therefore, shall remain the same in every Fiscal Year.

2. Multiple Land Use Classes on an Assessor’s Parcel
In some instances an Assessor’s Parcel of Developed Property may contain more than one Land Use Class. The Maximum Special Tax levied on such Assessor’s Parcel shall be the sum of the Maximum Special Tax for all Units of Single Family Property and Acres of Other Residential Property and Non-Residential Property (based on the pro rata share of Square Footage between Other Residential Property and Non-Residential Property, according to the applicable building permits, Final Subdivision Map, parcel map, condominium plan, or other recorded County map) located on that Assessor’s Parcel.

D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Each Fiscal Year, beginning with Fiscal Year 2018-19, the CFD Administrator shall determine the Special Tax Requirement for such Fiscal Year. The Special Tax shall then be levied as follows:

First: If needed to satisfy the Special Tax Requirement, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Developed Property up to 100% of the applicable Assigned Special Tax; Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Final Mapped Property up to 100% of the Maximum Special Tax for Final Mapped Property; 2320
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Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property up to 100% of the Maximum Special Tax for Undeveloped Property; Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the levy of the Special Tax on each Assessor’s Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor’s Parcel;
Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Taxable Property Owner Association Property up to the Maximum Special Tax for Taxable Property Owner Association Property;
Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Taxable Public Property up to the Maximum Special Tax for Taxable Public Property.

Notwithstanding the above, under no circumstances shall the Special Tax levied in any Fiscal Year on any Assessor’s Parcel of Single Family Property or Other Residential Property for which an occupancy permit for private residential use has been issued be increased as a result of delinquency or default by the owner or owners of any other Assessor’s Parcel or Assessor’s Parcels within CFD No. 35 by more than ten percent above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults.

E. EXEMPTIONS
No Special Tax shall be levied on up to 2.44 Acres of Public Property and up to 14.12 Acres of Property Owner Association Property. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Public Property or Property Owner Association Property.

Property Owner Association Property or Public Property that is not exempt from the Special Tax under this section shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fifth or sixth step, respectively, in Section D above, up to 100% of the applicable Maximum Special Tax for Taxable Property Owner Association Property and Taxable Public Property. No Special Tax shall be levied in any Fiscal Year on Assessor’s Parcels that have fully prepaid the Special Tax obligation pursuant to the formula set forth in Section H.

No Special Tax shall be levied on Lower Income Household Welfare Exemption Property; provided, however, that if, in any Fiscal Year, applicable law does not require that Lower Income Household Welfare Exemption Property be exempt from some portion, or all, of the Special Tax, such portion, or all, of the Special Tax shall be levied on such property in accordance with this Rate and Method of Apportionment based on the Land Use Class to which the Assessor’s Parcel is assigned.

F. APPEALS
Any property owner may file a written appeal of the Special Tax with CFD No. 35 claiming that the amount or application of the Special Tax is not correct. The appeal must be filed not later than one calendar year after having paid the Special Tax that is disputed, and the appellant must be current in all payments of Special Taxes. In addition, during the term of the appeal process, all Special Taxes levied must be paid on or before the payment date established when the levy was made. 2321
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The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination.

If the property owner disagrees with the CFD Administrator’s decision relative to the appeal, the owner may then file a written appeal with the City Council whose subsequent decision shall be final and binding on all interested parties. If the decision of the CFD Administrator or subsequent decision by the City Council requires the Special Tax to be modified or changed in favor of the property owner, then the CFD Administrator shall determine if sufficient Special Tax revenue is available to make a cash refund. If a cash refund cannot be made, then an adjustment shall be made to credit future Special Tax levy(ies).

This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to filing any legal action by such owner.

G. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that the Special Taxes may be collected in such other manner as the City Council shall determine, including direct billing of affected property owners.

H. PREPAYMENT OF SPECIAL TAX
The following definitions apply to this Section H:
“CFD Public Facilities” means $12,757,000 each Prepayment Period, or such lower number as determined by the City Council to be sufficient to fund the Facilities and Services to be provided by CFD No. 35.
“Expenditures Fund” means funds or accounts, regardless of their names, that are established to hold moneys that are available to acquire or construct Facilities and to fund Services. “Future Facilities Costs” means the CFD Public Facilities minus (i) Facilities and Services costs previously paid from the Expenditures Fund during the Prepayment Period in which the prepayment is being made, (ii) moneys currently on deposit in the Expenditures Fund from deposits made during the Prepayment Period in which the prepayment is being made, and (iii) moneys currently on deposit in an escrow fund that are expected to be available to finance Facilities costs. In no event shall the amount of Future Facilities Costs be less than zero.
“Prepayment Period” means one of three periods of time during which a Special Tax prepayment may be made.
“Prepayment Period 1” means July 1, 2018, through June 30, 2052. “Prepayment Period 2” means July 1, 2052, through June 30, 2085. “Prepayment Period 3” means July 1, 2085, through June 30, 2119.

1. Prepayment in Full
The obligation of an Assessor's Parcel to pay the Special Tax may be prepaid as described herein, provided that a prepayment may be made only for Assessor’s Parcels for which a building permit for new construction was issued after January 1, 2017, and only if there are no delinquent Special 2322
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Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor's Parcel. The CFD Administrator may charge a fee for providing this service. Prepayment in any six month period must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture.

The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below):

Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
Total Prepayment Amount
As of the proposed date of prepayment, the Special Tax Prepayment Amount (defined below) shall be calculated by the CFD Administrator as follows:

Paragraph No.

1. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel, and determine the Prepayment Period for the proposed prepayment.

2. Compute the Assigned Special Tax and Backup Special Tax for the Assessor’s Parcel to be prepaid based on the Developed Property Special Tax which is, or could be, charged in the current Fiscal Year. For Assessor’s Parcels of Final Mapped Property (for which a building permit has been issued but which is not yet classified as Developed Property) to be prepaid, compute the Assigned Special Tax and Backup Special Tax for that Assessor’s Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor’s Parcel.

3. (a) Divide the Assigned Special Tax computed pursuant to Paragraph 2 by the total estimated Assigned Special Tax for CFD No. 35 based on the Developed Property Special Tax which could be charged in the current Fiscal Year on all expected development through buildout of CFD No. 35, excluding any Assessor’s Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to Paragraph 2 by the estimated total Backup Special Tax at buildout of CFD No. 35, excluding any Assessor’s Parcels which have been prepaid.

4. Multiply the larger quotient computed pursuant to Paragraph 3(a) or 3(b) by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the “Bond Redemption Amount”).

5. Multiply the Bond Redemption Amount computed pursuant to Paragraph 4 by the applicable redemption premium (e.g., the redemption price minus 100%), if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).
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6. Compute the Future Facilities Costs for the applicable Prepayment Period.

7. Multiply the larger quotient computed pursuant to Paragraph 3(a) or 3(b) by the amount determined pursuant to Paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the “Future Facilities Amount”).

8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds.

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

10. Add the amounts computed pursuant to Paragraphs 8 and 9 to determine the “Defeasance Amount”.

11. Verify the administrative fees and expenses of CFD No. 35, including the costs to compute the prepayment, the costs to invest the prepayment proceeds, the costs to redeem Bonds, and the costs to record any notices to evidence the prepayment and the redemption (the “Administrative Fees and Expenses”).

12. If reserve funds for the Outstanding Bonds, if any, are at or above 100% of the reserve requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment (the “Reserve Fund Credit”). No Reserve Fund Credit shall be granted if reserve funds are below 100% of the reserve requirement on the prepayment date or the redemption date.

13. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Paragraphs 4, 5, 7, 10, and 11, less the amount computed pursuant to Paragraph 12 (the “Prepayment Amount”).

14. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 4, 5, 10, and 12 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to Paragraph 7 shall be deposited into the Expenditures Fund. The amount computed pursuant to Paragraph 11 shall be retained by CFD No. 35.

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

In such cases, the increment above $5,000, or integral multiple thereof, will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of Bonds or to make debt service payments.

As a result of the payment of the current Fiscal Year’s Special Tax levy as determined under Paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year’s Special Tax levy for such Assessor’s Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid during Prepayment Period 3, the CFD Administrator shall cause a suitable notice to be recorded in compliance with the Act to indicate that the Special Tax has been prepaid and that the obligation of such Assessor's Parcel to pay the Special Tax shall cease.

With respect to the Special Tax for any Assessor’s Parcel that is prepaid during Prepayment Period 1 or Prepayment Period 2, the obligation of such Assessor’s Parcel to pay the Special Tax shall be tolled, or suspended, through the end of such Prepayment Period, but shall resume in the first Fiscal Year of the 2324
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subsequent Prepayment Period. The CFD Administrator shall cause a suitable notice to be recorded in compliance with the Act to indicate that the Special Tax has been satisfied for the remainder of the applicable Prepayment Period but has not been permanently satisfied and the obligation to pay the Special Tax will resume in the first Fiscal Year of the Prepayment Period following the Prepayment Period in which the prepayment was made. Once the obligation of an Assessor’s Parcel to pay the Special Tax resumes, the Special Tax for the then applicable Prepayment Period may be prepaid.

Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Special Tax that may be levied on Taxable Property within CFD No. 35 (after excluding 2.44 Acres of Public Property and 14.12 acres of Property Owner Association Property) both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds.

2. Prepayment in Part
The Special Tax on an Assessor’s Parcel for which a building permit for new construction was issued after January 1, 2017, may be partially prepaid. The amount of the prepayment shall be calculated as in Section H.1, except that a partial prepayment shall be calculated by the CFD Administrator according to the following formula:

PP = (PF – AE) x % + AE.

The terms above have the following meaning:

PP = the partial prepayment
PF = the Prepayment Amount (full prepayment) for the Special Tax calculated according to Section H.1
AE = the Administrative Fees and Expenses determined pursuant to paragraph 11 above % = the percentage by which the owner of the Assessor’s Parcel(s) is partially prepaying the Special Tax
The Special Tax partial prepayment amount must be sufficient to redeem at least a $5,000 increment of Bonds.

The owner of any Assessor’s Parcel who desires such prepayment shall notify the CFD Administrator of such owner’s intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor’s Parcel within thirty (30) days of the request and may charge a fee for providing this service. With respect to any Assessor’s Parcel that is partially prepaid, the CFD Administrator shall (i) distribute the remitted prepayment funds according to Section H.1, and (ii) indicate in the records of CFD No. 35 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor’s Parcel, equal to the outstanding percentage (100% - “%”, as defined above) of the Maximum Special Tax, shall continue to be levied on such Assessor’s Parcel pursuant to Section D during the Prepayment Period in which the partial prepayment is made.

For partial prepayments made during Prepayment Period 1 or Prepayment Period 2, the full amount of the Special Tax shall resume in the first Fiscal Year of the Prepayment Period following the Prepayment Period in which the partial prepayment was made. Once the obligation of an Assessor’s Parcel to pay the Special Tax resumes, the Special Tax for the then applicable Prepayment Period may be prepaid. 2325
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I. TERM OF SPECIAL TAX
The Fiscal Year after which no further Special Tax shall be levied or collected is Fiscal Year 2118-2119, except that the Special Tax that was lawfully levied in or before such Fiscal Year and that remains delinquent may be collected in subsequent years.

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EXHIBIT A

CERTIFICATE OF MODIFICATION OF SPECIAL TAX
(PAGE 1 OF 2)
CITY OF ONTARIO AND CFD NO. 35 CERTIFICATE

1. Pursuant to Section C.1 of the Amended and Restated Rate and Method of Apportionment of Special Tax (the “Rate and Method”) for City of Ontario Community Facilities District No. 35 (Countryside Phase 2 South – Facilities) (“CFD No. 35”), the Assigned Special Tax and the Backup Special Tax for Developed Property within CFD No. 35 has been modified.
a. The information in Table 1 relating to the Assigned Special Tax for Developed Property within CFD No. 35, as stated in Section C.1.a.2 of the Rate and Method of Apportionment, has been modified as follows:

TABLE 1
ASSIGNED SPECIAL TAX – DEVELOPED PROPERTY

b. The Backup Special Tax for Developed Property, as stated in Section C.1.a.3, shall be modified as follows:

The Backup Special Tax shall be $[____] per Unit for Single Family Property. However, if the Expected Residential Lot Count does not equal 235 for Single Family Property, and the City has not issued Bonds, then the Backup Special Tax for Designated Buildable Lots of Single Family Property shall be calculated according to the following formula:

Backup Special Tax = $[______]  Expected Residential Lot Count for Single Family Property
Land
Use
Class
Description
Residential
Floor Area
(Square
Footage)
Assigned
Special Tax
1 Single Family Property < 1,501 $[ ] per Unit
2 Single Family Property 1,501 – 1,700 $[ ] per Unit
3 Single Family Property 1,701 – 1,900 $[ ] per Unit
4 Single Family Property 1,901 – 2,100 $[ ] per Unit
5 Single Family Property 2,101 – 2,300 $[ ] per Unit
6 Single Family Property 2,301 – 2,500 $[ ] per Unit
7 Single Family Property > 2,500 $[ ] per Unit
8 Other Residential Property $[ ] per Acre
9 Non-Residential Property $[ ] per Acre
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2. The Special Tax for Developed Property may only be modified prior to the first issuance of CFD No. 35 Bonds.

3. Upon execution of this Certificate by CFD No. 35, CFD No. 35 shall cause an amended notice of Special Tax lien for CFD No. 35 to be recorded reflecting the modifications set forth herein.

Capitalized undefined terms used herein have the meanings ascribed thereto in the Rate and Method. The modifications set forth in this Certificate have been calculated by the CFD Administrator in accordance with the Rate and Method.

GOODWIN CONSULTING GROUP, INC.

CFD ADMINISTRATOR
By:_________________________________ Date:______________________

The undersigned acknowledges receipt of this Certificate and of the modification of the Assigned Special Tax and the Backup Special Tax for Developed Property as set forth in this Certificate.

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 35
(COUNTRYSIDE PHASE 2 SOUTH – FACILITIES)
By:_________________________________ Date:______________________

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APPENDIX B

APPRAISAL REPORT
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APPENDIX C

PRICE POINT STUDY
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APPENDIX D

FORM OF OPINION OF BOND COUNSEL
[TO COME FROM BOND COUNSEL]
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APPENDIX E

GENERAL INFORMATION CONCERNING THE CITY OF ONTARIO
This appendix sets forth general information about the City of Ontario (the “City”) including information with respect to its finances. The following information concerning the City, the County of San Bernardino (the “County”) and the State are included only for general background purposes regarding the area encompassing the District. The Series 2024 Bonds are special, limited obligations of the 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 District (except to the limited extent set forth in the Indenture), the City or the State of California (the “State”), or any political subdivision thereof, is pledged to the payment of the Series 2024 Bonds.

The City is located in western San Bernardino County, 35 miles inland from downtown Los Angeles and encompasses 50 square miles. Located in the western part of the Inland Empire region, it lies just east of the Los Angeles county line and is part of the Greater Los Angeles Area. The City is home to the LA/Ontario International Airport which is the 11th busiest cargo airport in the United States. Ontario handles the mass of freight traffic between the ports of Los Angeles and Long Beach and the rest of the country.

Government
The City was incorporated as a general law city in 1891, and is governed by a Mayor and four council members elected at large to serve four-year terms. The City operates under the Council - Manager form of government. The City Council appoints the City Manager who is responsible for the day-to-day administration of City business and the coordination of all departments of the City.

The population growth in the City, County and State is shown on the following chart.

POPULATION ESTIMATES
City of Ontario, County of San Bernardino and State of California 2014-2024
Year(1) City of Ontario County of San Bernardino State of California 2014 167,885 2,094,951 38,556,731
2015 169,153 2,112,187 38,865,532
2016 169,491 2,122,579 39,103,587
2017 172,858 2,139,520 39,352,398
2018 175,083 2,150,017 39,519,535
2019 178,606 2,165,876 39,605,361
2020 175,427 2,181,654 39,538,223
2021 176,206 2,179,007 39,286,510
2022 178,682 2,180,777 39,078,674
2023 180,717 2,182,056 38,940,231
2024 179,516 2,187,665 39,185,605
________________________
(1) As of January 1.

Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties and State, 2014-2020, with 2010 Benchmark; E-4 Population Estimates for Cities, Counties and State, 2021-2024, with 2020 Benchmark. 2332
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Employment
The following table summarizes the labor force, employment and unemployment figures for the years 2018 through 2023 for the City, the County, the State and the United States.

CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT RATE
City of Ontario, San Bernardino County, State of California and United States 2018 through 2023(1)
Year and Area Labor Force Employment(2) Unemployment(3) Unemployment
Rate (%)
2018
City of Ontario 87,600 84,400 3,200 3.6%
San Bernardino County 955,100 915,800 39,200 4.1
State of California 19,289,500 18,469,900 819,600 4.2
United States 162,075,000 155,761,000 6,314,000 3.9
2019
City of Ontario 90,100 87,100 3,100 3.4%
San Bernardino County 965,400 928,100 37,400 3.9
State of California 19,385,300 18,589,600 795,700 4.1
United States 163,539,000 157,538,000 6,001,000 3.7
2020
City of Ontario 89,600 81,400 8,200 9.1%
San Bernardino County 972,800 879,300 93,500 9.6
State of California 18,958,600 17,037,000 1,921,600 10.1 United States 160,742,000 147,795,000 12,947,000 8.1
2021
City of Ontario 91,100 84,900 6,200 6.8%
San Bernardino County 990,000 916,600 73,500 7.4
State of California 18,956,600 17,568,700 1,387,800 7.3 United States 161,204,000 152,581,000 8,623,000 5.3
2022
City of Ontario 92,500 89,000 3,500 3.8
San Bernardino County 1,003,000 961,200 41,700 4.2
State of California 19,169,300 18,348,900 820,400 4.3
United States 164,287,000 158,291,000 5,996,000 3.6
2023
City of Ontario 93,400 89,500 3,900 4.2
San Bernardino County 1,013,700 966,500 47,200 4.7
State of California 19,308,300 18,388,300 920,000 4.8
United States 167,116,000 161,037,000 6,080,000 3.6
______________________
Note: Data is not seasonally adjusted.
(1) Annual averages, unless otherwise specified.
(2) Includes persons involved in labor-management trade disputes. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table.

Source: U.S. Department of Labor – Bureau of Labor Statistics, California Employment Development Department. 2021 Benchmark. 2333
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Listed below are the major employers in the City and in the County for Fiscal Year 2022-23.

PRINCIPAL EMPLOYERS
City of Ontario
Fiscal Year 2022-23(1)
Employer Number of Employees
United Parcel Services 5,000 to 9,999
Workforce Personnel, Inc. 5,000 to 9,999
Ontario Montclair Elementary School District 1,000 to 4,999 Chaffey Union High School 1,000 to 4,999
FedEx 500 to 999
Qvc, Inc. 500 to 999
AutoZone 500 to 999
The Home Depot 500 to 999
Cardenas Market LLC 500 to 999
Uline Inc 250 to 499
Cardinal Health 250 to 499
Wal-Mart Associates, Inc. 250 to 499
Ventura Foods, LLC 250 to 499
Gold Star Foods, Inc. 250 to 499
Toyota Motor Sales USA, Inc. 250 to 299
Staples Contract Commercial 250 to 499
Starbucks 250 to 499
Mag Instrument 250 to 499
Citizens Business Bank 250 to 499
Carmax Auto 250 to 499
______________________
(1) Last year in which information is available.

Source: City of Ontario.

PRINCIPAL EMPLOYERS
San Bernardino County
Fiscal Year 2022-23
Rank Name of Business
Approximate No. of San
Bernardino County
Employees(1) Type of Business
1 San Bernardino County ≥10,000 Public Administration
2 Loma Linda University Medical Center 5,000-9,999 Medical Center 3 Ontario International Airport 5,000-9,999 Airport
4 Amazon 1,000-4,999 Electronic Commerce
5 Burlington Distribution Corp 1,000-4,999 Distribution 6 California State University, San Bernardino 1,000-4,999 Medical Center 7 Dignity Health Community Hospital of San Bernardino 1,000-4,999 Medical Center 8 Environmental Systems Research Institute 1,000-4,999 Research 9 Fedex Ground 1,000-4,999 Postal
10 Inland Empire Health Plan 1,000-4,999 Health Plan
________________________
(1) Due to confidentiality of reporting number of employees, ranges have been provided.

Source: San Bernardino County Annual Comprehensive Financial Report for the year ending June 30, 2023. 2334
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Industries
Residents of the City find employment throughout the Riverside-San Bernardino-Ontario Labor Market Area. This labor market area, as defined for reporting purposes by the California Employment Development Department, has boundaries coterminous with those of Riverside and San Bernardino Counties. The following table sets forth certain employment data for the Riverside - San Bernardino-Ontario Metropolitan Statistical Area and the County for the period from 2019 through 2023.

RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA

INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE
2019 2020 2021 2022 2023
Civilian Labor Force 2,071,600 2,091,700 2,120,600 2,148,700 2,171,500 Civilian Employment 1,987,500 1,885,400 1,964,300 2,058,400 2,068,800 Civilian Unemployment 84,000 206,200 156,300 90,200 102,700 Civilian Unemployment Rate 4.1% 9.9% 7.4% 4.2% 4.7%
Total Farm 15,400 14,100 13,700 13,800 13,100
Total Nonfarm 1,552,700 1,495,800 1,575,100 1,659,800 1,679,800 Total Private 1,291,500 1,247,800 1,333,100 1,409,800 1,418,900 Goods Producing 209,700 202,200 207,700 216,300 216,100 Mining & Logging 1,200 1,300 1,400 1,600 1,500
Construction 107,200 104,900 110,100 114,700 115,700
Manufacturing 101,300 96,000 96,100 100,000 98,900
Service Providing 1,343,000 1,293,700 1,367,400 1,443,500 1,463,700 Trade, Transportation & Utilities 395,100 406,900 443,200 464,900 456,500 Wholesale Trade 67,700 65,600 67,400 69,500 68,700
Retail Trade 180,700 168,800 177,000 181,000 182,700
Transportation, Warehousing & Utilities 146,600 172,500 198,800 214,400 205,100 Information 14,100 12,400 12,500 13,000 13,300
Financial Activities 45,000 44,100 44,200 46,000 44,900 Professional & Business Services 155,300 152,100 166,600 173,900 164,800 Educational & Health Services 250,300 248,700 254,300 267,500 287,400 Leisure & Hospitality 175,900 141,300 160,200 180,900 186,500 Other Services 46,200 40,200 43,600 47,400 49,300
Government 261,200 248,000 242,000 250,000 260,900
Total, All Industries 1,568,100 1,509,900 1,588,800 1,673,600 1,692,900 ____________________________
Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix E.

Source: State of California, Employment Development Department, March 2023 Benchmark. 2335
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Personal Income
The following tables show the personal income and per capita personal income for the City, County, State of California and United States from 2014 through 2023.

PERSONAL INCOME(1)
City of Ontario, County of San Bernardino, State of California, and United States 2014-2023
Year
City of
Ontario
County of
San Bernardino California United States
2014 $3,100,249 $ 69,951,380 $1,955,718,006 $14,778,160,000 2015 3,224,189 74,081,824 2,097,049,575 15,467,113,000
2016 3,159,733 77,453,102 2,191,138,011 15,884,741,000
2017 3,444,006 80,031,472 2,295,048,653 16,658,962,000
2018 3,474,794 83,514,331 2,411,055,136 17,514,402,000
2019 3,826,610 89,182,422 2,537,950,599 18,343,601,000
2020 4,114,067 100,359,889 2,767,521,379 19,609,985,000 2021 4,566,417 108,700,135 3,013,676,929 21,392,812,000 2022 4,392,483 108,081,645 3,006,647,281 21,820,248,000 2023 --
(1) --(1) --(1) 22,952,028,300
_____________________________
Note: Dollars in Thousands.
(1) City of Ontario, County of San Bernardino and State of California figures for calendar year 2023 not yet available.

Source: U.S. Department of Commerce, Bureau of Economic Analysis and City of Ontario Annual Comprehensive Financial Report for the year ending June 30, 2022.

PER CAPITA PERSONAL INCOME(1)(2)
City of Ontario, County of San Bernardino, State of California, and United States 2014-2023
Year
City of
Ontario
County of
San Bernardino California United States
2014 $18,774 $33,381 $50,619 $46,287
2015 19,068 35,179 53,817 48,060
2016 18,601 36,422 55,863 48,971
2017 19,761 37,311 58,214 51,004
2018 19,761 38,663 60,984 53,309
2019 21,129 41,079 64,174 55,547
2020 22,237 45,968 70,058 59,151
2021 24,682 49,570 76,987 64,427
2022 24,682 49,270 77,013 65,473
2023 --(2) --(2) 80,423 68,531
__________________________
(1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S. Bureau of the Census. All dollar estimates are in millions of current dollars (not adjusted for inflation). (2) City of Ontario and County of San Bernardino figures for calendar year 2023 not yet available.

Source: City of Ontario Comprehensive Annual Financial Report for the year ending June 30, 2022, Bureau of Economic Analysis for County, State and U.S.
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Assessed Valuation
The table below sets forth the City’s assessed valuation of property for Fiscal Years 2013-14 through 2022-23.

ASSESSED VALUATION OF TAXABLE PROPERTY
City of Ontario
Fiscal Years 2013-14 to 2022-23
(Dollars in Thousands)
City
Fiscal Year
Ended June 30
Secured
Value
Unsecured
Value
Less
Exemptions
Taxable
Assessed
Value
2014 $12,465,751 $1,758,596 $(110,182) $14,114,165
2015 12,413,859 2,552,384 (108,252) 14,857,991
2016 13,124,582 2,611,079 (105,864) 15,629,797
2017 13,781,901 2,543,614 (109,080) 16,216,435
2018 14,844,332 2,624,317 (108,915) 17,359,734
2019 16,575,762 2,814,842 (108,701) 19,281,903
2020 18,181,749 2,910,729 (110,654) 20,981,823
2021 19,529,581 3,147,303 (111,223) 22,565,661
2022 21,666,906 3,257,643 (112,096) 24,812,452
2023 25,470,365 2,423,770 (109,103) 27,785,032
________________________
Source: City of Ontario.

PROPERTY TAX LEVIES AND COLLECTIONS
City of Ontario
Fiscal Years 2013-14 to 2022-23
(Dollars in Thousands)

Collected within the
Fiscal Year of Levy Total Collections to Date
Fiscal Year
Ended June 30
Taxes Levied
for the
Fiscal Year Amount
Percent of
Levy
Collections in
Subsequent
Years Amount
Percent of
Levy
2014 $24,858,740 $24,518,130 $98.63% $812,490 $25,330,619 101.90% 2015 25,868,724 25,584,269 98.90 768,052 26,352,321 101.87 2016 27,397,660 27,022,201 98.63 755,577 27,777,778 101.39 2017 28,598,396 28,237,630 98.74 628,491 28,866,121 100.94 2018 30,476,605 30,258,907 99.29 662,586 30,921,494 101.46 2019 33,855,137 33,811,751 99.87 275,397 34,087,147 100.69 2020 36,873,998 36,420,730 98.77 332,350 36,753,080 99.67 2021 39,726,164 39,415,629 99.22 341,296 39,756,925 100.08 2022 43,670,142 43,614,885 99.87 496,967 44,111,852 101.01 2023 49,348,272 49,693,817 100.70 948,837 50,642,654 102.62 ________________________
Source: City of Ontario.
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Tax Levy and Tax Collection
Below is a chart which indicates the tax levy and collection records for the City from the 2013-14 through 2022-23 Fiscal Years.

PROPERTY TAX LEVIES AND COLLECTIONS
City of Ontario
Fiscal Years 2013-14 to 2022-23
Fiscal Year
Percent of Levy
Collected
Total Tax Collections
to Tax Levy to Date(1)
2014 101.90 25,330,619
2015 101.87 26,352,321
2016 101.39 27,777,778
2017 100.94 28,866,121
2018 101.46 30,921,494
2019 100.69 34,087,147
2020 99.67 36,753,080
2021 100.08 39,756,925
2022 101.01 44,111,852
2023 102.62 50,642,654
_________________________
(1) Beginning with the City’s Comprehensive Annual Financial Report for the year ending June 30, 2019, the City did not include in its reported property tax collections pass-through payments related to the former Ontario Redevelopment Agency or Redevelopment Property Tax Trust Fund residual payments. The historical property tax collection amounts have been adjusted to reflect this change.

Source: City of Ontario.

Largest Taxpayers
The principal property taxpayers in the City for Fiscal Year 2022-23 are as follows:

PRINCIPAL PROPERTY TAXPAYERS
City of Ontario
Fiscal Year 2022-23
Taxpayer Taxable Value ($)
% of Total City
Taxable Value (%) Taxable Value ($)
% of Total City
Taxable Value (%)
Prologis Inc $1,006,416,608 2.76% $ 171,858,483 0.90%
United Parcel Service Company 750,883,576 2.06 405,653,016 2.13 Ontario Mills LP 429,692,777 1.18 313,095,987 1.64
Costco Wholesale Corporation 391,629,045 1.07 -
Watson Land Company 372,678,646 1.02 -
Federal Express Corporation 353,225,679 0.97 -
Vineyard Industrial LLC 302,251,290 0.83 -
Ontario Land Ventures LLC 293,374,514 0.80 -
Palmer Ontario Properties LP 249,280,420 0.68 -
Colony Commerce Ontario East LP 243,608,601 0.67% -
Catellus Finance 1 LLC - 227,810,437 1.19
Comref So California Industrial - 132,876,889 0.70
Majestic-CCC IV Partners - 126,530,054 0.66
Niagara Bottling LLC - 112,864,414 0.59
Camden Landmark LLC - 90,500,000 0.47
Vogel Properties INC - 89,794,960 0.47
Southwest Airlines Company INC - 84,258,897 0.44
Total Top 10 Taxpayers 4,393,041,156 1,755,243,137 9.20 Total Taxable Value 36,492,068,503 19,082,173,993 100.00% ________________________
Source: City of Ontario.
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Taxable Sales
The table below presents taxable sales for the years 2015 through 2023 for the City.

TAXABLE SALES
City of Ontario
2015 through 2023
(Dollars in Thousands)
Year
Retail and Food
Permits
Retail and Food
Taxable
Transactions Total Permits
Total Outlets
Taxable
Transactions
2015(1) 4,867 $4,279,949(1) 7,580 $ 7,174,748(1)
2016 4,875 4,634,312 7,658 8,124,276
2017 4,974 4,775,352 7,888 7,670,947
2018 5,194 4,850,172 8,435 7,939,125
2019 5,306 4,953,629 8,830 8,186,154
2020 5,692 4,416,993 9,543 7,584,137
2021 5,386 5,798,203 9,138 9,565,256
2022 5,646 6,812,383 9,632 10,852,564
2023 5,716 6,329,769 9,749 10,242,831
_____________________
(1) Beginning in 2015, the outlet counts in these reports show the number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Industry-level data for 2015 are not comparable to that of prior years.

Source: California Department of Tax and Fee Administration.

The table below presents taxable sales for the years 2015 through 2023 for the County.

TAXABLE SALES
San Bernardino County
2015 through 2021
(Dollars in Thousands)
Year
Retail and Food
Permits
Retail and Food
Taxable
Transactions Total Permits
Total Outlets
Taxable
Transactions
2015(1) 37,696 $23,384,548(1) 56,128 $35,580,276(1)
2016 38,370 24,477,003 57,629 37,216,551
2017 39,067 25,603,171 58,956 38,399,373
2018 39,837 26,905,784 61,838 40,554,024
2019 40,964 27,585,905 64,771 41,768,748
2020 44,330 28,745,277 71,145 43,265,512
2021 40,801 38,345,912 66,585 55,378,097
2022 41,690 40,048,059 68,480 59,992,846
2023 40,632 38,103,700 67,336 57,475,070
_________________________
(1) Beginning in 2015, the outlet counts in these reports show the number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Industry-level data for 2015 are not comparable to that of prior years.

Source: “Taxable Sales in California (Sales & Use Tax)” - California State Board of Equalization for 2014; Taxable Sales in California, California Department of Tax and Fee Administration for 2015-2021. 2339
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Transportation
Because Ontario is a major hub for passengers and freight, the City is also served by several major freeways. Interstate 10 and the Pomona Freeway (State Route 60) run east-west through the City. Interstate 10 is north of the Ontario airport while the Pomona freeway is south of the airport. Interstate 15 runs in the north-south directions at the eastern side of the City. State Route 83, also known as Euclid Avenue, also runs in the north-south direction at the western side of the City.

The City maintains an Amtrak station which is served by the Sunset Limited and Texas Eagle lines.

Ontario also has a Metrolink station off of Haven Avenue. It connects Ontario with much of the Greater Los Angeles area, Orange County and the San Fernando Valley. Public bus transportation is provided by Omnitrans.

Rail service is provided by Burlington Northern Santa Fe and Union Pacific.

The Ontario International Airport is a medium-hub, full-service airport, which offers more than 70 daily flights to cities in the U.S., Mexico and Taiwan and is served by AeroMexico, Alaska Airlines, American Airlines, China Airlines, Delta Air Lines, Frontier, JetBlue, Southwest Airlines, United Airlines/United Express and Volaris. The airport’s service area includes a population of approximately six million in San Bernardino and Riverside counties, and portions of Orange and Los Angeles counties. The Ontario International Airport was previously operated by the Department of Airports of the City of Los Angeles (the “Department”). Following protracted litigation among the Department, the City of Ontario and the Ontario International Airport Authority, a joint powers authority was formed by the City of Ontario and the County of San Bernardino (the “Airport Authority”). The Airport Authority assumed ownership and control of the management and operation of the Ontario International Airport on November 1, 2016.

With approximately 570,000 square feet and 26 passenger gates within two terminals, Ontario International Airport is the Western States Regional Terminal for United Parcel Service. In 2021 approximately

4.5 million passengers used the airport and cargo shipments decreased approximately 3.7% from the previous year. In 2020, approximately 2.5 million passengers used the airport and cargo shipments rose more than 18% from the previous year.
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APPENDIX F

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
The following is a summary of certain provisions of the Indenture which are not described elsewhere in the Official Statement. This summary does not purport to be comprehensive, and reference should be made to the Indenture for a full and complete statement of their provisions. [TO COME FROM BOND COUNSEL]
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APPENDIX G

FORM OF DISTRICT

CONTINUING DISCLOSURE AGREEMENT
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APPENDIX H

FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE

CONTINUING DISCLOSURE CERTIFICATE
of

LENNAR HOMES OF CALIFORNIA, LLC
Dated as of ________ 1, 2024
City of Ontario
COMMUNITY FACILITIES DISTRICT NO. 35
(COUNTRYSIDE PHASE 2 SOUTH - FACILITIES)
SPECIAL TAX BONDS, SERIES 2024
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CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”), dated as of ________ 1, 2024, is executed by Lennar Homes of California, LLC, a California limited liability company (the “Developer”), in connection with the issuance by the City of Ontario Community Facilities District No. 35 (Countryside Phase 2 South - Facilities) (the “Community Facilities District”) of the City of Ontario Community Facilities District No. 35 (Countryside Phase 2 South - Facilities) Special Tax Bonds, Series 2024 (the “Series 2024 Bonds”), in the aggregate principal amount of $__________ pursuant to the Indenture, dated as of ________ 1, 2024 (the “Indenture”), by and between 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 Series 2024 Bonds are payable from and secured by special taxes levied on certain of the property within the Community Facilities District;
WHEREAS, the Developer is developing a portion of the property within the Community Facilities District that is described in the Official Statement as the “Shady Tree” and “Whispering Wind” neighborhoods; and
WHEREAS, this Disclosure Certificate is being executed and delivered by the Developer for the benefit of the owners and beneficial owners of the Series 2024 Bonds.

NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the Developer hereby agrees as follows:

Section 1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Disclosure Certificate have the meanings herein specified. Capitalized undefined terms used herein shall have the meanings ascribed thereto in this Disclosure Certificate or the Indenture. “Affiliate” of another Person means (a) a Person directly or indirectly owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of such other Person, (b) any Person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other Person, and (c) any Person directly or indirectly controlling, controlled by, or under common control with, such other Person; for purposes hereof, “control” means the power to exercise a controlling influence over the management or policies of a Person, unless such power is solely the result of an official position with such Person.
“Assumption Agreement” means an undertaking of a Major Developer (or Affiliate thereof) containing terms substantially similar to this Disclosure Certificate, whereby such Major Developer agrees to provide Semi-Annual Reports and notices of significant events with respect to the portion of the Property owned by such Major Developer in the Community Facilities District in form and substance satisfactory to the Participating Underwriter.
“Community Facilities District” means the City of Ontario Community Facilities District No. 35 (Countryside Phase 2 South - Facilities), a community facilities district organized and existing under the laws of the State.
“Development Plan” means, with respect to a Major Developer, the specific improvements such Major Developer intends to make, or cause to be made, in order for such Major Developer’s Property to be fully developed within the time frame in which such improvements are intended to be made and the estimated costs of such improvements; the Developer’s Development Plan, as of the date hereof, is described in the Official Statement under the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT – Lennar Homes’ Development Plan.”
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“Dissemination Agent” means, initially, the Developer, or any Dissemination Agent designated in writing by the Developer and which has filed with the Developer and the Community Facilities District a written acceptance of such designation.
“Financing Plan” means, with respect to a Major Developer, the method by which such Major Developer intends to finance its Development Plan, including specific sources of funding for such Development Plan; the Developer’s Financing Plan, as of the date hereof, is described in the Official Statement under the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT – Lennar Homes’ Financing Plan.” “First Report Date” means June 1 of each year.
“Indenture” means the Indenture, dated as of ________ 1, 2024, by and between the Community Facilities District and Zions Bancorporation, National Association, as originally executed and as it may be amended or supplemented from time to time in accordance with its terms. “Listed Events” means any of the events listed in subsection (a) of Section 4 hereof. “Major Developer” means, as of any date, a Person (including the Developer) that owns 46 or more of the planned 235 homes in the Community Facilities District. As of the date of this Disclosure Certificate, the Developer is a Major Developer.
“MSRB” means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive continuing disclosure reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
“Official Statement” means the Official Statement, dated _____________, 2024, relating to the Series 2024 Bonds.
“Participating Underwriter” means Samuel A. Ramirez & Company, Inc., the original underwriter of the Series 2024 Bonds.
“Person” means an individual, a corporation, a partnership, an association, a limited liability company, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof. “Planned Development Stage” means the stage of development to which the Developer intends to develop the Property, as described in the Official Statement, which is the construction of finished homes. “Property” means (i) the real property within the boundaries of the Community Facilities District owned by the Developer or any Affiliate thereof as of the date set forth in the applicable Semi-Annual Report and (ii) when property is conveyed by the Developer to a Major Developer, the real property within the boundaries of the Community Facilities District that was formerly owned by the Developer but with respect to which the Developer’s obligations under this Disclosure Certificate have not been assumed by a Major Developer. Property as of any date of determination does not include real property within the boundaries of the Community Facilities District that has been conveyed to individual homeowners or any real property that is the subject of an Assumption Agreement.
“Report Dates” means, collectively, the First Report Dates and the Second Report Dates. “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. “Second Report Date” means December 1 of each year.
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“Semi-Annual Report” means any Semi-Annual Report provided by the Developer pursuant to, and as described in, Sections 2 and 3 hereof.
“Special Taxes” means special taxes of the Community Facilities District. “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.

Section 2. Provision of Semi-Annual Reports. (a) So long as the Developer’s obligations hereunder have not been terminated pursuant to Section 7, the Developer shall, or shall cause the Dissemination Agent (if any) to, provide to the MSRB a Semi-Annual Report that is consistent with the requirements of Section 3 hereof, not later than each Report Date, commencing with the December 1, 2024 First Report Date.

If, in any year, a Report Date falls on a day that is not a Business Day, such deadline shall be extended to the next following Business Day.
(b) Not later than 15 calendar days prior to the date specified in subsection (a) of this Section for the providing of the Semi-Annual Report to the MSRB, the Developer shall provide the Semi-Annual Report to the Dissemination Agent (if any) or shall provide notification to the Dissemination Agent that the Developer is preparing, or causing to be prepared, the Semi-Annual Report and the date which the Semi-Annual Report is expected to be available. If by such date, the Dissemination Agent has not received a copy of the Semi-Annual Report or notification from the Developer that the Developer intends to file the Semi-Annual Report, the Dissemination Agent shall contact the Developer to determine if the Developer is in compliance with the first sentence of this subsection (b). The Semi-Annual Report may be submitted as a single document or as separate documents comprising a package, and may incorporate by reference other information as provided in Section 3 of this Disclosure Certificate.
(c) If the Developer does not provide, or does not cause the Dissemination Agent to provide, a Semi-Annual Report to the MSRB by the Report Date as required in subsection (a) above, the Developer or the Dissemination Agent shall, in a timely manner, send a notice to the MSRB in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) Provide each Semi-Annual Report received by it to the MSRB, as provided herein; and (ii) To the extent the Semi-Annual Report has been furnished to it, file a report with the Developer (if the Dissemination Agent is other than the Developer), the Community Facilities District, and the Participating Underwriter certifying that such Semi-Annual Report has been provided pursuant to this Disclosure Certificate and stating the date it was provided to the MSRB.

Section 3. Content of Semi-Annual Reports. Each Semi-Annual Report shall contain or incorporate by reference the following as of a date not more than sixty (60) days prior to the applicable Report Date:
(a) The following information:
(i) A description of the progress made in the Development Plan for the Property since the date of the Official Statement or the most recent Semi-Annual Report, including a description of any significant changes in such Development Plan and the causes or rationale for such changes. (ii) To the extent not previously disclosed in a prior Semi-Annual Report, a discussion of any material change in the respective sources of funds of each Major Developer to finance their development of the Property as disclosed in their Financing Plan, and an estimate of the remaining costs to be spent by the Developer to reach the Planned Development Stage. (iii) An update to the following tables:
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Status of Ownership
Information as of May 6, 2024
Owned by Lennar Homes 87
Owned by Homeowners 148
Status of Development of Lots Owned by the Major Developer1 Information as of May 6, 2024
Models 6
Units Under Construction or Completed 45
Finished Lots 36
__________________________
1 As of the date of the Official Statement, the Developer is the only Major Developer in the District.
(vi) An update of the status of any previously reported Listed Event described in Section 4 hereof.
(b) In addition to any of the information expressly required to be provided under the preceding paragraph (a), the Developer shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

Major Developers that are Affiliates of each other may file a single Semi-Annual Report covering all such entities. Any or all of the items listed above may be included by specific reference to other documents that have been made available to the public on the MSRB’s website or through the Securities and Exchange Commission’s EDGAR database. The Developer shall clearly identify each such other document so included by reference.

Section 4. Reporting of Significant Events. (a) So long as the Developer’s obligations hereunder have not been terminated pursuant to Section 7, pursuant to the provisions of this Section, the Developer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Property, if material under clauses (b) and (c), in a timely manner not later than ten business days after obtaining knowledge of the occurrence of the event:
(i) Any conveyance by a Major Developer of any portion of a parcel of Property owned by such Major Developer or any Affiliate of a Major Developer to an entity that is not an Affiliate of a Major Developer, the result of which conveyance is to cause such entity to become a Major Developer. (ii) Any failure of a Major Developer, or any Affiliate of a Major Developer owning any Property, to pay prior to delinquency any general property taxes or assessments with respect to such Property (to the extent the responsibility of such Major Developer or such Affiliate) that wasn’t promptly cured.
(iii) Any denial or termination of credit, any denial or termination of, or default under, any line of credit or loan or any other loss of a source of funds that could have a material adverse effect on a Major Developer’s Financing Plan or Development Plan as most recently disclosed in the Official Statement or a Semi-Annual Report or on the ability of a Major Developer, or any Affiliate of a Major Developer owning any Property, to pay the Special Taxes with respect to the Property owned by such Major Developer or such Affiliate prior to delinquency (to the extent the responsibility of such Major Developer or such Affiliate).
(iv) Bankruptcy, insolvency, receivership or similar event of a Major Developer or an Affiliate of a Major Developer owning any Property. For purposes of this paragraph, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for a Major Developer or an Affiliate of a Major Developer owning any Property in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in 2347
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which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of a Major Developer or an Affiliate of a Major Developer owning any Property, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of such a Major Developer or an Affiliate of a Major Developer owning any Property. (v) The sale of all or substantially all of the assets of a Major Developer or an Affiliate of a Major Developer owning any Property, to an entity that is not an Affiliate of a Major Developer. (vi) Any significant amendments to land use entitlements for the Property, if material. (vii) Any previously undisclosed governmentally-imposed preconditions to commencement or continuation of development on Property, if material. (viii) Any previously undisclosed legislative, administrative or judicial challenges to development on Property, if material.
(ix) Any changes, if material, in the alignment, design or likelihood of completion of significant public improvements affecting Property, including major thoroughfares, sewers, water conveyance systems and similar facilities.
(x) The assumption of any obligations by a Major Developer pursuant to Section 6 hereof. (b) Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall as soon as possible determine if such event would be material under applicable federal securities laws. (c) If the Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Developer shall, or shall cause the Dissemination Agent to, file a notice of the occurrence of such Listed Event with the MSRB, the Community Facilities District, and the Participating Underwriter within ten business days of obtaining knowledge of such occurrence.

Section 5. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB.

Section 6. Assumption of Obligations. Prior to termination of the Developer’s obligations under this Disclosure Certificate pursuant to Section 7, in the event the Developer conveys any portion of the Property owned by the Developer or any Affiliate of the Major Developer to an entity that is not an Affiliate of the Developer the result of which conveyance is to cause such entity to become a Major Developer, the Developer’s obligations under this Disclosure Certificate with respect to such Property shall terminate only upon the execution of an Assumption Agreement by such entity.

Section 7. Termination of Reporting Obligation. The obligations of the Developer under this Disclosure Certificate shall terminate upon the earliest to occur of (a) the date on which (i) the Developer is no longer a Major Developer and (ii) the Developer no longer has any obligations under this Disclosure Certificate with respect to Property owned by any Major Developer, or (b) the date on which all of the Series 2024 Bonds have been legally defeased, redeemed, or paid in full. The Developer’s obligations under this Disclosure Certificate with respect to a Major Developer shall terminate upon the earliest to occur of (x) the date on which such Major Developer is no longer a Major Developer, as defined herein, or (y) the date on which the Developer’s obligation with respect to the Property owned by such Major Developer are assumed under an Assumption Agreement entered into pursuant to Section 6 hereof; provided, however, that upon the occurrence of any of the events described in clauses (x) or (y), the Developer’s obligations hereunder with respect to each other Major Developer, if any, shall remain in full force and effect. If the obligations of the Developer under this Disclosure Certificate terminate prior to the final maturity of the Series 2024 Bonds, the Developer shall give, or cause to be given, notice of such termination in a filing with the MSRB, the District, and the Participating Underwriter.
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Section 8. Dissemination Agent. The Developer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing 30 days’ written notice to the Developer. The Developer shall be responsible for paying the fees and expenses of the Dissemination Agent.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Developer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of subsection (a) of Section 2 hereof, Section 3 hereof or subsection (a) of Section 4 hereof, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Developer, or the type of business conducted; and (b) The proposed amendment or waiver (i) is approved by owners of the Series 2024 Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of owners or beneficial owners of the Series 2024 Bonds.

In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Developer shall describe such amendment or waiver in the next Semi-Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type of financial information or operating data being presented by the Developer.

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Developer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Semi-Annual Report or notice required to be filed pursuant to this Disclosure Certificate, in addition to that which is required by this Disclosure Certificate. If the Developer chooses to include any information in any Semi-Annual Report or notice in addition to that which is specifically required by this Disclosure Certificate, the Developer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Semi-Annual Report or notice of occurrence of a Listed Event or any other event required to be reported.

Section 11. Default. In the event of a failure of the Developer or the Dissemination Agent to comply with any provision of this Disclosure Certificate, the Owners of at least 25% of the aggregate principal amount of outstanding Series 2024 Bonds, may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Developer or the Dissemination Agent to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties hereunder as are specifically set forth in this Disclosure Certificate. The Dissemination Agent shall not be responsible for the form or content of any Semi-Annual Report or notice of Listed Event. The Developer agrees to indemnify and save the Dissemination Agent, and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur in the exercise or performance of its powers and duties hereunder, including the reasonable costs and expenses (including attorneys’ fees) of defending against any claim of liability, and which are not due to its negligence or its willful misconduct. The obligations of the Developer under this Section shall survive the resignation or removal of the Dissemination Agent and the termination of this Disclosure Certificate.

Section 13. Notices. Notices should be sent in writing by regular, overnight or electronic mail to the following addresses. The following information may be conclusively relied upon until changed in writing. 2349
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Developer: Lennar Homes of California, LLC
4140 Temescal Canyon Road, Suite 410
Corona, CA 92883
[email protected]
[email protected]
Community Facilities District: City of Ontario
303 East B Street
Ontario, CA 91764
Attn: City Manager
[email protected]
[email protected]
Participating Underwriter Ramirez & Co.
633 West Fifth Street, Suite 2693
Los Angeles, CA 90071
Attn: Eric McKean
[email protected]
Section 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Developer, the Dissemination Agent, the Community Facilities District, the Participating Underwriter and the owners and beneficial owners from time to time of the Series 2024 Bonds, and shall create no rights in any other person or entity.

Section 15. Governing Laws. This Disclosure Certificate shall be governed by and construed in accordance with the laws of the State of California.

IN WITNESS WHEREOF, the Developer has executed this Disclosure Certificate as of the date first above written.

LENNAR HOMES OF CALIFORNIA, LLC,
a California limited liability company
By:

Name:

Title:
2350
H-9

EXHIBIT A

NOTICE OF FAILURE TO FILE SEMI-ANNUAL REPORT
Name of Issuer: City of Ontario Community Facilities District No. 35 (Countryside Phase 2 South - Facilities) Name of Issue: City of Ontario Community Facilities District No. 35 (Countryside Phase 2 South - Facilities) Special Tax Bonds, Series 2024
Date of Issuance: ___________, 2024
NOTICE IS HEREBY GIVEN that Lennar Homes of California, LLC, a California limited liability company (the “Developer”), has not provided a Semi-Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate, dated as of ________ 1, 2024, executed and delivered by the Developer. [The Developer anticipates that such Semi-Annual Report will be filed by ____________.] Dated: ,
Lennar Homes of California, LLC
cc:

City of Ontario
Community Facilities District
No. 35 (Countryside Phase 2 South - Facilities)
2351
I-1

APPENDIX I

INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY

AND ITS BOOK-ENTRY SYSTEM
The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Series 2024 Bonds, payment of principal, premium, if any, accreted value and interest on the Series 2024 Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Series 2024 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC to the District which the District believes to be reliable, but the District and the Underwriter do not and cannot make any independent representations concerning these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Series 2024 Bonds. The Series 2024 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond will be issued for each annual maturity of the Series 2024 Bonds, each in the aggregate principal amount of such maturity, and will be deposited through the facilities of DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Series 2024 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2024 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2024 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Series 2024 Bonds representing their ownership interests in Series 2024 Bonds, except in the event that use of the book-entry system for the Series 2024 Bonds is discontinued.

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

The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2024 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2024 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 2352
H-2
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2024 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2024 Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Series 2024 Bond documents. For example, Beneficial Owners of Series 2024 Bonds may wish to ascertain that the nominee holding the Series 2024 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Series 2024 Bonds within a maturity are being prepaid, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2024 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Series 2024 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Series 2024 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

A Series 2024 Bond Owner shall give notice to elect to have its Series 2024 Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Series 2024 Bonds by causing the Direct Participant to transfer the Participant’s interest in the Series 2024 Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Series 2024 Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Series 2024 Bonds are transferred by Direct Participants on DTC’s records and followed by a bookentry credit of tendered Series 2024 Bonds to the Trustee’s DTC account.

DTC may discontinue providing its services as depository with respect to the Series 2024 Bonds at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered.

The District may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Series 2024 Bonds will be printed and delivered to DTC.

THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE SERIES 2024 BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE

OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL

OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE SERIES 2024 BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. 2353

APPRAISAL REPORT

CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT No. 35
(Countryside Phase 2 South – Facilities)
Shady Tree & Whispering Wind at Country Lane by Lennar
City of Ontario, San Bernardino County, California
(Appraisers’ File No. 2024-1292)
Prepared For
City of Ontario
303 East B Street
Ontario, California 91764
Prepared By
Kitty Siino & Associates, Inc.
115 East Second Street, Suite 100
Tustin, California 92780
2354
KITTY SIINO & ASSOCIATES, INC.

REAL ESTATE APPRAISERS & CONSULTANTS
May 6, 2024
Armen Harkalyan, Executive Director of Finance
City of Ontario
303 East B Street
Ontario, CA 91764
Reference: Appraisal Report
City of Ontario CFD No. 35 (Countryside Phase 2 South-Facilities) Country Lane by Lennar (Shady Tree and Whispering Wind) Ontario Ranch, City of Ontario, County of San Bernardino Dear Mr. Harkalyan:

At the request and authorization of the City of Ontario, we have completed an Appraisal Report for the City of Ontario Community Facilities District No. 35 (Countryside Phase 2 South - Facilities) (“Ontario CFD No. 35”) which consists of a residential community known as Country Lane, in the area known as Ontario Ranch in the City of Ontario. Country Lane includes a total of 235 residential units split between two product lines, Shady Tree at Country Lane (“Shady Tree”) and Whispering Wind at Country Lane (“Whispering Wind”). Shady Tree is proposed for 97 detached homes arranged on “Z” lots containing a minimum of 3,455 square feet and in a conventional configuration while Whispering Wind is proposed for 138 detached cluster units arranged in a motorcourt configuration on lots with a minimum of 3,000 square feet; all homes are single family detached. Lennar Homes of California, LLC (“Lennar”) is developing and marketing the property.

Country Lane offers two-story floorplans ranging in size from 2,213 to 2,409 square feet for Shady Tree (conventional small lot product), and 1,618 to 2,202 square feet for Whispering Wind (cluster small lot product). Out of the 235 proposed units within Country Lane, 137 have closed to individual homeowners to date with an additional 38 in escrow which are due to close upon completion. The Lennar-owned property ranges from completed model homes to houses under construction to physically finished pads.

The valuation methods used in this report are the Sales Comparison Approach, a Discounted Cash Flow Analysis and a Mass Appraisal Technique as defined within this report. The fee simple estate of the subject property has been valued, subject to the Ontario CFD No. 35 special tax lien.

This report is written with the hypothetical condition that the subject property is enhanced by the improvements and/or fee credits to be funded by the Special Tax Bonds of Ontario CFD No. 35.

As a result of our investigation, the concluded minimum market value for the subject property is shown below.

Shady Tree and Whispering Wind at Country Lane:

Lennar Ownership (80 lots & 18 houses) $ 29,406,682
Individual Owners (137 houses) $ 88,072,375
Total Aggregate Value Ontario CFD No. 35 $117,479,057
The values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of April 1, 2024.
115 East Second Street, Suite 100, Tustin, California 92780 (714) 544-9978 - Phone, (714) 544-9985 – Fax, E-Mail: [email protected] 2355
Armen Harkalyan
City of Ontario
May 6, 2024
Page Two
Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. This Appraisal Report is intended to comply with both the Uniform Standards of Professional Appraisal Practice (“USPAP” January 2020/2022) and with the Appraisal Standards of the California Debt and Investment Advisory Commission (“CDIAC”). The appraiser is not responsible for unauthorized use of this report.

This letter of transmittal is part of the attached report, which sets forth the data and analyses upon which our opinion of value is, in part, predicated.

Respectfully submitted,
KITTY SIINO & ASSOCIATES, INC.

Kitty S. Siino, MAI
California State Certified General
Real Estate Appraiser (AG004793)
2356

TABLE OF CONTENTS
Assumptions and Limiting Conditions............................................................................... i Hypothetical Condition ....................................................................................................iii Extraordinary Assumption ...............................................................................................iii Aerial Photos of Ontario CFD No. 35 ....................................................................... iv - vii Purpose of the Appraisal................................................................................................ 1 The Subject Property...................................................................................................... 1 Intended Use of the Report ............................................................................................. 2 Definitions ...................................................................................................................... 2 Property Rights Appraised ............................................................................................. 5 Effective Date of Value................................................................................................... 5 Date of Report................................................................................................................ 5 Scope of Appraisal ........................................................................................................ 5 Regional Area Map.......................................................................................................... 8 County of San Bernardino Area Description................................................................... 9 City of Ontario/Ontario Ranch Description .................................................................... 17 Countryside Specific Plan / Immediate Surroundings ................................................... 23 City of Ontario Community Facilities District No. 35 ..................................................... 26 Subject Property Descriptions ....................................................................................... 29 Inland Empire Housing Market ...................................................................................... 40 Highest and Best Use Analysis ..................................................................................... 51 Valuation Analysis and Conclusions ............................................................................. 56 Appraisal Report Summary ........................................................................................... 73 Appraiser’s Certification ............................................................................................... 74

ADDENDA
Ontario CFD No. 35 Boundary Maps
Tract Map Nos. 17449 and 17450
Discounted Cash Flow Analyses
Finished Lot Land Sales Map and Summary Chart
Improved Residential Sales Map and Summary Chart
Appraiser’s Qualifications
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ASSUMPTIONS AND LIMITING CONDITIONS

1. This report might not include full discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

2. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report.

3. It is assumed that the subject properties are subject to the special tax lien of Ontario CFD No. 35.

4. Responsible ownership and competent property management are assumed unless otherwise stated in this report.

5. The information furnished by others is believed to be reliable; however, no warranty is given for its accuracy.

6. All engineering is assumed to be correct. Any plot plans and illustrative material used in this report are included only to assist the reader in visualizing the property and may not be to scale.

7. It is assumed that there are no hidden or unapparent conditions of either property, subsoil or structures that would render them more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

8. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in this report.

9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined, and considered in this appraisal report.

10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based.

11. Any sketch or photograph included in this report may show approximate dimensions and is included only to assist the reader in visualizing the properties. Maps, photographs, and exhibits found in this report are provided for reader reference purposes only. No guarantee regarding accuracy is expressed or implied unless 2358
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otherwise stated in this report. No survey has been made for the purpose of this report.

12. It is assumed that the utilization of the land and improvements (if any) are within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report.

13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert relating to asbestos, urea-formaldehyde foam insulation or other potentially hazardous materials that may affect the value of the property. The appraiser’s value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions or for any expertise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process.

14. Proposed improvements, if any, are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications.

15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings, if any, must not be used in conjunction with any other appraisal and are invalid if so used.

16. The Americans with Disabilities Act (“ADA”) became effective on January 26, 1992 and have been updated several times since then. The appraiser has made no specific compliance survey and analysis of the property to determine whether they conform to the various detailed requirements of the ADA, nor is the appraiser a qualified expert regarding the requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect upon the value of the property.

Since the appraiser has no direct evidence relating to this issue, a possible noncompliance with requirements of the ADA in estimating the value has not been considered.

17. It is assumed there are no environmental concerns that would slow or thwart development of the subject properties and that the soils are adequate to support the highest and best use conclusions.
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18. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper qualification and only in its entirety. Permission is given for this appraisal to be published as a part of the Official Statement or similar document for the Ontario CFD No. 35 special tax bonds

19. It is assumed that there are no conditions of approval or hindrances which could slow or thwart the obtaining of occupancy permits on the 235 subject residential units. This is the case per the builders; however, we were unable to verify via the various conditions of approval.

HYPOTHETICAL CONDITION

1. It is assumed that all improvements and benefits to the subject properties, which are to be funded by the City of Ontario CFD No. 35 Special Tax Bond Proceeds are completed and in place.

EXTRAORDINARY ASSUMPTION

1. It is assumed that the sales information and remaining development costs/fees as reported by the builders and summarized in the report are correct. We have not reviewed escrow documents on each home sale however, per our review the sales as reported by the builder appear to be reasonable. We have not received any detail regarding the remaining development costs and have relied upon the builder for this information in the valuation analysis. If the actual land development costs differ, the final values may change.
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PURPOSE OF THE APPRAISAL
The purpose of this appraisal report is to estimate the value of the fee simple interest of the subject property, subject to the proposed lien along with the benefits from the Ontario CFD No. 35 Special Tax Bonds.

THE SUBJECT PROPERTY
The subject property consists of 235 proposed single-family detached homes being developed into a community known as Shady Tree and Whispering Wind at Country Lane in the City of Ontario (“City”). Country Lane is located along the south side of Chino Avenue, west of Archibald Avenue, just north of Schaefer Avenue. Country Lane is being built and sold by Lennar and features two product lines: Shady Tree which includes 97 detached conventionally arranged homes sized 2,213 to 2,409 square feet, and Whispering Wind which includes 138 detached homes arranged in a motorcourt configuration with units sized from 1,618 to 2,202 square feet. The subject community is encompassed by two tract maps. Tract Map 17449 covers the northern part of the subject (the Shady Tree product line), with “Z” lots containing a minimum of 3,455 square feet.

Tract Map 17450 which covers the southern part of the subject (the Whispering Wind product line), has detached cluster lots containing a minimum of 3,000 square feet. The lots vary in status from completed models, to homes under construction to finished lots.

The description, ownership and condition of the lands are detailed in the chart below.

Description No.

Lots Owner Product / Condition / Status
Shady Tree at Country Lane (Tract No. 17449)
Lots 1-32, 52-59, and 70-97 of Tract
17449 68 Individuals Completed Homes
Lots 42-44 of Tract 17449 3 Lennar Model Homes (None in Escrow) 0 Over 95% Complete
Lots 33-39, 48-51, 60-69 of Tract
17449 21 Lennar Under Construction (19 in Escrow)
Lots 40-41, 45-47 of Tract 17449 5 Lennar Finished Lots (None in Escrow) Subtotal – Shady Tree 97
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Whispering Wind at Country Lane (Tract No. 17450)
Lots 52-107, 118-130 of Tract 17450 69 Individuals Completed Homes Lots 109-111 of Tract 17450 3 Lennar Model Homes (None in Escrow) Lots 40-51 of Tract 17450 12 Lennar Over 95% Complete (12 in Escrow) Lots 17-39 of Tract 17450 23 Lennar Under Construction (7 in Escrow) Lots 1-16, 108, 112-117, 131-138 of
Tract 17450 31 Lennar Finished Lots (None in Escrow)
Subtotal – Whispering Wind 138
TOTAL CFD No. 35 235

INTENDED USE OF THE REPORT
It is the appraiser’s understanding that the client, the City of Ontario, will utilize this report in disclosure documents related to the sale of the Ontario CFD No. 35 Special Tax Bonds.

This report may be included in the Official Statement or similar document to be distributed in connection with the marketing and offering of the bonds. It is the appraiser’s understanding that there are no other intended uses of this report.

DEFINITIONS
Market Value
The term “Market Value” as used in this report is defined as:
"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated;

2. both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest;

3. a reasonable time is allowed for exposure in the open market;

4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
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5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”0F
1 Inherent in the Market Value definition is exposure time or the time the subject property would have been exposed on the open market prior to the appraisal in order to sell at the concluded values. In the case at hand and considering current market conditions, the exposure time for each individually owned property or each builder-owned ownership in a bulk sale, is estimated at less than one year.

Finished Lot or Pad
The term “Finished Lot or Finished Pad” is defined as:
“A parcel which has legal entitlements created by a recorded subdivision map or condominium map, whose physical characteristics are a fine graded level pad or lot with infrastructure contiguous to each individual lot, asphalt paved roads and the necessary utilities. This term assumes the payment of all applicable development fees with the exception of building permit and plan check fees.”
Minimum Market Value
The term “Minimum Market Value” as used in this report is defined as:
“The base market value of a new home, less current concessions. That is, most buyers purchase some upgrades, options and/or lot premiums when purchasing a new home. The sales price for the new home typically includes the base price for the plan, plus any upgrades, options or lot premiums, less builder concessions, if any, which were given or paid for by the builder. In the current marketplace, concessions may also include mortgage rate buydowns and help with closing costs which are not typically reflected in the reported sales price of the home; however, are accounted for in the Minimum Market Value. The concluded minimum market value is for the base value of the plan only, not taking into consideration any upgrades, options, or premiums and taking into consideration all concessions.”
Mass Appraisal Technique
The term “Mass Appraisal” as used in this report is defined as:
1 The Appraisal of Real Estate, 13th Edition
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“The process of valuing a universe of properties as of a given date using standard methodology employing common data and allowing for statistical testing”1F
2 In the case at hand, the statistical testing included reviewing all original builder sales and reviewing the Multiple Listing Service (“MLS”) for any re-sales and/or current listings of each plan type. In addition, we have determined the actual range of sales prices for each plan type which will be utilized in the valuation process. The search of the MLS resulted in no resales and no current resale listings within the subject properties.

Hypothetical Condition
The term “Hypothetical Condition” is defined by USPAP as:
“A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis” The Hypothetical Condition within this report is that subject property is enhanced by the improvements and/or fee credits to be funded by bonds to be issued by and is subject to the lien of Ontario CFD No. 35.

Extraordinary Assumptions
The term “Extraordinary Assumption” is defined by USPAP as:
“An assignment specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions”
There is one Extraordinary Assumption within this report which is that the sales information and the cost information as received from each builder are true and accurate.

We have not reviewed actual escrow documents on the sales of the new homes but we have reviewed each sale as reported by the builder and the sale prices appear reasonable. In addition, we have not received any detail on the remaining land development costs/fees. We have considered within the appraisal the number Lennar has 2 USPAP 2018-2019 Edition
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represented. It should be noted that these costs were relied upon for the value conclusion and, if the remaining land development costs differ, it may change the value conclusions.

PROPERTY RIGHTS APPRAISED
The property rights being appraised are of a fee simple estate interest, subject to easements of record and subject to Ontario CFD No. 35. The definition of “fee simple estate” is defined as:
“absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”2F
3 EFFECTIVE DATE OF VALUE
The subject property is valued as of April 1, 2024.

DATE OF REPORT
The date of this report is May 6, 2024.

SCOPE OF APPRAISAL
As previously stated, the purpose of this appraisal is to report the appraiser’s best estimate of the market value for the subject property, Ontario CFD No. 35, which is known as the community of Country Lane (specifically, Shady Tree at Country Lane and Whispering Wind of Country Lane). There are a total of 235 proposed homes, 97 at Shady Tree and 138 at Whispering Wind. This appraisal will be presented in the following format:
• County of San Bernardino Area Description
• City of Ontario/Ontario Ranch Description
• Brief Description of Ontario CFD No. 35
• Subject Property Descriptions
• Inland Empire Housing Market Analysis
• Highest and Best Use Analyses
• Valuation Procedures, Analyses and Conclusions
• Appraisal Report Summary
3 The Appraisal of Real Estate, 13th Edition
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In valuing the subject property, the value estimates will be based upon the highest and best use conclusion using the Sales Comparison Approach. The Sales Comparison Approach to value is defined as:
“…a set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, then applying appropriate units of comparison and making adjustments to the sales prices of the comparables based on the elements of comparison. The Sales Comparison Approach may be used to value improved properties, vacant land or land being considered as though vacant; it is the most common and preferred method of land valuation when an adequate supply of comparables is available.”3F 4 In the Sales Comparison Approach, market value is estimated by comparing properties similar to the subject that have recently been sold, are listed for sale or are under contract.

Neither a cost or income approach was utilized as they were not considered necessary to arrive at credible results. In addition, we have utilized a mass appraisal technique which included reviewing all builder sales and searching the MLS for any resales and/or resale listings.

The due diligence of this appraisal report included the following:

1. Compiled demographic information and related that data to the subject property to perform a feasibility/demand analysis.

2. Gathered and analyzed information on the subject marketplace, reviewed several real estate brokerage publications on historical and projected growth in the subject market and researched the micro- and macro-economic outlook within San Bernardino County and the Ontario area.

3. Inspected the subject property between March 1, 2024 and April 1, 2024.

4. Had the site flown by an aerial photographer on March 27, 2024.

5. Interviewed representatives from each of the Builders and/or their consultants to obtain community information.

6. Reviewed a preliminary title report on portions of the majority of the subject properties.
4 Dictionary of Real Estate Appraisal, Fourth Edition, 2002 2367
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7. Searched the area for relevant comparable residential land sales, inspected and verified each sale with a buyer or seller or broker familiar with the transaction.

8. Searched the area for relevant comparable new home residential projects, including sales prices and concessions and interviewed representatives from each comparable project.

9. Reviewed the sales brochures and websites for the subject communities.

10. Reviewed developer sales information on each home within the communities.

11. Reviewed Multiple Listing Service information to determine if there are any resales, pending resales or listings of resale homes.
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REGIONAL AREA MAP
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COUNTY OF SAN BERNARDINO AREA DESCRIPTION
Location
The subject property is located in the southwestern portion of San Bernardino County, in the southern portion of the City of Ontario within the area known as Ontario Ranch. The subject lies west of Interstate 15 (“I-15”) and south of State Route 60 (“SR-60”), specifically on the south side of Chino Avenue, west of Archibald Avenue and north of Schaefer Avenue.

San Bernardino County (the “County”) is the largest county in the United States by area, containing over 20,100 square miles, and includes large expanses of undeveloped deserts, valleys, canyons, and mountains with mountains and deserts comprising about 90 percent of the acreage. The County is a major beneficiary of outward urban pressure from Los Angeles, Orange, and Riverside Counties. Although located at the periphery of most urban activity in Southern California, the southwestern portion of San Bernardino County has been a major growth area and is perceived by most observers as an area expected to continue to grow. Riverside and San Bernardino Counties are considered distinct from Los Angeles and Orange Counties and belong to the same Metropolitan Statistical Area (“MSA”). This area, consisting of San Bernardino and Riverside Counties, is commonly referred to as the Inland Empire.

Transportation
The subject property is situated approximately 2.5 miles west of I-15, 1.5 miles south of SR-60, approximately 4.0 miles south of Interstate 10 (“I-10”), and about 8.8 miles north of State Route 91 (“SR-91”). SR-60 is the nearest highway providing access to the subject via the Archibald Avenue exit. The I-15 also provides convenient access to the subject via the Cantu Galleano Ranch Road/Ontario Ranch Road on/off ramps. Cantu Galleano Ranch Road becomes Ontario Ranch Road at the City limits at Hamner Avenue. I-15 travels in a northerly/southerly direction and provides access to Barstow and Nevada to the north and San Diego to the south. I-10 begins from the west in Los Angeles and provides access into Arizona to the east. In the vicinity of the subject, SR-60 provides additional east/west access about 1.5 miles north of the subject, and less than three miles 2370
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south of I-10, beginning in downtown Los Angeles, providing access throughout Riverside and San Bernardino counties, and ending in Beaumont.

The County is served by Amtrak and Metrolink as well as several rail-freight lines. The Ontario International Airport provides regional international air service and is located approximately three miles north of the subject property. San Bernardino International Airport is located approximately 20 miles northeast of the subject. In addition, the County has extensive trucking corridors along the previously referred to interstates, highways, and state freeways.

Population
The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, the January 1, 2023 (latest available) County population was 2.182 million. This represents a one-year increase of 0.1 percent. This compares to an average annual growth rate over the past 20 years of 2.1 percent. Current projections for San Bernardino County per the California Department of Finance suggest the population is anticipated to reach approximately 2.32 million by 2030, indicating an average annual increase of approximately 0.9 percent over the next seven years. The current near zero growth rate is lower than the previous 20-year annual average of 2.1 percent, likely due to the disruption of the COVID pandemic. The future growth of 0.9 percent annually was predicted assuming a more stable market than was seen prior to the Great Recession, however doesn’t take into effect the COVID pandemic.

Economy
The U.S. economy in the past few years has experienced challenging times due to reactions from the COVID disruption. These economic challenges include significant inflation, increasing interest rates, banks’ instability and reaching an agreement on the debt ceiling. During COVID, the Federal, State, County and City Governments (“Governments”) originally shut down non-essential businesses and areas where social gatherings occur in order to slow the spread of the virus. This created a strain on small 2371
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and large businesses alike. Restaurants and hotels were hit hard and travel reduced drastically as citizens were urged to stay home. Layoffs occurred with reports of 40 million people filing for unemployment the first few months of the pandemic. The Governments attempted to curtail the job losses and hardships with the approval of over 5.6 trillion in COVID relief to our nation. In addition, the Federal Reserve Board (“Board”) reduced interest rates and started quantitative easing by buying bonds. This legislation helped shore up the U.S. economy; however, due to the significant amount of new money introduced into the economy, inflation began occurring at a rate not seen for 40 years. As of February 2024, the national inflation rate was at 3.2 percent; up from a low of 2.97 in July 2023, and down from the peak in June 2022 of 9.1 percent. This compares to a 1.24 annual percent rate for 2020 and an average of 1.74 percent annual rate for the previous ten years. Whether it is a result of world turmoil, supply chain issues due to COVID or from the additional money entering the economy, inflation has been hitting Americans hard.

In an effort to curb inflation, the Federal Reserve Board (“Board”) began raising interest rates. Between March 2022 and August 2023, there were eleven interest rate increases rising the Federal Funds Rate (“FFR”) from 0.25 – 0.50 percent to 5.25 – 5.50 percent.

The Board has not increased rates since August 2023, due to the decrease in inflation coupled with other mostly positive signs in the economy. While the eleven increases appeared to help slow inflation, the quick, significant increases strained bank balance sheets. Three major banks failed in early 2023 with the government taking unprecedented action to help shore them up. At the most recent Board meeting (March 19-20, 2024) they continued to pause the increases for the fifth meeting in a row and continued to suggest there still could be three interest rate cuts later this year. After the March Board meeting the stock market increased to an all-time high and bond rates decreased slightly based on the news. The FFR increases over the past couple years increased a typical 30-year fixed mortgage rate from 2.98 percent as of November 10, 2021, to the high of

7.79 percent as of October 2023; however, the rate has dropped to 6.9 percent as of March 21, 2024 (per Federal Reserve Economic Data-St. Louis). This steep increase over the past two years has significantly affected the real estate market. 2372
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The COVID disruption to the economy also caused extreme volatility in the stock market with the Dow Jones Industrial Average (“DJIA”) dropping from 29,398 in February 2020 to 19,174 in March 2020, a drop of 37 percent. The Government interventions resulted in a bounce back in the DJIA to 27,111 by June 2020 with the stock market then climbing up to a peak of 36,799 in January 2022. In February 2022, Russia began invading Ukraine which caused volatility in world economics followed by U.S. inflation, interest rate increases and instability in the U.S. due to the debt ceiling being reached. In addition, Israel declared war on Hamas on October 7, 2023, which added to the strain. All of these factors caused a drop in the DJIA of over ten percent from January 2022 to the low on October 27, 2023 (32,418); however, the Federal Reserve Board’s notes from March coupled with generally strong economic news, brought the stock market to a new all-time high of 39,340 (March 25, 2024). It appears the Board’s decision not to increase rates further and their suggestion that decreases may occur in the next nine months has been well received by investors. Current concerns on the U.S. economy include the nation’s debt limit which can only be increased through government approvals. The current partisanship in our government caused a stand-off in increasing the debit limit which has been in danger of being reached numerous times with several temporary deals being reached, however, no permanent agreements at this time.

The significant increase in mortgage rates over the past 20 months is just one part of the puzzle affecting the impact of new housing on the broader economy. Additional risks include homebuilders trying to find balanced inventory levels, supply chain issues, both wage and price increases, and persistent inflation. Over the past 25 years, the Inland Empire economy has had significant cycles with home prices almost doubling from 1995 to 2005, then falling by over 50 percent during the Great Recession, taking prices back to 2002 levels. Home values appeared to hit bottom in 2009 then remained essentially flat for two to three years with the majority of the Inland Empire housing market seeing an improvement beginning in mid-2012. Contrary to homebuilder’s original thoughts of a slowdown due to the COVID pandemic, new home buyers stepped up in the spring of 2020 and new home sales were significantly higher during the second half of 2020 versus 2373
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the previous year and continued extremely strong throughout 2021. This exceptional activity in new home sales was the one bright spot in the COVID disruption and is thought to be due to several factors, including: a tight supply of resale homes; historically low interest rates; millennials finally buying homes; and the work from home factor which began during the pandemic and allowed residents to live in more suburban areas without long commutes. As rates began increasing in early 2022, there was a significant slowdown in sales within the Inland Empire. The high mortgage rates have significantly slowed existing homeowners from moving. The limited availability of existing homes on the market has resulted in new homes capturing a much larger share of the total home sales; however, new home sales are also down year-over-year in the Inland Empire.

While most jobs have come back, job losses were significant during the COVID recession as the Nation’s unemployment rate went from 3.5 percent in February 2020 to 14.4 percent in April 2020, with the February 2024 National unemployment rate at 4.2 percent (Employment Development Department, not seasonally adjusted). The unemployment rate for the MSA was estimated at 5.5 percent (as of February 2024 per the Employment Development Department). This reflects a decrease from the peak during the Great Recession of 15.1 percent in 2010 and a decrease from the peak during COVID of 14.9 percent. As of February 2024, Riverside County’s unemployment rate was 5.6 and San Bernardino County had a 5.4 percent unemployment rate. The current unemployment rate for the MSA of 5.6 percent is similar to the California rate at 5.6 percent and higher than the February 2024 National rate of 4.2 percent. Below is a table comparing San Bernardino County’s unemployment rate to the unemployment rates of the surrounding counties as of February 2024.

Jurisdiction As of Unemployment Rate*
Los Angeles County Feb-2024 5.0%
Riverside County Feb-2024 5.6%
San Bernardino County Feb-2024 5.4%
Orange County Feb-2024 4.2%
San Diego County Feb-2024 4.7%
Source: State of California E.D.D.; *Not Seasonally Adjusted 2374
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The latest UCLA Anderson Forecast (“Forecast”) was issued March 13, 2024, and stated the possibility of a recession has faded due to expansionary fiscal policy, new national industrial policy, and the fact that consumers are still spending despite the perception of economic uncertainty. GDP growth in the fourth quarter came in at a higher-thanexpected 3.2 percent annual rate of growth that was mostly due to strong consumer spending but also to inventory replacement after the holidays. The Forecast is now for the first quarter 2024 growth to be 2.2 percent. They believe the impact of higher interest rates will restrain growth in 2024. Inflation is still higher than the target 2.0 percent primarily because of residential rents, automobile repair and new health insurance premiums. The upside of the Forecast is productivity growth thanks to new technology that drives higher wages and higher GDP. The Forecast mentions risks to their current forecast include a possible shutdown of government, geopolitical events and the possibility of a different national economic policy in 2025 due to the election.

The UCLA Forecast for California is typically more positive than the overall Nation due to job growth in California; however, this Forecast suggests a slower-growing California economy with the growth not much faster than the U.S. They believe that the unemployment rate for the first quarter of 2024 will average 4.7 percent (currently 5.6 percent) with the 2024 yearly average of 4.6 percent, then 3.8 percent in 2025 and 3.9 percent in 2026. The housing market in California is still misbehaving as higher interest rates should send prices lower; however, the median price of an existing single-family home sold in the state has climbed significantly since December 2022 by 9.3 percent in San Diego; 9.0 percent in Los Angeles and 3.9 percent in San Francisco. With existing home sales numbers at depression levels, builders are responding with new developments with the Forecast stating that 32 percent of all developers interviewed in Northern California and 55 percent in Southern California are planning to begin one or more new multi-family projects in 2024. The Forecast is estimating 123,000 net new units to be permitted in California in 2024 and grow to 159,500 by the end of 2026.

One bright spot in the current economy is sales of new homes. While existing homeowners are reluctant to put their houses on the market due to their under-four 2375
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percent mortgages, new home sales continue. Even with rates in the seven percent range, new homes are still selling. This is partially due to the extremely limited availability of existing homes on the market, coupled with homebuilders offering to buy-down interest rates to help new home buyers. While new homes historically captured 10 – 13 percent of total home sales; over the past year new homes are capturing over 30 percent of total home sales. This rush to new home purchases has put pressure on pricing, even while interest rates have soared. During the Great Recession median housing prices (existing) in San Bernardino County dropped from a high of $350,288 in March 2006 to a low of $120,406 in May 2009. Median prices surpassed the pre-recession high in September 2020, hit a peak in April 2022 of $495,000 with the median home price bouncing generally between $475,000 and $500,000 over the past six months (all statistics per the California Association of Realtors). The median home price in San Bernardino County is up 2.3 percent year over year, which will be discussed further in the Inland Empire Housing Market section later within this report.

As a final indicator of overall economic activity for the region, we have reviewed the rise and fall of TEUs (Twenty-foot Equivalent Units – i.e., containers) being processed in the local ports. This is especially important for the Inland communities, as it represents much of the growth in development of west coast distribution centers and warehouses in the Inland Empire linked to supply-chain nodes in the Pacific Rim. The chart below shows TEU activity at the Port of Long Beach. Generally, there had been increases since 2009 with the exception of a slight dip in 2016 and again in 2019 which ended with a 5.6 percent downturn. The 2022 calendar year saw a decrease of 2.6 percent from the previous year; however, 2023 saw the largest percentage decrease of 12.2 percent year over year (8,018,668 versus 9,133,657 total TEUs). It should be noted that consumer demand cooled in mid-2022 leaving fewer TEUs needed. For the calendar year 2024, TEUs are up over 20 percent.

4.0 6.0

8.0 10.0
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 TEU's (millions)
Year
Port of Long Beach TEUs
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Education
The subject area is served by the Mountain View Elementary School District and Chaffey Joint Union High School District. The subject is assigned to Mountain View Elementary, Grace Yokley Middle School, and Colony High School. Mountain View Elementary School District operates a total of five schools (four elementary schools and one middle school) and Chaffey Joint Union High School District operates 12 schools serving students above middle school age. Community Colleges are available near the subject at Chaffey College in Rancho Cucamonga (ten miles north), at Chaffey College’s Chino campus (five miles west of the subject in Chino), and San Bernardino Valley College (17 miles northeast).

Higher education is available approximately 20 miles to the northeast at California State at San Bernardino, about 15 miles east is University of California at Riverside, ten miles northwest in the private Claremont Colleges area which include Claremont McKenna College, Pitzer College, Harvey Mudd College, Pomona College, and Scripps College, and 13 miles to the northwest at Cal Poly Pomona.

Conclusion
Population in the County has increased over the past 20 years with predictions for continued population growth. The Nation’s economy has been slowing after the Board increased the FFR over five percent to fight historical inflation which began during COVID.

One bright spot during COVID was housing; the region’s relative affordability and low interest rates, coupled with the rising prices in the coastal market and the demand for housing, set up a new housing boom. This was followed by a significant drop in sales due to existing homeowners being unwilling to give up their low-rate mortgages, which turned out to be a boon for new homes. Current concerns for the Inland Empire economy include stubborn inflation, the high prices of homes, higher interest rates, supply chain issues, possible government shutdowns along with the Russian/Ukraine and Israel/Palestine conflicts, which are all creating volatility in both local and global financial markets. In conclusion, the County is expected to continue to grow in population due to its Southern California location, the availability of land, and the relatively lower land and housing prices in comparison to adjacent Orange, Los Angeles, and San Diego Counties. 2377
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CITY OF ONTARIO / ONTARIO RANCH DESCRIPTION
General Area
The subject property is located in the southern portion of the City of Ontario near the western boundary of San Bernardino County. The City is about 35 miles east of downtown Los Angeles and encompasses approximately 50 square miles of land area. Ontario was established in 1882 by Canadian engineers George and William Chaffey and Charles Frankish. The settlement was originally named Ontario Model Colony after the province in Ontario, Canada where the settlers were from. The subject is located in the area known as the Ontario Ranch (formerly the New Model Colony) which includes approximately 8,200 acres that was formerly a portion of the San Bernardino Agricultural Preserve and was annexed by the City of Ontario in 1999. The Ontario Ranch is generally bounded by Riverside Drive to the north, Milliken Avenue/Hamner Avenue to the east, the Riverside County line and Merrill Avenue to the south, and Euclid Avenue to the west. The area was predominantly dairy farms and agricultural lands until the early 2000s when it began transitioning into residential land use. The Great Recession stopped development in the Ontario Ranch until 2012 when land sales and development began once again. Between the second half of 2020 into 2022, Ontario Ranch benefited from the significant increase in new homes sales due to the COVID pandemic factors. Residential land sales slowed from mid-2022 to mid-2023 with land transactions occurring since that time.

On the following page is a map showing the Ontario Ranch area in the City of Ontario. The map shows the amount of land available for future development in the community. The 8,200 acres of the Ontario Ranch is proposed for over 30,000 new residential units. As a result of the Ontario Ranch, the City is planning on adding 150,000 new residents over the next 20 years which will make it one of the 50 largest cities in the U.S. The map identifies the various specific plans within Ontario Ranch. The subject is located within the Countryside Specific Plan with the subject’s approximate location identified by the red star below.
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The Ontario Ranch and Surrounding Area
Population
The City of Ontario had a January 2023 estimated population of 180,717 which reflects an increase of 1.1 percent from the year before (per Department of Finance); however, during this time period the majority of cities in the County had a declining population with the overall County showing a slight 0.1 percent increase. Between 2010 and 2020 the City grew at an average annual growth of 1.43 percent. The more recent population increase is mostly due to the new development within the Ontario Ranch which is essentially the last remaining undeveloped residential land within the City. The population is anticipated to continue to increase at a faster rate than the overall County due to the new residential development currently underway in Ontario Ranch; however, with the recent rise in interest rates, the population growth rate may be tempered. Below is a map from the City of Ontario’s website showing the various specific plans within the Ontario 2379
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Ranch. As mentioned, the subject property is located within the Countryside Specific Plan (pink).

Within the Ontario Ranch, out of the total 8,200 acres, 4,026 acres are approved within the above 18 specific plans (per latest update on City website). Within the approved 4,026 acres are; 10,455 single family residences, 10,659 multi-family residences, 1.63 million square feet of commercial, 16.35 million square feet of industrial and 3.88 million square feet of business park. There is an additional 314 acres and 574 single family units in process for approval along with 4.42 million square feet of industrial space and nearly 920,000 square feet of business park. There are ten residential specific plans currently with approvals which include Grand Park, The Avenue, Parkside, Subarea 29, Rich Haven, Parkside, Esperanza, West Haven, Edenglen, Armstrong Ranch and Countryside (includes the subject property). In addition, there are approvals for the Colony Commerce Center West, the West Ontario Commerce Center, the Colony Commerce Center East, the Merrill Commerce Center, the Ontario Ranch Business Park, and South Ontario Logistics Center. There is one amendment to a specific plan in process, which is in Subarea 29, which includes 574 single family units over 125 acres. There are currently 2380
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five specific plans marketing houses: Parkside, Subarea 29, Esperanza, West Haven, and Countryside. Esperanza includes Lennar’s Esperanza age qualified community of Vivir as well as Sunset Ranch with two active townhome communities: Belmont and Moonstone, both by KB Home. Subarea 29 has Lennar’s Fairhaven. The Avenue has one new home project that recently sold out: Cambridge Court by Woodside. Rich Haven has three new home projects currently selling: Oleander by Shea; Neuhouse by Landsea; and Canvas Park (townhomes) by Brookfield. NUVO (which includes Bryant, Grant, Hyde, and Lincoln) is within Parkside and is being built-out by The New Home Company. Lastly, Countryside currently has two new home communities, Shady Tree at Country Lane, and Whispering Wind at County Lane (subjects), both by Lennar. Park Place was developed by Lewis Community Developers and Stratham Communities in a partnership, previously had over ten new home neighborhoods selling by five different homebuilders, but all have closed out as the original Park Place is built-out.

Ontario Ranch Parkway has on/off ramps from the I-15 about 0.25 miles west of the entrance to Ontario Ranch. Ontario Ranch Parkway is known as Cantu-Galleano Ranch Road in Riverside County. The County line generally runs along Hamner Avenue at Ontario Ranch Parkway with the west side of Hamner Avenue in San Bernardino County and the east side of Hamner Avenue in the panhandle of the City of Eastvale in Riverside County.

Transportation
The City is served by three major freeways. State Route 60 and Interstate 10 traverse the City in an east west direction while Interstate 15 runs in a north-south direction just east of the City, in the Ontario Ranch area and through the City north of I-10. The Ontario International Airport is located about five miles north of the subject. Ontario International is the 15th busiest airport in the country measured by cargo carried. It is a major hub for freight and is surrounded by one of the largest warehousing/distribution districts in California. This industrial area is divided between the cities of Ontario, Rancho Cucamonga, Jurupa Valley, Fontana and Eastvale
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Economy
While the early economy of Ontario was more dairy and agricultural influenced, in the 1970s thru 1990s the development of industrial buildings surrounding the airport fueled the area. This industrial area became built-out leaving little land for development remaining in the late 1990s when the annexation of the Ontario Ranch occurred. Once planning was approved, land began selling to residential home builders in the mid-2000s however the Great Recession stopped development generally from 2006 through 2012.

Over 5,000 homes have been sold in Ontario Ranch since early 2016. There were several land transactions within the Ontario Ranch in 2012 and 2013 however 2014 saw a slow down with little to no finished lot sales in the area. The year 2015 saw no finished lot sales but did include additional construction by Brookfield Homes in the area of The Avenue.

The years 2018 through 2021 saw more residential land transactions in Ontario Ranch and synergy in the area began, with five land closings in 2020, four in 2021, none in 2022.

In 2023 land sales began in earnest once again as it was recently announced that Ontario Ranch was the top selling Southern California region for the second consecutive year.

The sales activity has led builders to jump on new land opportunities as new home pricing and sales rates were both increasing. In 2023 numerous land transactions in the greater Ontario area went under contract with several recent closings due to new home sales occurring at an above average rate. This is thought to be due to the extremely limited supply of existing homes for sale. Historically 10 – 13 percent of total home sales are new homes; however, for the past year, new home sales are capturing 30 – 40 percent of total sales due to the limited availability of existing home sales.

For shopping within Ontario Ranch, the New Haven Marketplace opened with a Stater Bros market, Starbucks, Chase Bank, Brew Haven Tap House, Carl’s Jr and Jersey Mike’s along with additional in-line space. Adjacent to the Ontario Ranch, immediately to the east, between I-15 and Hamner Avenue is the recently developed industrial area located within the “panhandle” of the City of Eastvale. This area currently houses Costco, an Amazon fulfillment center, and both Walmart and UPS Distribution centers. 2382
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Summary
Population in the City of Ontario had continually grown at a slower rate than other areas within the County due to the essential build-out prior to the approval of the Ontario Ranch. Since Ontario Ranch approvals, the growth rate within the City has been significantly higher than that of the County. Predictions are for a stronger population growth due to the transition of lands within the Ontario Ranch from agricultural uses to residential uses. There have been numerous specific plan approvals and residential land sales within Ontario Ranch in the past few years. Ontario has enjoyed strong new home sales and price increases along with the rest of the Inland Empire housing market in the last two years. The neighboring City of Eastvale is essentially built-out with Ontario Ranch in the direct line of development from the more populated coastal areas. While higher interest rates suggest a real estate slowdown, due to the population growth, the need for new homes will continue. The City, and more specifically the Ontario Ranch, are projected to continue to have positive growth into the future.
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COUNTRYSIDE SPECIFIC PLAN / IMMEDIATE SURROUNDINGS
The Countryside Specific Plan (“Countryside”) encompasses an estimated 178 gross acres and is proposed for 819 residential units within the Ontario Ranch (formerly known as the New Model Colony) in the City of Ontario where it was known as Planning Subarea

5. The vision of the Specific Plan was to create a livable community combining safe and pleasant neighborhoods within walking distance to parks and surrounding commercial and recreational facilities. Countryside is generally bound by Riverside Drive on the north, Archibald Avenue on the east, Schaefer Avenue on the south and the Cucamonga Creek and Cucamonga Basin on the west. Development began in Countryside in 2016 with neighborhoods 1, 3 and 4 (within northern portion) developed between 2016 and 2018.

The subject property refers to neighborhoods No. 5 and 6 (identified by the black stars). 2384
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The Countryside Specific Plan was approved in 2006, prior to the Great Recession which halted development. Three neighborhoods (Neighborhood 1, 3 and 4) were developed between 2016 and 2018. Neighborhood 5 and 6 (subject property) were purchased by Lennar over three years ago (per Lennar representatives) and are being developed as Whispering Winds and Shady Tree. The entire Countryside project was original planned as two Planning Areas which are broken out as follows with the subject property being Neighborhoods 5 and 6 in Planning Area 2
Planning Area 1 - North of Chino Avenue
Neighborhood Acres # DU’s Type Density
1 34.09 187 5,500 sf lots 5.49
2 20.46 106 6,000 sf lots 5.18
3 11.45 70 5,000 sf lots 6.11
4 12.43 73 5,000 sf lots 5.87
Subtotal P.A 1 78.43 436 5.56
Planning Area 2 – South of Chino Avenue
5 12.76 98 Z-Lot 7.68
6 14.82 141 Cluster Court 9.51
7 11.21 60 Alley Loaded 5.35
8 12.32 84 5,500 sf lots 6.82
Subtotal P.A.2 51.11 383 7.49
Total Residential 129.54 819
Other Land Uses
Park 5.61
Paseo 3.78
Neighborhood Buffers 3.66
Streets 19.10
SCE Easement 7.31
Deer Creek Channel 9.03
Subtotal Other 48.49
Project Total 178.03 819

The subject site essentially wraps around the southwest corner of Chino and Archibald Avenues with frontage of Neighborhood 5 along Chino Avenue and Neighborhood 6 having frontage along Archibald Avenue. Neighborhood 2 (located at the corner of Chino and Archibald which the subject wraps around) is currently under construction by KB Home as Crestview and is planning for their grand opening the first weekend in April. 2385
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The subject is surrounded existing residential to the north (Neighborhoods 1, 3 and 4) and a vacant parcel (Neighborhood 2) which was recently sold to Lennar; existing residential to the east (beyond Archibald, vacant lands to the south along with an industrial building and vacant lands to the west beyond Cucamonga Creek.

Shopping is available about one-half mile north at the southeast corner of Riverside Drive and Archibald Avenue at a Ralph’s Supermarket anchored shopping center; about one mile southeast at a Stater Bros anchored shopping center at the corner of Ontario Ranch Road and Haven Avenue or in Eastvale at the northeast corner of Limonite and Archibald Avenues about two miles south of the subject at a Sprout’s anchored shopping center.

More regional shopping is available within three miles with Costco, Target, Home Depot and Lowes.
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ONTARIO COMMUNITY FACILITIES DISTRICT NO. 35
We have reviewed the Formation Hearing Report (“Report”) dated October 17, 2017, prepared for Ontario CFD No. 35. Per the Report the City Council of the City of Ontario adopted a Resolution of Intention to establish Ontario CFD No. 35 on September 5, 2017.

The Report gives the following description of authorized facilities and services.

Facilities to be Financed or Purchased – The types of facilities to be financed or purchased by Ontario CFD No. 35 are street and bridge improvements, including grading, paving curbs and gutters, sidewalks, street signalization and signage, street lights and parkway and landscaping related thereto, domestic and recycled water distribution facilities, sewer collection facilities, solid waste facilities, storm drainage facilities, park and recreation facilities and equipment, aquatic facilities and equipment, fire facilities and equipment, police facilities and equipment, library facilities and equipment, fiber optic telecommunication system facilities, general governmental office, administrative and meeting facilities, and land, rights-of-way and easements necessary for any of such facilities.

Services – Police protection services, fire protection and suppression services, ambulance and paramedic services, maintenance and lighting of parks, parkways, streets, roads and open space, flood and storm protection services and maintenance and operation of any real property or other tangible property with an estimated useful life of five or more years that is owned by the City.

The boundary map is shown as follows:
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The cost estimate for the Facilities and Services as stated in the Report is shown below.

Estimated Cost of Facilities and Services $ 6,754,000
Replacement Facilities and Services $16,359,000
Incidentals:

Bond Reserve Fund $ 1,775,000
Bond discount/Issuance Costs $ 1,053,000
Capitalized Interest $ 359,000
Total Bond Amounts Needed $26,300,000
It should be noted that at the time of the Report which included the above cost estimate, the total authorized amount of bonds for Ontario CFD 35 was $27,000,000. On June 7, 2022, the City of Ontario passed, approved, and adopted Resolution No. 2022-049 which amended the total authorized amount of bonds to $45,000,000. It should also be noted that the above amounts assume three series of bonds over 100 years.

The Assigned Special Tax amounts for developed property within Ontario CFD No. 35 as shown in the Rate and Method of Apportionment (recorded July 22, 2022) are shown in the table below.

Per the latest Sources and Uses of Funds (dated April 17, 2024), the total uses of funds (all amounts subject to change) are anticipated to be $9,944,269 in Project Fund Deposits, $738,037 in Debt Service Reserve Fund, $440,600 in Cost of Issuance and Underwriter’s Discount and a deposit to Administrative Expense Fund of $89,244. A copy of the Ontario CFD No. 35 boundary map is located in the Addenda for your review.

Land
Use
Class
Description Square
Footage
Assigned
Special Tax
1 Single Family Detached Property < 1,501 $3,342 per Unit 2 Single Family Detached Property 1,501 – 1,700 $3,454 per Unit 3 Single Family Detached Property 1,701 – 1,900 $3,626 per Unit 4 Single Family Detached Property 1,901 – 2,100 $3,849 per Unit 5 Single Family Detached Property 2,101 – 2,300 $3,935 per Unit 6 Single Family Detached Property 2,301 – 2,500 $4,073 per Unit 9 Single Family Detached Property > 2,500 $4,262 per Unit 10 Other Residential Property $52,912 per Acre
11 Non-Residential Property $52,912 per Acre
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SUBJECT PROPERTY DESCRIPTIONS
The subject property consists of the community known as Country Lane by Lennar.

Country Lane features two neighborhoods with distinct product lines: Shady Tree, and Whispering Wind. Information specific to each neighborhood is listed below.

Shady Tree at Country Lane
Location: South side of Chino Avenue, west of Archibald Avenue, Ontario Ranch, Ontario, California.

Legal Property
Description: Lots 1-97 of Tract Map No. 17449.

Property Owner: Individual Owners as Lots 1-32, 52-59, and 70-97 of Tract 17449; Lennar as to Lots 33-51 and 60-69 of Tract 17449.

Assessors
Parcel Nos.: 0218-283-01 through -55; 0218-284-01 through -42.

Property Taxes: We have attempted to review a sample Shady Tree home tax bill on Assessor Parcel Number 0218-283-53. There were two tax bills Shady Tree
Whispering
Wind
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which appeared to have been issued on the subject property for 2023 which totaled $12,404.05 in overall taxes and assessments, based on an assessed value of $662,996. The taxes on this parcel are paid current. This equates to an overall tax rate of 1.87 percent. It is an assumption of this report that the overall tax rate for the subject property, once fully improved, is under two percent.

Three-Year
Sales History: Per Lennar representatives, Lennar has owned the subject for longer than three years. Lennar began selling homes at Shady Tree in October 2022. Individual homebuyers have closed on 68 homes between May 16, 2023, and April 1, 2024. There are 19 proposed homes in escrow which are due to close upon completion.

Size and Shape: The subject property is roughly rectangular shaped and contains an estimated 18.723 gross acres and 16.958 net acres per recorded Tract Map No. 17449. Tract Map 17749 includes a 3.767-acre open space lot (a SoCal Edison easement) on the southern portion of the site, which divides Shady Tree from Whispering Wind.

Zoning: Per the City of Ontario’s General Plan (Land Use Plan LU-01) the site is designated as LMDR or Low Medium Density Residential, which allows for 5.1-11.0 dwelling units per acre. The General Plan Land Use Map also shows the southern portion of the subject (Tract No. 17450) as partially falling within the Chino Airport Influence Area overlay. Per the current City of Ontario Zoning Map, the site is shown as Specific Plan – Countryside (PSP04-001). Per the Countryside Specific Plan the site is allowed up to 98 units on “Z” lots.

Entitlements: Tract Map No. 17449 encompasses the northern portion of the subject property and covers all of the Shady Tree neighborhood within County Lane. Tract Map 17449 covers 18.723 gross acres and

16.958 net acres, was recorded on December 16, 2021, and divides the northern portion of the subject into 97 numbered “Z” lots and 19 lettered lots. This includes one large 3.767 acre lettered open space lot at the southernmost end of Tract Map 17449 which serves as a SoCal Edison easement that bisects the subject.

The recorded tract maps allow for 97 single family detached “Z” lots with a minimum lot size of 3,455 square feet on the total 16.958 acres resulting in an overall density of 5.7 dwelling units per acre which is within the allowed zoning and general plan designation.

Topography: The topography of the Shady Tree site is generally flat, and at street level of Chino Avenue, the northern border. The lands have been developed into single-family detached “Z” lots with drainage in an engineered street drainage system.
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Soils Condition: We have reviewed a “Supplemental Geotechnical Evaluation, Countryside II Project” that covers both Tracts 17449 (Shady Tree) and 17450 (Whispering Wind) prepared by Petra Geosciences of Costa Mesa, and dated November 5, 2020. The report makes recommendations that should be appropriately implemented during remaining grading and construction. The Report references previous soils testing reports that were not provided and have not been reviewed. The Report also mentions recommending methane testing.

It is an assumption of this report that the soils are adequate to support the highest and best use conclusion and that all recommendations in the soil reports were adhered to during construction. This is evidenced by construction of homes on the site and City inspectors on site during construction.

Seismic
Information: The subject property is not located in a designated Earthquake Study Zone (Alquist-Priolo Earthquake Fault Zone) as determined by the State of California (via City of Ontario) and there are no known active faults crossing the site.

Environmental
Concerns: We have reviewed a “Volume 1 Countryside Specific Plan Final Environmental Impact Report” (“EIR”) which includes the subject lands, prepared by EIP Associates of Los Angeles, and March 2006.

The EIR provides a summary of impacts and mitigation measures and classifies them into “Less Than Significant,” “Potentially Significant,” and “Significant and Unavoidable” categories.

It is an assumption of this report that there are no environmental issues which would slow or thwart development of the subject property. This is suggested by construction of homes on the site and City inspectors on site during construction.

Methane
Reports: We have not received any Methane Reports to review. It is an assumption of this report that there are no methane issues which would slow or thwart development of the subject property.

Flood Information: Per FEMA Map No. 06071C8638H dated August 28, 2008, the subject is shown as being in Zone X with “Area with Reduced Flood Risk due to Levee.”
Easements and
Encumbrances: We have reviewed a Preliminary Title Report prepared by Lennar Title that covers Shady Tree at Country Lane, the northern portion of the subject property. Report 192002-001256 dated August 29, 2022, covers Tract Map 17449. The report notes the following exceptions:
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Item Nos. 1, 2, 3 and 4 refer to property taxes and the Special Tax Assessment for CFD 19 (Countryside Phase 1 Services) and the subject CFD No. 35. Item No. 5 pertains to water rights. Item Nos. 6, 7, 8, 9, 10, 14, 21 and 22 refer to easements on the property. Item No. 11 pertains to a development agreement with amendments recorded on the site. Item No. 12 and 13 pertain to water quality management plans. Item Nos. 15, 16, 17, 18, 19 and 20 all refer to matters shown or disclosed by the filed map on the site. Item No. 23 states no known matters otherwise appropriate to be shown were deleted from the report.

While the exceptions appear typical for subject-type lands, it is an assumption of this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than CFD No. 35 and the noted CFD No. 19. The appraisers are not title experts, and it is recommended that any concerns relating to title should be addressed to the appropriate experts.

Utilities: All normal utilities are available to serve the subject site by the following companies:

Electrical: Southern California Edison Company
Natural Gas: The Gas Company
Sewer/Water: City of Ontario
Schools: Mountain View District and Chaffey Joint Union High School District (Mountain View
Elementary, Grace Yokley Middle, Colony High)
Streets/Access: Access to the subject property is convenient via both SR-60 and I15. From SR-60, exit Archibald Avenue and head south 1.2 miles to Chino Avenue. Head west on Chino Avenue less than one quarter mile; the subject is on the south side of Chino Avenue at Starling Avenue. From I-15, exit Ontario Ranch Road and head west just over

2.5 miles to Archibald Avenue, then north on Archibald for one mile to Chino Avenue. The Shady Tree models are located on Pheasant Way, just east of the Starline Avenue Entrance via Chino Avenue.

SR-60 (1.5 miles north of the subject) provides east/west access from downtown Los Angeles to the city of Beaumont. The subject sits between Archibald Avenue and Haven Avenue on/offramps.

I-15 (2.5 miles east of the subject) is a major north/south freeway, which provides access to both international borders with Mexico and Canada.

I-10 (4.1 miles north of the subject) is a major east/west freeway in San Bernardino across Los Angeles and San Bernardino Counties.

I-10 provides access to Los Angeles to the west and through San 2392
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Bernardino County and Riverside County to Arizona to the east. I-10 is an interstate providing a southern route across the U.S. to Florida.

Archibald Avenue has on/off ramps at SR-60 and provides access into north Ontario and down into Eastvale. Archibald Avenue’s northern terminus is at the Ontario International Airport, approximately three miles north of the subject.

Ontario Ranch Road has on/off ramps to I-15 and is known as CantuGalleano Ranch Road east of Hamner Avenue. It is the main access into the newly emerging community of Ontario Ranch. Currently Ontario Ranch Road becomes Edison Road west of Ontario Ranch.

Chino Avenue is a smaller local east/west arterial that provides access through Ontario Ranch and Chino. Chino Avenue begins at Milliken Avenue, west of I-15 (just over two miles east of the subject), and crosses Euclid Avenue and Highway 71, before terminating at Chino Hills Parkway, ten miles west of the subject.

Internal streets within Shady Tree include: Starling Avenue, Pheasant Way, Tanager Drive, Crane Court, Wren Way,
Meadowlark Drive, and Kiwi Court.

Current Condition: The subject has been developed into 97 single-family detached lots containing a minimum of 3,455 square feet. The lots are arranged in a convention single family detached configuration. Upon our inspection, 71 of the homes were over 95 percent complete including 68 individually owned homes, three model homes, and no additional production homes owned by the builder. In addition, there were 21 homes under construction (less than 95 percent complete with 19 in escrow) and five finished lots.

Cost to Complete: The entire subject property (Tract 17449 and 17450) has been developed into 235 finished lots/pads with internal streets complete and utilities stubbed to each lot. Per Lennar representatives the remaining hard costs total $6,779,076, however that includes $804,942 in interior walls which is not considered a land development cost. Deducting this amount results in $5,974,134 in remaining land development costs which includes the amenities, landscaping, civil and soils engineering, consultants, storm drain, street improvements, etc. We did not receive a detail on the costs in order to decipher which Tract Map the costs were associated with.

Per Lennar representatives, all land development fees have been paid. It is our understanding that the $5,974,134 in remaining land development costs are the builder’s responsibility and will be spread between the Lennar owned lots as the individual owners are not responsible. Out of the total 235 lots/pads, 137 are individually 2393
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owned leaving 98 lots, pads or homes owned by Lennar. Dividing the $5,974,134 by the 98 lots/pads results in remaining land development costs of $60,960.55 per lot/pad or home.

Homeowner’s
Association: Per builder representatives, the Country Lane HOA fees (for both Shady Tree and Whispering Wind) are $228 per month at buildout. It is assumed that the HOA maintains the community pool and spa, recreation center, parks and paseos (including the HOA-maintained public park at the northwest corner of Dolomite and Kinglet), internal streets and common area landscaping.

Improvement
Description: Shady Tree at Country Lane includes three detached two-story floorplans ranging in size from 2,213 to 2,409 square feet. Exteriors feature Craftsman, Spanish, American Farmhouse, and Colonial influenced architecture. There are three model homes, located on Pheasant Way, east of Starling Avenue at the entrance off Chino Avenue. Shady Tree floorplans offer four to five bedrooms and attached two bay garages. All floorplans at Shady Tree offer open concept living with eat-in kitchens open to great rooms, second floor laundry rooms, as well as owner’s suites with separate tub and showers, dual sinks, and walk in closets. Homes at Shady Tree offer ceramic floors at entryways, vinyl flooring at kitchen, dining room, laundry and bathrooms, and wall to wall carpeting with half inch pad in remaining areas. Interiors feature upgraded 3 ½ inch baseboard and 2 ¼ inch door casings, LED recessed lights, upgraded slat-style stair rail system, RG-6 coaxial cable television outlets at select locations, and Moen plumbing and bathroom fixtures. Lennar includes prewiring for ceiling fans in all bedrooms, great rooms, and loft (per plan), tankless water heaters, Honeywell Home T6 Pro ZWave smart thermostat, and Legrand On-Q 30” RF Transparent Structured Median Enclosure. Kitchens include thermofoil shakerstyle cabinetry (choice of white or gray), GE stainless steel appliances, stainless steel single-basin sink, and slab-granite or quartz countertops with choice of colors. Garages at Shady Tree are fully dry-walled and fog coated, and exteriors include block wall fencing with vinyl side gates, illuminated house numbers and coach lights, and drought tolerant front landscaping. Sixty-eight of the 97 homes in the subject property have closed to individuals with closing dates between May 16, 2023 and April 1, 2024. Closed net sales prices (including premium, upgrades, options, and incentives) within the subject have ranged from $596,665 to $780,023. Current base pricing ranges from $733,000 to $799,000. Per the sales data provided, incentives have ranged from $0 up to $106,652, with an average incentive of $46,354. Our search of the MLS revealed no resales or current resale listings. Our physical search noted all homes appear to be in excellent condition. The houses which are over 95 percent complete are detailed below.
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Shady Tree at Country Lane
Floor Plan Bed/Bath Floors/
Parking Sq. Ft.

Ind.

Owned
Bldr.

Owned
Plan 1 4 / 2.5 2 / 2 2,213 34 1*
Plan 2 4 + Loft / 4 2 / 2 2,315 15 1*
Plan 3 5 / 4 2 / 2 2,409 19 1*
Total 68 3
*Each asterisk designates one model home per that plan. In addition to the above there are 21 homes under construction and five additional finished lots.

Whispering Wind at Country Lane
Location: West of Archibald Avenue at Dolomite Street, south of Chino Avenue, Ontario Ranch, Ontario, California.

Legal Property
Description: Lots 1-138 of Tract Map No. 17450.

Property Owner: Individual Owners as Lots 52-107 and 118-130 of Tract 17450; Lennar as to Lots 1-51, 108-117, and 131-138 of Tract 17450.

Assessors
Parcel Nos.: 0218-293-01 through -75; 0218-294-01 through -63.

Property Taxes: We have reviewed a sample Whispering Wind home tax bill on Assessor Parcel Number 0218-294-29. There are two invoices for the 2023 tax year which total $11,425.73 based on an assessed value of $599,500. The taxes on this parcel are paid current. This equates to an overall all tax rate of 1.91 percent which is typical for the area. It is an assumption of this report that the overall tax rate including all special assessments is under two percent.

Sales History: Per Lennar representatives, they have owned the subject for over three years. Lennar began selling homes at Whispering Wind in October 2022. Individual homebuyers have closed on 69 homes between June 14, 2023, and April 1, 2024. There are 19 proposed homes in escrow which are due to close upon completion.

Size and Shape: The subject property is irregularly shaped and contains an estimated

16.827 gross acres and 16.158 net acres per recorded Tract Map No. 17450. Tract Map 17450 includes a 1.073-acre park lot at the northern portion of the Tract.

Zoning: Per the City of Ontario’s General Plan (Land Use Plan LU-01) the site is designated as LMDR or Low Medium Density Residential, which allows for 5.1-11.0 dwelling units per acre. The General Plan Land Use Map also shows the southern portion of the subject (Tract No. 17450) as partially falling within the Chino Airport Influence Area 2395
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overlay. Per the current City of Ontario Zoning Map, the site is shown as Specific Plan – Countryside (PSP04-001). Per the Countryside Specific Plan the site has allowances for up to 141 cluster lots.

Entitlements: Tract Map No. 17450 encompasses the southern portion of the subject property and covers all of the Whispering Wind neighborhood within County Lane. Tract Map 17450 covers 16.827 gross acres and

16.158 net acres, was recorded on December 16, 2021 and divides the southern portion of the subject into 138 numbered and 16 lettered lots. This includes one large 1.073-acre lettered park lot at the northern portion of Tract 17450.

The recorded tract maps allow for 138 single family detached lots arranged in motorcourts with a minimum lot size of 3,000 square feet on the total 16.158 acres resulting in an overall density of 8.5 dwelling units per acre which is within the allowed zoning and general plan designation.

Topography: The topography of the Whispering Wind site is generally flat, and at street level of Archibald Avenue, the eastern border. The lands have been developed into single-family detached lots with drainage into an engineered street drainage system.

Soils Condition: We have reviewed a “Supplemental Geotechnical Evaluation, Countryside II Project” that covers both Tracts 17449 (Shady Tree) and 17450 (Whispering Wind) prepared by Petra Geosciences of Costa Mesa, and dated November 5, 2020. The report makes recommendations that should be appropriately implemented during remaining grading and construction. The Report references previous soils testing reports that were not provided and have not been reviewed. The Report also mentions recommending methane testing.

It is an assumption of this report that the soils are adequate to support the highest and best use conclusion and that all recommendations in the soil reports were adhered to during construction. This is evidenced by construction of homes on the site and City inspectors on site during construction.

Seismic
Information: The subject property is not located in a designated Earthquake Study Zone (Alquist-Priolo Earthquake Fault Zone) as determined by the State of California (via City of Ontario) and there are no known active faults crossing the site.

Environmental
Concerns: We have reviewed a “Volume 1 Countryside Specific Plan Final Environmental Impact Report” (“EIR”) which includes the subject lands, prepared by EIP Associates of Los Angeles, and March 2006. 2396
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The EIR provides a summary of impacts and mitigation measures and classifies them into “Less Than Significant,” “Potentially Significant,” and “Significant and Unavoidable” categories.

It is an assumption of this report that there are no environmental issues which would slow or thwart development of the subject property. This is suggested by construction of homes on the site and City inspectors on site during construction.

Methane
Reports: We have not reviewed any Methane Reports for the subject property.

It is an assumption of this report that there are no methane issues which would slow or thwart development of the subject.

Flood Information: Per FEMA Map No. 06071C8638H dated August 28, 2008, the subject is shown as being in Zone X with “Area with Reduced Flood Risk due to Levee.”
Easements and
Encumbrances: We have reviewed a Preliminary Title Report prepared by Lennar Title that covers Whispering Wind at Country Lane, the southern portion of the subject property. Report 192002-001257 dated August 29, 2022, covers Tract Map 17450. The report notes the following exceptions:

Item Nos. 1, 2, 3 and 4 refer to property taxes and the Special Tax Assessment for CFD 19 (Countryside Phase 1 Services) and the subject CFD No. 35. Item No. 5 pertains to water rights. Item Nos. 6, 7, 11 and 20 thru 46 refer to easements on the property. Item No. 8 pertains to a development agreement with amendments recorded on the site. Item Nos. 9 and 10 pertain to water quality management plans. Item Nos. 12 thru 19 all refer to matters shown or disclosed by the filed map on the site. Item No. 47 states no known matters otherwise appropriate to be shown were deleted from the report.

While the exceptions appear typical for subject-type lands, it is an assumption of this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than CFD No. 35 and the noted CFD No. 19. The appraisers are not title experts, and it is recommended that any concerns relating to title should be addressed to the appropriate experts.

Utilities: All normal utilities are available to serve the subject site by the following companies:

Electrical: Southern California Edison Company
Natural Gas: The Gas Company
Sewer/Water: City of Ontario
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Schools: Mountain View District and Chaffey Joint Union High School District (Mountain View
Elementary, Grace Yokley Middle, Colony High)
Streets/Access: Access to the subject property is convenient via both SR-60 and I15. From SR-60, exit Archibald Avenue and head south 1.5 miles to Dolomite Street (just south of Chino Avenue). Head west on Dolomite Street into the subject. From I-15, exit Ontario Ranch Road and head west just over 2.5 miles to Archibald Avenue, then north on Archibald for three-quarters of a mile to Dolomite Street. The Whispering Wind models are located on the southwest corner of Dolomite Street and Brockram Drive.

SR-60 (1.5 miles north of the subject) provides east/west access from downtown Los Angeles to the city of Beaumont. The subject sits between Archibald Avenue and Haven Avenue on/offramps.

I-15 (2.5 miles east of the subject) is a major north/south freeway, which provides access to both international borders with Mexico and Canada.

I-10 (4.1 miles north of the subject) is a major east/west freeway in San Bernardino across Los Angeles and San Bernardino Counties.

I-10 provides access to Los Angeles to the west and through San Bernardino County and Riverside County to Arizona to the east. I-10 is an interstate providing a southern route across the U.S. to Florida.

Archibald Avenue has on/off ramps at SR-60 and provides access into north Ontario and down into Eastvale. Archibald Avenue’s northern terminus is at the Ontario International Airport, approximately three miles north of the subject.

Ontario Ranch Road has on/off ramps to I-15 and is known as CantuGalleano Ranch Road east of Hamner Avenue. It is the main access into the newly emerging community of Ontario Ranch. Currently Ontario Ranch Road becomes Edison Road west of Ontario Ranch.

Chino Avenue is a smaller local east/west arterial that provides access through Ontario Ranch and Chino. Chino Avenue begins at Milliken Avenue, west of I-15 (just over two miles east of the subject), and crosses Euclid Avenue and Highway 71, before terminating at Chino Hills Parkway, ten miles west of the subject.

Internal streets within Whispering Wind include: Dolomite Street, Kinglet Avenue, Shale Avenue, Brockram Drive, Bluestone Paseo, and Basanite Avene.
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Current Condition: The subject has been developed into 138 single-family detached lots arranged in motorcourts (specially, four pack clusters on paver shared driveways) containing a minimum of 3,000 square feet. The lots are arranged in a convention single family detached configuration. Upon our inspection, 84 of the homes were over 95 percent complete including 69 individually owned homes, three model homes, and 12 additional production homes over 95 percent complete owned by the builder (all in escrow). In addition, there were 23 homes under construction (less than 95 percent complete with seven in escrow) and 31 finished lots.

Cost to Complete: The entire subject property (Tract 17449 and 17450) has been developed into 235 finished lots/pads with internal streets complete and utilities stubbed to each lot. Per Lennar representatives the remaining hard costs total $6,779,076, however that includes $804,942 in interior walls which is not considered a land development cost. Deducting this amount results in $5,974,134 in remaining land development costs which includes the amenities, landscaping, civil and soils engineering, consultants, storm drain, street improvements, etc. We did not receive a detail on the costs in order to decipher which Tract Map the costs were associated with.

Per Lennar representatives, all land development fees have been paid. It is our understanding that the $5,974,134 in remaining land development costs are the builder’s responsibility and will be spread between the Lennar owned lots as the individual owners are not responsible. Out of the total 235 lots/pads, 137 are individually owned leaving 98 lots, pads or homes owned by Lennar. Dividing the $5,974,134 by the 98 lots/pads results in remaining land development costs of $60,960.55 per lot/pad or home.

Homeowner’s
Association: Per builder representatives, the Country Lane HOA fees (for both Shady Tree and Whispering Wind) are $228 per month at buildout. It is assumed that the HOA maintains the community pool and spa, recreation center, parks and paseos (including the HOA-maintained public park at the northwest corner of Dolomite and Kinglet), internal streets, front yard and common area landscaping.

Improvement
Description: Whispering Wind at Country Lane includes four detached two-story floorplans ranging in size from 1,618 to 2,202 square feet. Exteriors feature Craftsman, Spanish and American Farmhouse influenced architecture. There are three model homes, located on Brockram Drive, just south of Dolomite Street, which provides the entrance from Archibald Avenue. Whispering Wind floorplans offer three to five bedrooms and attached two bay garages. All floorplans at Whispering Wind offer open concept living with eat-in kitchens open to great rooms, second floor laundry rooms, as well as owner’s suites with separate tub and showers, dual sinks, and walk in closets. 2399
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Homes at Whispering Wind offer ceramic floors at entryways, vinyl flooring at kitchen, dining room, laundry and bathrooms, and wall to wall carpeting with half inch pad in remaining areas. Interiors feature bullnose corners throughout the home, upgraded 3 ¼ inch baseboard and 2 ¼ inch door casings, LED recessed lights, RG-6 coaxial cable television outlets at select locations, and Moen plumbing and bathroom fixtures. Lennar includes prewiring for ceiling fans in all bedrooms, great rooms, and loft (per plan), tankless water heaters, Honeywell Home T6 Pro Z-Wave smart thermostat, and Legrand On-Q 30” RF Transparent Structured Median Enclosure.

Kitchens include thermofoil shaker-style cabinetry (choice of white or gray), GE stainless steel appliances (including upgraded GE stainless steel built-in 30” gas cooktop with single base oven below), stainless steel single-basin sink, and granite countertops. Garages at Whispering Wind are fully dry-walled and fog coated, and exteriors include block wall fencing with vinyl side gates, illuminated house numbers and coach lights, and drought tolerant front landscaping.

Sixty-nine of the 138 homes in the subject property have closed to individuals with closing dates between June 16, 2023 and March 5, 2024. Closed net sales prices (including premium, upgrades, options, and incentives) within the subject have ranged from $524,210 to $701,500. Current base pricing ranges from $614,000 to $726,000. Per the sales data provided, incentives have ranged from $0 up to $82,617, with an average incentive of $40,043. Our search of the MLS revealed no resales or current resale listings. Our physical search noted all homes appear to be in excellent condition.

The houses which are over 95 percent complete are detailed below.

Whispering Wind at Country Lane
Floor Plan Bed/Bath Floors/
Parking Sq. Ft.

Ind.

Owned
Bldr.

Owned
Plan 1 3 / 2.5 2 / 2 1,618 17 3
Plan 2 3 / 2.5 2 / 2 1,800 18 4*
Plan 3 4 + Loft / 3 2 / 2 2,067 17 4*
Plan 4 5 / 3 2 / 2 2,202 17 4*
Total 69 15
*Each asterisk designates one model home per that plan. In addition to the above there are 23 homes under construction and 31 additional finished lots. 2400
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THE INLAND EMPIRE HOUSING MARKET
In analyzing the area’s housing market, population growth and economic conditions need to first be considered.

Population
The San Bernardino County population showed minimal 0.1 percent growth between January 2022 and January 2023, and an average of about two percent the previous 20 years. The stagnant growth during this time is thought to be due to the disruption during COVID. Prior to the COVID pandemic, predictions were for the County to grow at an average annual rate of 0.75 percent over the next eight years. This equates to an increase of approximately 20,000 residents per year suggesting the need for about 7,000 homes per year within the County. The after-COVID influence is still unknown on the County’s population growth. New home sales in most cities in the County from 2020 were higher than the coastal communities due to affordability, the work from home factor, and the fact that millennials are finally entering the housing market. These factors may increase actual County population growth. This has been offset by minimal existing home sales resulting in less overall home sales over the past year as compared to one year ago and also as compared to 2019, before COVID.

Economic Conditions
Over the past twenty years the County has seen various cycles in the housing market as with most of Southern California. The Great Recession impacted the Inland Empire significantly and resulted in a longer recovery period than that of other Southern California regions. Median housing prices (all types) in the County increased almost 300 percent from $120,406 at the lowest point in 2009 to the February 2024, price of $477,070 per the California Association of Realtors. This is lower than the recent December 2023 peak of $506,000 median home price in San Bernardino County: however, 2.3 percent higher than one year ago ($466,500).

Economic growth in the Inland Empire was strong generally between 2015 (after the Great Recession), and until the economic shutdown due to COVID. The second half of 2401
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2020 and all of 2021 saw economic growth, however the first two quarters of 2022 saw GDP shrinking. The end of 2022 saw lower unemployment rates (December rate of 3.6%) than the Inland Empire’s pre-COVID unemployment rate in February 2020 of 4.0 percent, however 2023 showed unemployment rising slightly with the December 2023 rate for the Inland Empire at 5.1%. Thus far in 2024 the unemployment rate has inched up, with the February 2024 unemployment rate for the Inland Empire at 5.5%. While unemployment rates are still near historical lows, they have risen over the past year and the inflation factor has significantly affected the economy.

The housing market played a large role in the past two recessions. In the Great Recession, due to increased interest rates and rising home prices between June 2004 and mid-2006, the market reaction was to create non-conventional financing alternatives, such as sub-prime and non-conventional mortgages, to artificially maintain the boom housing market of 2004 and 2005. By 2007, the housing market saw a shake-up because of the problems in the sub-prime and non-conventional mortgage markets, which played a role in the 2008 upheaval of Wall Street and contributed significantly to the U.S. economic downturn of the Great Recession. Due to stricter income verification on new loans and the lack of available credit, coupled with job losses and declining home prices, sales of new homes slowed for the next few years and essentially remained flat until mid2012 when home prices began a steady climb.

During the COVID disruption, new home sales were one of the brightest spots in both the local and national economies. While new home sales slowed in March and April 2020 due to the onset of the COVID pandemic, both sales and prices increased significantly due to strong demand from May 2020 throughout COVID until spring 2022 when interest rate increases began affecting the home-buying market. The rising interest rates alone did not seem to slow sales in Spring 2022. However, a combination of increasing home prices and falling consumer confidence, added to the significant interest rate increases, slowed new home sales significantly beginning in mid-2022. Due to the significantly higher mortgage interest rates, existing homeowners are not moving which has stifled the existing home market, making the new home market the only option for some. In the 2402
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Inland Empire there were 44,796 existing homes closings in the past 12 months (down

26.9 percent from one year ago) and 8,195 new home closings in the past 12 months (down 24.1 percent from the previous year), all information as of March 1, 2024 per Zonda Research, a new home market research company. In January 2022, mortgage rates were

3.22 percent (for a typical 30-year fixed conventional mortgage) while as of March 14, 2024, the rate for the same loan is 6.74 percent. On a $500,000 mortgage, the monthly payment for this loan has increased from $2,168 to $3,240 or nearly 50 percent which has hit homebuyers hard.

Per the Zonda National Economic and Housing Market Update in March 2024, the rate of growth of new home sales is off from COVID highs but up from 2022 sales numbers, suggesting a healthy market. Per their survey of over 300 new-home builders nationally, the builders are stating sales are continuing but report they had to adjust pricing and incentives to “find the market.” In the January 2023 survey, 50 percent of builders surveyed were lowering their prices and the remaining 50 percent stated their pricing was flat. In March 2024, the survey resulted in 50 percent of the builders stating their pricing was increasing a little, 46 percent of builders stating their pricing was flat and 4 percent dropping prices. This is a very different dynamic than in January 2023 which was partly due to builder’s readjusting concessions (interest rate buy-downs), and partly due to the market accepting the mortgage rate increases. In today’s market over 60 percent of newhome builders in the U.S. are offering either full-term or temporary interest rate buy-downs (John Burns Research and Consulting) which is helping to sustain new home sales. Per Zonda, in March 2024, 80 percent of new home builders in the Inland Empire are offering incentives.

The larger public homebuilders began offering significant interest rate buy-downs in early 2023 in order to keep absorption rates steady, which reportedly cost between $30,000 and $100,000 in incentives. The builders are attempting to find the “sweet spot” in incentives. In their September 2023, survey of 300 builders nationwide, Zonda asked builders to check all that they were offering and found 70 percent of builders surveyed were offering rate buydowns, 60 percent were offering funds towards closing costs, 33 2403
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percent were offering flex dollars, 22 percent were offering lower home prices and 20 percent were offering funds toward options and upgrades. In the subject communities Shady Tree has had an average $46,000 in concessions per sale while Whispering Wind has had an average $40,000 per sale. The question is, how long can builders continue to offer these significant incentives. As rates go higher, the extent that builders can buydown the mortgage rates goes down.

Home loan mortgage rates have been and are still playing a huge part in the housing market. The Board held mortgage rates at all-time lows after the Great Recession and again after the COVID Recession in an attempt to assist the housing market’s recovery.

Low rates helped home sales during these times. However, first-time buyers are now having a hard time entering the housing market due to rising prices and rising interest rates. Mortgage applications had been spiking in late 2020 and 2021 due to the low rates and the fear rates were going to start ticking up, which began happening in March 2022.

The Board has increased the rate eleven times between March 2022 and August 2023, which increased the FFR from 0-0.25 percent to 5.25-5.50 percent. At the latest Board meeting in March 2024, they paused the FFR increases for the fifth time and suggested decreases in 2024 will begin later in the year. The financial markets had been anticipating a possible March decrease which caused volatility in the financial markets in the past month or so. The FFR increases are supposed to help slow the high inflation rate in the Nation, which appears to be occurring as the latest reports are showing inflation in February 2024 at 3.2 percent, significantly down from a high of 9.1 percent in June 2022.

While new home builders slowed production as sales slowed in 2022, the spring of 2023 brought optimism to builders once again. Sales were up month over month as buyers adjusted to higher mortgage rates and the existing home inventory is at all-time lows.

Existing homeowners that are locked into a 3 percent mortgage are not moving up due to the current almost seven percent rates. This is creating a supply issue for existing homes.

New home sales are benefiting from this supply issue as in some cases, the only option for homebuyers are new homes. Per Zonda, historically, new homes captured 10 to 13 percent of all home sales; however, due to the limited supply of existing homes currently 2404
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on the market, new homes have captured between 12 and 24 percent of all home sales in the Inland Empire over the past year.

Residential Land Development
While there had been little land development going on in most of the Inland Empire during the Great Recession years 2008-2011, the second half of 2012 saw a resurgence in the more coveted areas of the Inland Empire. The increase in housing prices since 2012 combined with the limited availability of supply made land development feasible once again for homebuilders. It is thought that the increase in regulations, which has significantly increased the timeline for processing entitlements, has limited the master developers’ further entitlement of developable land in California. While prior to the recession it was not unusual to see numerous large master-planned communities selling lots to various builders (such as Park Place within Subarea 29), there are few currently available in the subject area. The majority of land sales over the past few years include single tracts of land with maps ready to record (such as Lennar’s Shady Tree and Whispering Wind) or a public builder buying a larger piece of land but develops the land for its own use, such as NUVO by The New Home Company.

Land sales in the Inland Empire slowly grew from 2012 up to a peak in 2017, with 2018 and 2019 showing lower land transactions. Once home sales exploded in May 2020, land sales followed with a significant number of residential land sales to builders in the Inland Empire during the second half of 2020 and throughout 2021. In late 2021 and early 2022, prior to the FFR increases, builders were paying significantly more for residential land that was ready to develop as demand was up and supply was shrinking. The beginning of 2022 continued with residential land sales going under contract until May, when new home sales began to fall sharply. According to Zonda’s survey of builders regarding residential land purchases, as of January 2023 only 2 percent of builders surveyed were “full steam ahead,” and almost 40 percent were pausing transactions or bidding lower on land transactions. As of March 2024, these percentages had changed drastically with 49 percent stating they are going “full steam ahead” and 46 percent moving “cautiously forward.” The increase in optimism from new home builders outlook is partially due to the 2405
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extreme slowdown of existing home inventory which is fueling new home sales. Per Zonda in 2023 there were about 11,245 vacant developed lots in the Inland Empire, which is down 21 percent from the previous year.

New Home Sales and Pricing
We have researched new single-family homes within the subject’s market in order to reflect residential trends. It should be noted these sales numbers and prices pertain to new home sales while later in this section we discuss existing home sales. In reviewing new home sales in the Inland Empire market area, per the March 24, 2024, Ryness Report, the year-to-date average sales rate (4.3 sales per month) is slightly higher than the same time period of the previous year (3.9 sales per month). The month of March is typically when sales rates pick up as it marks the beginning of “selling season” and the peak homebuying months of February through July. Surprisingly, even with the increases in pricing and mortgage rates, sales of new homes are occurring at a very good pace; however, this is partially due to the extremely limited supply of existing homes which is creating more demand for new homes. As interest rates rise, purchasing power becomes lower and therefore fewer people purchase new homes. Along with home sales comes a demand for appliances, furniture, building materials and services such as insurance, mortgage services, inspections, interior designers, and landscapers, all contributing to the area economy.

When comparing the March 24, 2024, Inland Empire Ryness Report to one year prior, there are six less projects (251 in March 2023 and 245 in March 2024) and sales are about 11 percent higher year-to-date than the previous year (4.3 sales per month in March 2024 versus 3.9 sales per month in March 2023). Looking back, in February 2022 the Inland Empire average sales rate was 5.4 homes per month; in February 2021 the average sales rate was 5.2 homes per month and in January 2020, prior to the pandemic, the average sales rate in the Inland Empire was 4.1 sales per month, similar to the current absorption rate. This similar sales rate to 2020 suggests new home buyers can weather the higher mortgage rates. However, the reader should note existing home listings are over 30 percent lower than in 2020 which increases the amount of new home buyers. 2406
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New single-family home pricing (combines both attached and detached) in the Inland Empire has also seen changes. The median new home price in the Inland Empire changed from the peak value of $437,200 in the third quarter of 2006 to $268,155 in early 2009 (decrease of 39 percent) while the current Inland Empire median new home price is $576,500 which is down from a record high of $650,000 in May 2022 per the California Association of Realtors’ (“CAR”). The current median price reflects an increase of over 100 percent from the bottom of the cycle and an increase of more than 32 percent over its peak prior to the Great Recession, however a decrease from the 2022 peak of 11 percent. In reality, this decrease is actually larger as builders are building smaller homes and buying down interest rates which costs the builder at times, up to $100,000, however, the amount is not reflected in the recorded sales price. New home sale prices fluctuate based on the land value and competition more than on the cost of building the home.

While finishes and sizes of homes can change, the basic costs on a per square foot basis typically do not fluctuate as much as land values; however, there have been inflationary increases in construction costs adding to this increase. Construction materials have increased an estimated 40 percent since 2019.

We have reviewed Empire Economics’ Price Point Review Study on Ontario CFD No. 35 (Countryside Phase 2 South - Facilities) dated March 28, 2024. Empire Economics did an original Price Point Study on the project in January 2022 in order to determine their market value for the various plans within Shady Tree and Whispering Wind. The “Review Study” is to ascertain if the prices have increased or decreased since the original Study.

The Empire Economics Price Point Review Study concluded that all plans within Shady Tree had current base price conclusions which are above the original base price conclusions in January 2022 with the increase ranging from 6 - 10 percent. Within Whispering Winds some square footage changed but generally two of the plans had decreases in base price conclusions and two had increases in base price conclusions.

The two smallest plans had decreases between 0.5 - 5 percent while the two largest plans had increases between 0.5 to 8 percent. The Review Study took into account the concessions which are included in their net prices. This compares with the CAR’s reports which suggest prices have decreased 11 percent since the peak in May 2022. 2407
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Within our search for the most comparable actively selling new home communities, we searched the subject’s city of Ontario, which currently features a multitude of actively selling new home communities, although many of them are attached product and smaller product than that of the subject property. We extended our search to include communities selling similar product in neighboring Chino. We found nine communities comparable to Shady Tree and Whispering Wind at Country Lane. The comparables have current base prices ranging from $562,990 to $849,990. Both Shady Tree and Whispering Wind’s base prices range from $614,000 to $799,000, which falls well within the range of comparable new homes in the area.

Existing Homes Sales and Pricing
While the previous section looked at new home sales and pricing, this section refers to existing homes in the Inland Empire. According to the California Association of Realtors’ most recent data, within overall Southern California, the median price paid for an existing single-family detached home in February 2024 ($825,000) is 5.0 percent higher than the month prior median home price, and up 10.8 percent year-over-year from $744,400 in February 2023. These overall Southern California numbers compare to San Bernardino County with $477,070 as the median price paid for an existing detached home in the County in February 2024, down -0.1 percent from January 2024 ($477,500), however up

2.3 percent on a year-over-year basis ($466,500). Below is a table showing the sales and prices for the Southern California area by County per the CAR.

Southern California Existing Home Sales
County Feb. 2024 Jan. 2024 Feb. 2023
Price MTM
% Change
Price YTY
% Change
Sales YTY
% Change
Los Angeles $817,100 $833,000 $778,540 -1.9% 12.4% -2.7% Orange $1,350,000 $1,320,000 $1,194,500 2.3% 16.5% 6.3% Riverside $636,000 $610,000 $585,000 4.3% 6.9% 12.4%
San Bernardino $477,070 $477,500 $446,900 -0.1% 2.3% 7.0% San Diego $980,000 $925,000 $824,900 5.9% 11.6% -1.8%
Ventura $890,000 $870,000 $815,000 2.3% 10.6% 8.1%
Southern Calif. $825,000 $786,000 $744,400 5.0% 10.8% 14.2% Source: California Association of Realtors
Based on February 2024 median existing homes prices, in comparison to the majority of the surrounding counties, San Bernardino has a definite price advantage. The “San 2408
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Bernardino County Advantage” (price difference between San Bernardino and surrounding counties) is $158,930 as compared to Riverside County, $340,030 as compared to Los Angeles County, $412,930 as compared to Ventura County, $502,930 as compared to San Diego County and $872,930 as compared to Orange County. That is, in February 2024, the median priced home in San Bernardino County was $872,930 less than the median priced home in Orange County ($1,350,000). Typically, as the price advantage widens, homebuyers are more open to commuting to further out areas. With the current work-from-home concept, the suburban areas have seen more growth which put pressure on home prices in the Inland Empire.

In a separate attempt to capture the amount of increase in home prices, the resale activity of existing homes in the subject’s immediate area (per Redfin.com) has been reviewed.

The number of sales and sale prices of existing homes within market areas surrounding the subject are shown in the table below.

Community
Name
Location
To
Subject
No. of
Sales
Feb. 2024
Price
Median
Price %
Change
from Feb.
2023
Ontario Ranch Subject 91 $633,268 -3.1%
Ontario North 91 $640,000 6.4%
Eastvale South 18 $867,500 6.4%
Mira Loma East N/A $755,000 8.6%
Jurupa Valley Northeast 19 $625,000 5.9%
Chino Southwest 41 $736,065 9.5%
Rancho Cucamonga Northwest 54 $704,500 5.1%
Source: Redfin Housing Market Trends February 2024
The median home price of a detached home in Ontario Ranch in February 2024 was $633,268 per Redfin, which makes up the low-end of the range of the resale home prices in the subject area. The lowest prices in the range relate to Ontario and Ontario Ranch, while the highest end of the range relates to Eastvale. It should be noted that the decrease in pricing within Ontario Ranch is due more to smaller homes being sold (higher density and lower square foot product) when compared to a year ago. The peak of the Ontario Ranch median sale price was August 2022 when the median price reached $780,000 which reflected a 19.1 percent increase year-over-year. The above year-to-year price fluctuations relate to the California Association of Realtors overall San Bernardino County 2409
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detached home resale price increase of 2.3 percent year-over-year from February 2023 to February 2024.

Country Lane - Sales and Pricing
Country Lane is comprised of 235 proposed single-family detached homes with marketed sizes from 1,618 to 2,409 square feet. Country Lane began sales in both Shady Tree and Whispering Wind in October 2022, with early base pricing ranging from $649,000 to $674,000 for Shady Tree and from $577,000 to $637,000 for Whispering Wind. The latest base pricing at Shady Tree ranges from $733,000 to $799,000 which is 12.9 to 20.3 percent higher than opening base prices. The latest base pricing at Whispering Wind ranges from $614,000 to $726,000 which ranges from 6.4 to 14.0 percent higher than original base pricing. Actual closed prices, including options, upgrades, premiums, and taking into consideration all concessions, have ranged from $596,655 to $780,023 for Shady Tree and $524,210 to $701,500 for Whispering Wind. The significant difference between the base pricing and the actual pricing is options, upgrades and premiums paid by the buyer offset by concessions given by the builder and mortgage companies. The total concessions given by the builder range from zero up to $106,652 with an average on the sales to date of $46,354 per sale at Shady Tree, and zero up to $82,617 with an average on the sales to date of $40,043 per sale at Whispering Wind. A portion of these concessions are not considered in the reported sales prices and are decided on a caseby-case basis. These mortgage concessions have increased and decreased over the past 24 months due to fluctuating mortgage rates. Within the subject, Lennar has sold and closed 137 homes to individuals, with an additional 38 homes in escrow which are due to close at completion. The total of 174 sales since October 2022 equates to an absorption rate of 9.7 sales per month spread across the two product types (4.8 sales per month for Shady Tree and 4.8 sales per month for Whispering Wind). These sales rates are considered to be good for the subject marketplace. Per the Ryness Report, a new home tracking service, as of March 24, 2024, year-to-date average sales per project per month in the Inland Empire is 4.3 homes: slightly lower than the average sales paces of Shady Tree and Whispering Wind. This suggests that Country Lane has found the correct price points for the subject market.
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Summary
The Inland Empire had seen substantial increases in pricing since 2012 with most areas, including the subject, showing astronomical increases from mid-2020 through early 2022.

While existing home sales were originally down when COVID began in spring/early summer 2020, new home sales subsequently shot up due to the existing home market supply being constrained and interest rates hitting all-time lows. The latest statistics indicate a possible slowdown in sales as interest rates have risen substantially; however, buyers appear to be resilient to the increases. The Ontario new-home submarket is performing in line with the Inland Empire market as a whole. The subject market area saw an increase in pricing consistent with most of Southern California throughout 2020 and 2021 and appeared to be continuing in the beginning of 2022. Late 2022 saw sales slow and prices lowering; followed by price increases as builders offered additional incentives. Builders’ optimism appears to have returned with builders generally believing prices will increase slightly in 2024 or remain flat. Despite uncertainty hitting the market due to interest rates and inflation, most observers agree that the Inland Empire housing market is healthy and population growth is still estimated to occur in the area. It is believed that as the population continues to increase, housing growth will also continue, despite a possible economic slowdown.
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HIGHEST AND BEST USE ANALYSIS
The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report, the highest and best use is defined as:
"the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value”4F
5 Proper application of this analysis requires the subject properties to first be considered “As If Vacant” in order to identify the “ideal” improvements in terms of use, size, and timing of development. The existing improvements (if any) are then compared to the “ideal” improvements to determine if the use should be continued, altered, or demolished preparatory to redevelopment of the site with a more productive or ideal use. “As If Vacant”
In the following analysis, we have considered the sites probable uses, or those uses which are physically possible; the legality of use, or those uses which are allowed by zoning or deed restrictions; the financially feasible uses, or those uses which generate a positive return on investment; and the maximally productive uses, or those probable permissible uses which combine to give the owner of the land the highest net return on value in the foreseeable future.

Physically Possible Uses
The subject property is irregular in shape and consists of 35.55 gross and 33.116 net acres per Tract Map Nos. 17449 and 17450. The site is in the Ontario Ranch area of the City of Ontario, specifically on the south side of Chino Avenue, west of Archibald Avenue.

The site’s original topography was generally level at street grade to surrounding streets.

Country Lane is bounded by existing houses to the north, a church and preschool to the east, Deer Creek Channel and industrial lands to the south, and Cucamonga Creek and vacant lands to the west. The neighborhood has been transitioning from dairies and 5 The Appraisal of Real Estate, 11th Edition
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farmlands to the new master planned community of Ontario Ranch. The site has been graded for development into 235 single-family detached lots with a minimum lot size of 3,000 square feet. We have reviewed a soils report on the site, as well as environmental reports for the project. All reports reviewed conclude that development of the site is feasible, however mitigation measures recommended within such reports should be adhered to during construction. The site is still under development with homes ranging in construction status from finished lots to homes under construction, to completed homes and models. It is an assumption of this report that the soils are adequate to support the highest and best use, that there are no environmental issues which would slow or thwart development of the property. This is evidenced by existing homes on the site which were recently built with City inspectors on site during construction. An engineered drainage system appears to have been designed into a street drainage system for the site. All standard utilities are available to serve the subject property. The site has good access via SR-60 to Archibald Avenue to Chino Avenue, and via I-15 to Ontario Ranch Road to Archibald Avenue.

Based on the physical analysis, the size and access make the subject property physically suited for numerous types of development; however, the grading that has occurred on the site suggests residential development.

Legality of Use
The subject property is located within the City of Ontario in the County of San Bernardino.

Per the City General Plan, the subject is zoned as LMDR (low to medium density residential) allowing for 5.1 to 11.0 dwelling units per acre. Per the City of Ontario Zoning Map, the site as shown as SP and falls within the Countryside Specific Plan. Per the Countryside Specific Plan Land Use Plan, the subject lands are designated as Neighborhood 5 (Shady Tree, the northern portion) and Neighborhood 6 (Whispering Winds, the southern portion), allowing for up to 98 and 141 residential units respectively, for a total maximum unit count of 239. Tract Map No. 17449, which covers Shady Tree, was recorded on December 16, 2021, and subdivides the northern portion of the site into 97 numbered lots. Tract Map No. 17450, which covers Whispering Wind, was also recorded on December 16, 2021, and subdivides the southern portion of the property into 2413
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138 numbered lots. The approved tract maps appear to be consistent with the approved specific plan and the current zoning.

Based on the legality of use analysis, the type of development for which the subject properties can be utilized is narrowed to residential use. This is consistent with the findings of the physically possible uses.

Feasibility of Development
The third and fourth considerations in the highest and best use analysis are economic in nature, i.e., the use that can be expected to be most profitable. As discussed under the Inland Empire Housing Market section earlier within this report, the market showed strong increases in both sales and pricing in 2020, 2021 and the beginning of 2022. The second half of 2022 and the beginning of 2023 reflected a slowdown in sales and a softening in prices as interest rates have risen substantially. The slowdown in the second half of 2022 resulted in builder’s either pausing on escrows or dropping escrows resulting in few actual residential land sale closings until the second half of 2023. Currently, builders are once again entering escrows and moving forward on older escrows as new home buyers are continuing to purchase homes, even with the higher mortgage rates. Within Ontario CFD No. 35, out of 235 mapped units, there have been 175 home sales to date including 137 home closings. All structures appear to be in excellent condition with no physical depreciation apparent. Within the new home market in the Ontario area, we found eleven projects (including subject’s two product lines) to be comparable to the subject’s product lines. Homebuilding had not been able to keep up with the demand in 2020 and 2021 due to several factors including historically low interest rates, millennials joining the home buying market and the work from home factor which all add to the demand. While the market softened in the second half of 2022 through early 2023, the latter half of 2023 and start of 2024 have shown the Inland Empire is still seeing demand and new homes are still selling. Our search for land sales found six land sales in the market area in the past nine months that we consider to be comparable. Population growth is still occurring in the area and will continue to create the need for housing. Based on the above analysis, the highest and best use the subject property appears to be for single-family residential development at the right price points.
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Maximum Productivity
Based on the market activity of residential lands in the immediate area, we have concluded there is a need/demand for residential lands.

Highest and Best Use Conclusion – “As If Vacant”
The final determinant of highest and best use, as if vacant, is the interaction of the previously discussed factors (i.e., physical, legal, financial feasibility and maximum productivity considerations). Based upon the foregoing analysis, it is our opinion that the highest and best use for the subject property is for residential land use.

Highest and Best Use – “As Improved”
The subject property consists of Shady Tree at Country Lane and Whispering Wind at Country Lane, with 235 total proposed homes which are currently being marketed by Lennar. Country Lane began selling in October 2022 and has sold 174 homes, reflecting a sales rate of 9.7 sales per month spread across the two product lines. Independently, Shady Tree has an average absorption rate of 4.8 sales per month while Whispering Wind has an average absorption rate of 4.8 homes per month. Base prices at Country Lane have increased since grand opening, with base price increases of 12.9 to 20.3 percent at Shady Tree (with most recent base pricing ranging from $733,000 to $799,000) and an increase of 6.4 to 14.0 percent at Whispering Wind (with most recent base pricing ranging from $577,000 to $637,000). In marketing the homes, the builder is offering concessions, including rate buy-downs and help with closing costs, on a case-by-case basis. These concessions have ranged from $0 to $106,652 with an average of about $46,000 per sale at Shady Tree and $40,000 per sale at Whispering Wind. While the incentives are showing a softening market per Empire Economics’ Price Point Review Study, the plan pricing (including incentives being offered) has increased on five if the plans ranging from

0.5 up to 10 percent and decreased on two of the plans on ranging from 0.6 to 5 percent between the concluded base pricing in 2022 and current base pricing. The sales absorption rate within Country Lane is above the average in the market area. As discussed under the Inland Empire Housing Market section, within the Inland Empire, the monthly average sales per project year-to-date is 4.3 homes per month while each of the 2415
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subject communities are experiencing 4.8 sales per month. All of the homes are of good design and appear to be of good quality workmanship. It appears that Shady Tree and Whispering Wind at Country Lane are being well received and the communities are selling at the correct price points for the area. Based on the above information, it is concluded that the highest and best use for the subject property, is for the continued use, as improved.
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VALUATION ANALYSIS AND CONCLUSIONS
The Sales Comparison Approach will be used to value the subject properties. This approach compares similar properties that have recently sold or are in escrow. In determining the value for the property, a unit of comparison needs to be addressed. For detached residential lands, they are typically sold on the basis of a finished lot. That is, the sales price is determined by the finished lot value and then the remaining costs to develop the property to a finished condition are taken into account in the sales price.

Therefore, in determining a current market value for the lands, the current condition of the lots will be considered. In the case of the existing home valuations, a single new-home sale is the unit of comparison. Our search will include all comparable new home projects within the subject’s immediate and surrounding market area to find comparable new homes for sale. In determining the value for each house, a base value will be concluded for each plan which will be considered a minimum market value as most buyers typically purchase some premiums, upgrades or options which increase the price of the home.

In the case of the completed (over 95 percent complete) builder-owned models and production houses, the homes will be valued using the Sales Comparison Approach to conclude on a retail value for each plan, followed by a Discounted Cash Flow (“DCF”) Analysis due to the single ownership. The DCF will take into account the fair market value of the completed homes (utilizing the Sales Comparison Approach), remaining development costs (if any), the marketing and carrying costs associated with selling off the homes, a profit due to the developer of the homes, and a discount rate reflecting both the risk associated with selling off the homes along with the time value of money during the estimated absorption period. A home under construction (under 95 percent complete) will be valued as a finished lot rather than attribute value to a partially complete improvement. In the case of individually owned homes, the concluded minimum market value will be used for each plan and a mass appraisal technique will be addressed. In determining the concluded minimum market value, new home sales in the area will be reviewed and compared with sales of the subject completed homes using standard methodology and statistical testing. All of the value conclusions will take into 2417
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consideration improvements and/or benefits to be funded by the Ontario CFD No. 35 Special Tax Bonds and their lien. A summary of the final value conclusions will be reported at the end of this valuation section.

Market Data Discussion – Residential Lots
Within Ontario CFD 35, there are 235 pads in a generally finished condition, with 137 completed homes individually owned, 18 Lennar-owned homes that are complete or nearly complete (including six model homes and 12 production homes over 95 percent complete – all in escrow), 44 Lennar-owned homes that are under construction (under 95 percent complete with 26 in escrow), and 36 additional finished lots/pads owned by Lennar. As we are valuing a home under construction (under 95 percent complete) on the basis of a finished lot/pad, we will be valuing 80 lots/pads in our analysis.

We have searched the area and found the six transactions summarized below (listed in the Addenda) to be most comparable to the subject property. The sales are reported both on a purchase price basis and on a finished lot basis. Although some sales refer to “finished lots,” they are typically physically finished lots with some fees remaining to be paid in order to be considered truly finished lots. At times land sales are for small-lot or attached product and refer to a “blended price” for these two products. The market data refers to mostly higher density products with overall density ranging from 10 to 25 dwelling units per acre while the subject property has an overall density of 7.1 dwelling units per acre which is a lower density than most of the recent land sales in Ontario Ranch. Below are the details of each of the comparable land sales along with a discussion of each transaction in relationship to the subject lands.

Land Sale No. 1 refers to the December 2023 purchase of the 14.6 acre parcel located at the northwest corner of Archibald and Eucalyptus Avenues in the master planned community of Parkside about one mile directly south of the subject. New Home Company is currently selling their NUVO project with four communities (Hyde, Bryant, Lincoln and Grant) adjacent to the north and west of this site. Lincoln and Grant are both sold out with Hyde having eight homes remaining to sell and Bryant currently selling. The parcel has 2418
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approvals for 236 units for an overall density of about 16 dwelling units per acre. Lennar purchased the site from Lewis Companies for $35,177,500, closing in December 2023.

This equates to a per lot price of $149,057 based on a reported estimated finished lot/pad value of $250,000 blended between the three products. The community will include three distinct products, either two- or three-story cluster homes. In comparison to the subject property, this site has a higher overall density (16.16 dwelling units per acre versus the subject’s 7.1 dwelling units per acre) which makes it significantly inferior to the subject.

Land Sale No. 2 pertains to Pulte Homes’ purchase of 333 proposed units along the west side of Hamner, north of Eucalyptus Avenue within the Esperanza Specific Plan about two miles southeast of the subject. Pulte purchased the site in December 2023 for $72,527,499 or $217,800 per unit. Per the approved site plan there are 156 townhomes, 82 small, detached cluster lots and 95 large, detached cluster lots. Per brokers familiar with the transaction, the reported blended finished lot price is $315,000 per unit which is broken down as $258,000 for the townhomes, $315,000 for the small cluster lots and $401,000 for the large cluster lots. The site is also known as Planning Area 3 and 4 of the Esperanza Specific Plan. In comparison to the subject property, the blended price on this transaction is considered to be inferior in density (11 dwelling units per acre versus the subject’s 7.1 dwelling units per acre). The cluster lots only have a lower density and range from $315,000 to $401,000 per unit which is more like the subject.

Land Sale No. 3 is in reference to another Lennar purchase, this one within Countryside Specific Plan, just north of the subject site. Lennar purchased the site for 265 units in October 2023 for $49,559,000 or $187,015 per unit based upon a reported $297,000 blended per unit finished lot/pad price. The product is estimated for townhomes, cluster units and detached lots with the finished prices estimated as $260,000 for the townhomes, $315,000 for the Cluster lots and $355,000 for the detached conventional lots. The density within the project is estimated to be 12 dwelling units per acre. In comparison to the subject property, the blended price on this transaction is considered to be inferior due to the higher density when compared to the subject property’s 7.1 dwelling units per acre. 2419
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However, the cluster lots have a lower density and a price range of $315,000 to $355,000 which are considered similar to the subject.

Land Sale No. 4 pertains to the purchase of 191 lots by Landsea Homes located in the Westhaven Specific Plan along the west side of Haven Avenue, north of Chino Avenue in Ontario Ranch about one mile northeast of the subject site. Landsea purchased the 191 lots in August 2023 for $25,234,500 or a blended price of $132,118 per unit based on an estimated finished lot blended price of $280,000. The finished lot per product is estimated at $260,000 for the townhomes and $315,000 for the cluster detached units.

The overall density on the site has been estimated at 10 dwelling units per acre. In comparison to the subject property, this transaction is considered to be slightly inferior in density based on the blended price and more similar to the cluster lots.

Land Sale No. 5 is in regard to another Landsea Homes purchase, this one along the west side of Mill Creek Avenue, south of Chino Avenue within the RichHaven Specific Plan about 1.5 miles east of the subject. Landsea purchased the site entitled for 144 townhomes in June 2023 for $16,924,000 or $117,528 per unit based on a reported finished lot price of $235,000. The property has an overall density of about 15 dwelling units per acre which is a higher density than the subject. All 144 units are proposed to be attached townhomes as Landsea is continuing their successful Eave community (adjoining lands to the west) on the site. In comparison to the subject site, this transaction is considered to be significantly inferior due to the higher density when compared to the subject site’s overall density of 7.1 dwelling units per acre and the fact that they are all attached units.

Land Sale No. 6 refers to the sale of a high-density property located about five miles north of the subject property along the north side of Concours Street at Duesenberg Drive in Ontario proper, not within the Ontario Ranch community. Shea Homes purchased the property from Lewis Group of Companies in August 2023 for $8,600,000 or $102,381 per unit based on an estimated finished lot price of $198,651. Duesenberg Drive bisects the property with proposed homes on each side of the street. The site contains an estimated 2420
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3.3 acres with entitlements for 84 attached units which equates to 25.45 dwelling units per acre. In comparison to the subject properties, this sale has a much higher density which suggests that the per unit or finished lot/pad price is significantly inferior to the subject property with a density of 7.1 dwelling units per acre. Less emphasis is placed on this transaction as it is not located within the Ontario Ranch, however we have included it to show the recent activity in the subject marketplace. The much higher density would set the lower limit based on a per unit value in the current market.

The chart on the following page summarizes the considerations used in adjusting the market data to the subject property.

Data
No. Location
Date of
Sale
Density
Finished
Lot Price
Rangh Comparison to Subject
1 Ontario Ranch 12/23 16 du/ac $250,000
(blended) Significantly Inferior – Density
2 Ontario Ranch 12/23 11 du/ac
$315,000
(blended)
($258,000 -
$401,000)
Inferior – Density blended
3 Ontario Ranch 10/23 12 du/ac
$297,000
(blended)
$260,000 to
$355,000
Inferior – Density blended
4 Ontario Ranch 8/23 10 du/ac
$280,000
(blended
$250,000 -
$310,000
Inferior – Density blended
5 Ontario Ranch 6/23 15 du/ac $235,000 Significantly Inferior – Density & Attached
6 Ontario Proper 8/23 25 du/ac $198,651 Significantly Inferior – Density & Attached

The market data has an overall, unadjusted, finished lot range from $198,651 to $315,000 with the major difference being overall density within the various communities. The lowest prices at $198,651 refers to significantly higher density at 25 dwelling units per acre versus the subject community density which is 7.1 dwelling units per acre. The subject has a lower density than all of the recent sales in the Ontario Ranch area; however, when reviewing the sales, several of the builders have reported their finished lot pricing based on product. The subject Shady Tree lots are generally conventional small lots rather than cluster lots and while Whispering Wind is in a cluster format, they are all detached small lots. We have reviewed Land Data Nos. 2, 3 and 4 which all included some townhome 2421
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lots and some either cluster or more conventional single family small lots. The cluster or single family detached lots range from $315,000 to $401,000 with Data No. 3 reporting a $355,000 finished lot price for the single family detached lots, similar to the subject. Data No. 3 is also located within the Countryside Specific Plan, same as the subject property making it the most comparable.

Based on the market data, which is considered to be good, and taking into account the varying factors in the transactions along with the current residential land market, we have concluded that the subject lots have a blended finished lot value of $330,000. However, the lots are not yet in a true finished condition. Based on the above and considering the remaining costs as discussed in the Property Description section, the land value is calculated as follows:

Lennar Ownership of Lots/Pads:
80 Lots/Pads x $330,000 $ 26,400,000
Less: Remaining Costs ($60,960.55 x 80) (4,876,844)
Current Value of 80 Lots/Pads $ 21,523,156
Retail House Valuation Analysis – Shady Tree & Whispering Wind by Lennar Shady Tree and Whispering Wind at Country Lane are proposed for a total of 235 detached homes with 137 completed and closed to individuals. The builder owns six model homes and 12 production home over 95 percent complete for a total of 18 homes.

The homes under construction and the remaining lots were valued above. This section will value the builder-owned homes, followed by a value for the individually-owned homes using a mass appraisal technique. We have searched the local Multiple Listing Service (“MLS”) and inspected the property and there has not been any resales or current resale listings within Country Lane. On the following page is a summary of the various floor plans in both Shady Tree and Whispering Wind. A listing of the improved residential comparable properties is located in the Addenda of this report. All improved residential comparable properties are located within the subject City of Ontario or the neighboring City of Chino. 2422
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Shady Tree at Country Lane
Floor Plan Bed/Bath Floors/
Parking Sq. Ft.

Ind.

Owned
Bldr.

Owned
Plan 1 4 / 2.5 2 / 2 2,213 34 1*
Plan 2 4+ Loft / 4 2 / 2 2,315 15 1*
Plan 3 5 / 4 2 / 2 2,409 19 1*
Subtotal 68 3
Whispering Wind at Country Lane
Plan 1 3 / 2.5 2 / 2 1,618 17 3
Plan 2 3 / 2.5 2 / 2 1,800 18 4*
Plan 3 4 + Loft / 3 2 / 2 2,067 17 4*
Plan 4 5 / 3 2 / 2 2,202 17 4*
Subtotal 69 15
Total 137 18
*Each asterisk designates one model home per that plan. In addition to the above there are 21 homes under construction and five additional finished lots within Shady Tree and 23 homes under construction and 31 additional lots within Whispering Wind.

The most appropriate new home comparable data for Shady Tree Plan 1 is:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
1 (Subj.) 1 4 / 2.5 2 / 2 2,213 --
1 2 4+ Loft / 4 2 / 2 2,315 $345.14
1 3 5 / 4 2 / 2 2,409 $328.77
2 3 4 + Loft / 3 2 / 2 2,067 $340.11
2 4 5 / 3 2 / 2 2,202 $329.70
6 4 4 / 3 2 / 2 2,173 $379.66
7 2 4 / 3 2 / 2 2,208 $341.61
9 2 4 / 3 2 / 2 2,200 $364.54
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $328.77 to $379.66 per square foot. The current base asking price for Shady Tree Plan 1 is $331.22 per square foot. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buydowns or closing cost assistance) which average about $46,000 per home which equates to over $20 per square foot on the subject plan. There have been 34 closings of Shady Tree Plan 1 with actual sales prices from $269.61 to $331.91 per square foot. There are nine current escrows of Shady Tree Plan 1 with a sales price range from $301.15 to $329.79 per 2423
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square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Shady Tree Plan 1 has a base current market value of $300.00 per square foot. This calculates as follows:
2,213 sf x $300.00 = $663,900
The most appropriate new home comparable data for Shady Tree Plan 2 is:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
1 (Subj.) 2 4+ Loft / 4 2 / 2 2,315 --
1 1 4 / 2.5 2 / 2 2,213 $331.22
1 3 5 / 4 2 / 2 2,409 $328.77
2 4 5 / 3 2 / 2 2,202 $329.70
6 4 4 / 3 2 / 2 2,173 $379.66
7 3 4 / 3 2 / 2 2,229 $345.14
9 2 4 / 3 2 / 2 2,200 $364.54
9 3 4 / 3 2 / 2 2,465 $344.82
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $328.77 to $379.66 per square foot. The current base asking price for Shady Tree Plan 2 is $345.14 per square foot. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buydowns or closing cost assistance) which average about $46,000 per home which equates to almost $20 per square foot on the subject plan. There have been 15 closings of Shady Tree Plan 2 with actual sales prices from $264.63 to $329.13 per square foot. There are four current escrows of Shady Tree Plan 2 with a sales price range from $307.40 to $330.09 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost 2424
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concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Shady Tree Plan 2 has a base current market value of $300.00 per square foot. This calculates as follows:
2,315 sf x $300.00 = $694,500
The most appropriate new home comparable data for Shady Tree Plan 3 is:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
1 (Subj.) 3 5 / 4 2 / 2 2,409 --
1 1 4 / 2.5 2 / 2 2,213 $331.22
1 2 4+ Loft / 4 2 / 2 2,315 $345.14
2 4 5 / 3 2 / 2 2,202 $329.70
7 3 4 / 3 2 / 2 2,229 $345.14
7 4 4 / 3.5 2 / 2 2,528 $321.02
9 3 4 / 3 2 / 2 2,465 $344.82
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $321.02 to $345.14 per square foot. The current base asking price for Shady Tree Plan 3 is $328.77 per square foot. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buydowns or closing cost assistance) which average about $46,000 per home which equates to over $19 per square foot on the subject plan. There have been 19 closings of Shady Tree Plan 3 with actual sales prices from $262.16 to $323.80 per square foot. There are six current escrows of Shady Tree Plan 3 with a sales price range from $304.66 to $326.75 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Shady Tree Plan 3 has a base current market value of $295.00 per square foot. This calculates as follows:
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2,409 sf x $295.00 = $710,655
The most appropriate new home comparable data for Whispering Wind Plan 1 is:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
2 (Subj.) 1 3 / 2.5 2 / 2 1,618 --
2 2 3 / 2.5 2 / 2 1,800 $357.78
3 H2 3 / 2.5 3 / 2 1,550 $399.99
3 H3 4 / 3.5 3 / 2 1,727 $395.48
4 B2 3 / 2.5 2 / 2 1,536 $417.96
4 B4 3 / 2.5 2 / 2 1,675 $393.43
5 2 3 / 2.5 2 / 2 1,638 $403.25
5 3 3 / 3.5 3 / 2 1,785 $364.21
8 2 3 / 2.5 2 / 2 1,684 $416.86
The subject market includes comparable products located within Ontario. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $357.78 to $417.96 per square foot. The current base asking price for Whispering Wind Plan 1 is $379.48 per square foot. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance) which average about $40,000 per home which equates to almost $25 per square foot on the subject plan. There have been 17 closings of Whispering Wind Plan 1 with actual sales prices from $323.99 to $385.82 per square foot. There are three current escrows of Whispering Wind Plan 1 with a sales price range from $358.89 to $400.65 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Whispering Wind Plan 1 has a base current market value of $350.00 per square foot. This calculates as follows:
1,618 sf x $350.00 = $566,300
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The most appropriate new home comparable data for Whispering Wind Plan 2 is:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
2 (Subj.) 2 3 / 2.5 2 / 2 1,800 --
2 1 3 / 2.5 2 / 2 1,618 $379.48
2 3 4 + Loft / 3 2 / 2 2,067 $340.11
3 H3 4 / 3.5 3 / 2 1,727 $395.48
3 H4 4 / 3.5 3 / 2 1,809 $393.03
4 B4X 3 / 2.5 2 / 2 1,754 $379.70
5 3 3 / 3.5 3 / 2 1,785 $364.21
5 4 4 / 3 2 / 2 1,805 $373.78
The subject market includes comparable products located within Ontario. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $340.11 to $395.48 per square foot. The current base asking price for Whispering Wind Plan 2 is $357.78 per square foot. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance) which average about $40,000 per home which equates to over $22 per square foot on the subject plan. There have been 18 closings of Whispering Wind Plan 2 with actual sales prices from $310.81 to $354.41 per square foot. There are three current escrows of Whispering Wind Plan 2 with a sales price range from $357.54 to $367.20 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Whispering Wind Plan 2 has a base current market value of $320.00 per square foot. This calculates as follows:
1,800 sf x $320.00 = $576,000
The most appropriate new home comparable data for Whispering Wind Plan 3 is:
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Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
1 (Subj.) 3 4 + Loft / 3 2 / 2 2,067 --
2 2 3 / 2.5 2 / 2 1,800 $357.78
2 4 5 / 3 2 / 2 2,202 $329.70
6 3 4 / 3 2 / 2 2,133 $382.09
6 4 4 / 3 2 / 2 2,173 $379.66
7 1 4 / 3 2 / 2 2,053 $359.74
8 3 4 / 3 2 / 2 1,955 $389.26
11 3 3 / 2.5 2 / 2 2,046 $383.18
11 4 3 / 2.5 2 / 2 2,100 $378.09
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $329.70 to $389.26 per square foot. The current base asking price for Whispering Wind Plan 3 is $340.11 per square foot. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance) which average about $40,000 per home which equates to over $19 per square foot on the subject plan. There have been 17 closings of Whispering Wind Plan 3 with actual sales prices from $271.61 to $339.38 per square foot.

There are six current escrows of Whispering Wind Plan 3 with a sales price range from $316.76 to $341.68 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions.

Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Whispering Wind Plan 3 has a base current market value of $300.00 per square foot. This calculates as follows:
2,067 sf x $300.00 = $620,100
The most appropriate new home comparable data for Whispering Wind Plan 4 is:
2428
_________________________________________________________________________________________________________ Appraisal Report
City of Ontario CFD No. 35 (Countryside Phase 2 South-Facilities)-Shady Tree & Whispering Wind at Country Lane by Lennar Kitty Siino & Associates, Inc. Page 68
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
1 (Subj.) 4 5 / 3 2 / 2 2,202 --
2 3 4 + Loft / 3 2 / 2 2,067 $340.11
6 3 4 / 3 2 / 2 2,133 $382.09
6 4 4 / 3 2 / 2 2,173 $379.66
7 2 4 / 3 2 / 2 2,208 $341.61
7 3 4 / 3 2 / 2 2,229 $345.14
9 2 4 / 3 2 / 2 2,200 $364.54
11 4 3 / 2.5 2 / 2 2,100 $378.09
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $340.11 to $382.09 per square foot. The current base asking price for Whispering Wind Plan 4 is $329.70 per square foot. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance) which average about $40,000 per home which equates to over $18 per square foot on the subject plan. There have been 17 closings of Whispering Wind Plan 4 with actual sales prices from $265.93 to $318.23 per square foot.

There are six current escrows of Whispering Wind Plan 4 with a sales price range from $307.60 to $343.89 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions.

Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Whispering Wind Plan 4 has a base current market value of $295.00 per square foot. This calculates as follows:
2,202 sf x $295.00 = $649,590
Builder Owned Retail Value – Country Lane
Within the subject property there are 12 production homes and six models over 95 percent complete owned by Lennar. Per interviews with builders, upgrades, and 2429
_________________________________________________________________________________________________________ Appraisal Report
City of Ontario CFD No. 35 (Countryside Phase 2 South-Facilities)-Shady Tree & Whispering Wind at Country Lane by Lennar Kitty Siino & Associates, Inc. Page 69
landscape/hardscape of over $100,000 are installed in subject-like model homes, however, the builders generally consider this a marketing cost and do not anticipate recovering this investment on a dollar-for-dollar basis. Based on historical information, home sizes and fixtures, actual model home sales within the subject area and the current real estate market, a consideration of a $40,000 premium has been included with each of the model homes. As concluded above, the retail base value conclusions for the builderowned homes within Country Lane are calculated as follows:

Shady Tree Plan 1 (1 x $663,900) $ 663,900
Shady Tree Plan 2 (1 x $694,500) 694,500
Shady Tree Plan 3 (1 x $710,655) 710,655
Whispering Wind Plan 1 (3 x $566,300) 1,698,900
Whispering Wind Plan 2 (4 x $576,000) 2,304,000
Whispering Wind Plan 3 (4 x $620,100) 2,480,400
Whispering Wind Plan 4 (4 x $649,590) 2,598,360
Model Upgrades (6 x $40,000) 240,000
Retail Value - Lennar Owned Homes $11,390,715
Absorption Period
In order to arrive at an absorption period for the 18 builder-owned homes within Country Lane, the absorption rates for the subject and surrounding developments have been reviewed. As discussed under the Highest and Best Use section earlier within this report, there is an average sales rate for Country Lane of 9.7 sales per month, combined across both product lines. The Improved Residential Market Data which are considered competition have sales rates from 2.5 to 6.0 sales per month. We have concluded that the subject 18 homes, 12 of which are currently in escrow, will be absorbed over a three-month period taking into consideration the absorption rate and the current escrows, along with current market conditions and the rising interest rates.

Remaining Costs
As discussed under the remaining development costs section earlier within this report Lennar has stated there are $60,960.55 per unit remaining in land development costs and fees associated with the builder-owned homes and lot. This equates to a total of 2430
_________________________________________________________________________________________________________ Appraisal Report
City of Ontario CFD No. 35 (Countryside Phase 2 South-Facilities)-Shady Tree & Whispering Wind at Country Lane by Lennar Kitty Siino & Associates, Inc. Page 70
$1,097,290 for the builder-owned 18 homes. It is an assumption of this analysis that the costs will be spread evenly over the three-month absorption time period.

Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on varying factors such as absorption period, intensity of marketing, etc. Due to the rapidly changing market with increasing interest rates, an eight percent allowance has been estimated for marketing expenses and two percent for general and administrative costs for a total of ten percent in expenses for this analysis.

Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross sales proceeds. During the Great Recession this range was lowered considerably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their workforce. As the market improved, so did the profits. A ten percent profit is considered appropriate in the analysis for this project.

Discount Rate
In selecting a discount rate, the following was completed:

1. Interviews with merchant builders in the Ontario Ranch area

2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.)

3. The quality, construction, historical sales, and product on the subject property The homes within the subject property appear to be well constructed and have been selling at good absorption rates. There is minimal remaining development associated with the project. New home sales appear to be withstanding the higher interest rates; however, this may be due to limited existing inventory available. Due to these factors, coupled with the amount of product remaining, a ten percent discount rate is considered appropriate for this analysis.
2431
_________________________________________________________________________________________________________ Appraisal Report
City of Ontario CFD No. 35 (Countryside Phase 2 South-Facilities)-Shady Tree & Whispering Wind at Country Lane by Lennar Kitty Siino & Associates, Inc. Page 71
Discounted Cash Flow Summary
The discounted revenue for the builder-owned homes in Country Lane (see DCF Analysis in Addenda) is $7,883,526.

Lennar Ownership Valuation Total – Country Lane
Lennar owns 18 homes over 95 percent complete, including six models, along with 80 lots either with houses under construction (under 95 percent complete) or in a finished lot condition within Ontario CFD No. 35. The homes under construction (under 95 percent) have been valued as a finished lot/pad rather than attribute value to a partially complete improvement. The final value conclusion for the builder owned property is shown below. 80 Lots Valuation $ 21,523,156
Houses (18 Including 6 models) 7,883,526
Total Lennar Owned Property $ 29,406,682
Individual Owners Value Conclusion – Country Lane
In determining the value for the individually owned homes within Country Lane, we have considered the concluded base price value for the homes, which is considered a minimum market value. This is due to homebuyers typically purchasing some additional upgrades, options or paying some premiums for the home. The concluded values are shown below:

Shady Tree Plan 1 (34 x $663,900) $ 22,572,600
Shady Tree Plan 2 (15 x $694,500) 10,417,500
Shady Tree Plan 3 (19 x $710,655) 13,502,445
Whispering Wind Plan 1 (17 x $566,300) 9,627,100
Whispering Wind Plan 2 (18 x $576,000) 10,368,000
Whispering Wind Plan 3 (17 x $620,100) 10,541,700
Whispering Wind Plan 4 (17 x $649,590) 11,043,030
Total Individual Ownership Value $88,072,375
In an additional review, we have reviewed the builder sales prices for the homes within Country Lane, where 137 closings occurred between May 16, 2023 and April 1, 2024. The builders’ reported net closing prices for the individually owned homes total $88,555,310.

The concluded current minimum market value of $88,072,375 equates to less than one percent less than the actual sales prices. The builder’s reported prices include premiums, 2432
_________________________________________________________________________________________________________ Appraisal Report
City of Ontario CFD No. 35 (Countryside Phase 2 South-Facilities)-Shady Tree & Whispering Wind at Country Lane by Lennar Kitty Siino & Associates, Inc. Page 72
upgrades and purchased options as well as took into consideration the concessions given by the builder. Due to the options, upgrades and premiums, the actual prices would be more than the base pricing, however base pricing within the project has increased 6.4 to

20.3 percent based on the plan. While this appreciation would have typically been seen in the current market value being higher, the appreciation is offset by the concessions which are determined on a case-by-case basis. As previously stated, the concessions have averages over $40,000 per sale on Whispering Wind and over $46,000 per sale on Shady Tree. Based on the above information and analysis along with our familiarity with the market, it is our conclusion that the original builder’s sales prices further substantiate the concluded minimum market value for the individually owned homes. 2433
_________________________________________________________________________________________________________ Appraisal Report
City of Ontario CFD No. 35 (Countryside Phase 2 South-Facilities)-Shady Tree & Whispering Wind at Country Lane by Lennar Kitty Siino & Associates, Inc. Page 73

APPRAISAL REPORT SUMMARY
The appraisal assignment was to value the subject property within Ontario CFD No. 35 which consists of 235 proposed residential units. The 235 units are known as Shady Tree and Whispering Wind at Country Lane, being marketed, and sold by Lennar, and are located in the Ontario Ranch area of the City of Ontario. The subject includes two product lines: Shady Tree, 97 detached homes arranged on “Z” lots; and Whispering Wind, 138 detached cluster homes arranged in motorcourts. As of April 1, 2024, individuals have purchased and closed 137 of the total 235 proposed houses, with an additional 38 homes in escrow which are due to close upon completion. The community has enjoyed a good sales pace. All structures appear to be in excellent condition with no visible depreciation.

We have reviewed builder sales and reviewed the local MLS for current re-sale listings or resales and found none.

The subject properties were valued utilizing the Sales Comparison Approach to value, a Discounted Cash Flow Analysis, and a Mass Appraisal Technique for the individually owned homes. A minimum value was determined by concluding at a base value for the individually owned homes. The valuation took into account the improvements/benefits to be funded by the special tax Ontario CFD No. 35 bond proceeds along with the Ontario CFD No. 35 special tax lien. The concluded aggregate value for the subject properties, subject to their respective special tax lien, is:

Shady Tree and Whispering Wind at Country Lane:

Lennar Ownership (80 lots & 18 houses) $ 29,406,682
Individual Owners (137 houses) $ 88,072,375
Total Aggregate Value Ontario CFD No. 35 $117,479,057
The above values are stated as of said date of value and subject to the attached Assumptions and Limiting Conditions and Appraiser’s Certification. 2434
_________________________________________________________________________________________________________ Appraisal Report
City of Ontario CFD No. 35 (Countryside Phase 2 South-Facilities)-Shady Tree & Whispering Wind at Country Lane by Lennar Kitty Siino & Associates, Inc. Page 74
APPRAISER’S CERTIFICATION
The appraiser certifies that to the best of his knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased, professional analyses, opinions, and conclusions.

3. The appraiser has no present or prospective interest in the property that is the subject of this report, and no personal interest or bias with respect to the parties involved.

4. The appraiser’s compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result or the occurrence of a subsequent event.

5. This appraisal was not based on a requested minimum valuation, a specific valuation, or the approval of a loan.

6. Analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

7. Kitty Siino has made a personal inspection of the property that is the subject of this report.

8. Kitty Siino has not performed any appraisal services on the subject property in the past three years.

9. No other appraisers have provided significant professional assistance to the persons signing this report.

10. The reported analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the requirements of the Appraisal Institute’s Code of Professional Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice.

11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

12. As of the date of this report, Kitty Siino has completed the requirements of the continuing education program of the Appraisal Institute.

Kitty S. Siino, MAI
State Certified General
Real Estate Appraiser (AG004793)
2435

ADDENDA
2436
ONTARIO CFD NO. 35 BOUNDARY MAP
2437
2438
TRACT MAP Nos. 17449 and 17450
2439
2440
2441

DISCOUNTED CASH FLOW ANALYSES
2442
Ontario CFD 35 (Shady Tree & Whispering Wind) Lennar-Owned Houses DCF MONTH Months MONTH 1 MONTH 2 MONTH 3 TOTAL
3 INCOME:

Retail Sales 11,390,715 $3,796,905 $3,796,905 $3,796,905 $11,390,715 TOTAL INCOME $3,796,905 $3,796,905 $3,796,905 $11,390,715 EXPENSES:

Remaining Costs ($365,763) ($365,763) ($365,764) ($1,097,290) Marketing & Carrying Expenses 10% ($379,691) ($379,691) ($379,691) ($1,139,072) Profit 10% ($379,691) ($379,691) ($379,691) ($1,139,072) TOTAL EXPENSES ($1,125,144) ($1,125,144) ($1,125,145) ($3,375,433) NET CASH FLOW $2,671,761 $2,671,761 $2,671,760 $8,015,282 Discount Factor 10% 0.9917 0.9835 0.9754
DISCOUNTED CASH FLOW $2,649,680 $2,627,782 $2,606,064 $7,883,526 CUMULATIVE DISCOUNTED $2,649,680 $5,277,462 $7,883,526 $7,883,526

CASH FLOW
2443

FINISHED LOT LAND SALES MAP
& SUMMARY CHART
2444

FINISHED LOT LAND SALES MAP
2445

FINISHED LOT LAND SALES SUMMARY CHART
Data
No. Location / APN / Buyer / Seller Sales
Date # Lots Lot
Size
Sales Price /
Price per Lot
Est.

Finished
Lot Price
Comments
1 NWC Eucalyptus and Archibald,
Parkside II, Ontario Ranch /
0218-053-05-0000 / Lennar /
Lewis
Dec-23 236 17
du/ac
$35,177,500 /
$149,057 $250,000
Site is 14.6 acres. Product will be three
two- and three-story cluster products.

Price is blended for the three products
2 W/S Hamner north of
Eucalyptus Avenue, Esperanza
Specific Plan, Ontario Ranch /
N/A / Pulte Homes / Richland
Dec-23 333 11
du/ac
$72,527,499 /
$217,800 $315,000
Blended price, estimated F/L values are
$258,000 for 156 townhomes; $315,000
for 82 small detached cluster lots and
$401,000 for 95 large detached cluster
lots. PA 3 & 4 of Esperanza SP
3 West side Archibald; S/O
Riverside Drive N/O Chino,
Countryside Spec. Plan, Ontario
Ranch / 0218-111-60-0000 /
Lennar / Landmark Co.

Oct–23 265 12
du/ac
$49,559,000 /
$187,015 $297,000
Blended price, estimated F/L values are
$260,000 for townhomes; $315,000 for
Cluster and $355,000 for detached lots.

Within Countryside SP
4 W/S Haven Avenue N/O Chino
Avenue, Westhaven Sp. Plan,
Ontario Ranch / 0218-151-10-
0000 / Landsea Homes /
Richland
Aug-23 191 10
du/ac
$25,234,500 /
$132,118 $280,000
Blended price, estimated F/L values are
$250,000 for townhomes and $310,000
for the cluster product. Within the
Westhaven Specific Plan in Ontario
Ranch
5 W/S Mill Creek Avenue; S/O
Chino Drive, RichHaven Spec
Plan, Ontario Ranch / 0218-203-
03-0000 / Landsea Homes /
Richland
Jun-23 144 15
du/ac
$16,924,000 /
$117,528 $235,000
Continuation of LandSea successful
Eave project (on adjoining lands to the
west) with townhomes. Within the
RichHaven Specific Plan.
6 CN/S Concours Street at
Duesenberg Drive, Ontario
Proper 0210-531-16 & 30 / Shea
/ Lewis Group of Companies
Aug-23 84 25
du/ac
$8,600,000 /
$102,381 $198,651
Site is 3.3 acres in Ontario proper (not
within Ontario Ranch). Anticipated to
close in August 2023
2446

IMPROVED RESIDENTIAL SALES MAP
& SUMMARY CHART
2447

IMPROVED RESIDENTIAL SALES MAP
2448

IMPROVED RESIDENTIAL SALES SUMMARY CHART
Data
No.

Project Name
Location/Developer Plan Room
Count
Floors
/Parking
Size
(SF)
Lot Size or
Density /
Absorption
Base Sales
Price Price/SF
1 Shady Tree at Country Lane / SWC
South Archibald Avenue and Chino
Avenue, Ontario / Lennar
1 4 / 2.5 2 / 2 2,213 3,455 sf lots $733,000 $331.22
2 4+ Loft / 4 2 / 2 2,315 4.8 sales/mo $799,000 $345.14 3 5 / 4 2 / 2 2,409 $792,000 $328.77
2 Whispering Wind at Country Lane /
SWC South Archibald Avenue and
Chino Avenue, Ontario / Lennar
1 3 / 2.5 2 / 2 1,618 $614,000 $379.48
2 3 / 2.5 2 / 2 1,800 3,000 sf lots $644,000 $357.78
3 4 + Loft / 3 2 / 2 2,067 4.8 sales/mo $703,000 $340.11 4 5 / 3 2 / 2 2,202 $726,000 $329.70
3 Hyde at NUVO Parkside / NWC
South Archibald Avenue and
Eucalyptus Avenue, Ontario / The
New Home Company
H1 2 / 2.5 3 / 1 1,197 $562,990 $470.33
H2 3 / 2.5 3 / 2 1,550 3,000 sf lots $619,990 $399.99
H3 4 / 3.5 3 / 2 1,727 3.7 sales/mo $682,990 $395.48
H4 4 / 3.5 3 / 2 1,809 $710,990 $393.03
4 Bryant at NUVO Parkside / NWC
South Archibald Avenue and
Eucalyptus Avenue, Ontario / The
New Home Company
B1/1X 3 / 2.5 2 / 2T 1,370 $606,990 $443.06
B2 3 / 2.5 2 / 2 1,536 3,000 sf lots $641,990 $417.96
B3 3 / 2.5 2 / 2 1,475 4.0 sales/mo $647,990 $439.32
B4 3 / 2.5 2 / 2 1,675 $658,990 $393.43
B4X 3 / 2.5 2 / 2 1,754 $665,990 $379.70
5 Fairhaven at Park Place / SWC
Merrill Avenue and Remington Drive,
Ontario / Lennar
1 3 / 2.5 2 / 2 1,470 Detached
Condos $623,537 $424.17
2 3 / 2.5 2 / 2 1,638 11.2 du/acre $660,528 $403.25
3 3 / 3.5 3 / 2 1,785 4.1 sales/mo $650,113 $364.21
4 4 / 3 2 / 2 1,805 $674,672 $373.78
6 Rhoe at Neuhouse, NE Haven
Avenue and Schafer Avenue,
Ontario / Landsea
1 3 / 2.5 2 / 2 1,862 2,700 sf lot $765,000 $410.85
2 4 / 3 2 / 2 1,922 Detached $815,000 $424.04
3 4 / 3 2 / 2 2,133 Motorcourts $815,000 $382.09
4 4 / 3 2 / 2 2,173 2.7 sales/mo $825,000 $379.66
7 Oleander, SE of Ontario Ranch
Road and Haven Avenue, Ontario /
Shea Homes
1 4 / 3 2 / 2 2,053 2,700 sf lot $738,555 $359.74
2 4 / 3 2 / 2 2,208 Detached $754,270 $341.61
3 4 / 3 2 / 2 2,229 Motorcourts $769,307 $345.14
4 4 / 3.5 2 / 2 2,528 3.2 sales/mo $811,551 $321.02
8 Tays Landing, SW of Campus
Avenue and East Riverside Drive,
Ontario / Meritage
1 3 / 2.5 2 / 2 1,465 3,000 sf lots $674,000 $460.07
2 3 / 2.5 2 / 2 1,684 6.0 sales/mo $702,000 $416.86
3 4 / 3 2 / 2 1,955 $761,000 $389.26
2449
9 Parklin at the Preserve, SW of Pine
Ave and Hellman Ave, Chino /
Richmond American
1 3 / 2.5 2 / 2 1,940 5,400 sf lots $786,990 $405.66
2 4 / 3 2 / 2 2,200 2.5 sales/mo $801,990 $364.54
3 4 / 3 2 / 2 2,465 $849,990 $344.82
10 Voyage at the Preserve, SW of Pine
Ave and Hellman Ave, Chino /
Lennar
1 3 / 3 2 / 2 1,838 5,400 sf lots $774,225 $421.23
2 4 / 3.5 2 / 2 1,947 3.5 sales/mo $814,240 $418.20
3 4 / 3.5 2 / 2 2,040 $818,498 $401.22
11 Rembrandt at Contour, NW of Pine
Ave and Hellman Ave, Chino / KB
Home
1 3 / 2.5 2 / 2 1,815 $749,990 $413.22
2 3 / 2.5 2 / 2 1,900 3,000 sf lots $761,990 $401.05
3 3 / 2.5 2 / 2 2,046 5.0 sales/mo $783,990 $383.18
4 3 / 2.5 2 / 2 2,100 $793,990 $378.09
2450
APPRAISER’S QUALIFICATIONS
2451
QUALIFICATIONS OF KITTY S. SIINO, MAI
Education
Bachelor of Arts in Business Administration, Financial Investments, California State University, Long Beach, California (1980)
Post-Graduate Study, Real Estate Development, University of California, Irvine, California Appraisal Institute Classes: Uniform Standards of Professional Appraisal Practice, A & B; Appraisal Principles; Appraisal Procedures; Basic Income Capitalization; Advanced Income Capitalization; Narrative Report Writing; Advanced Applications, Case Studies.

Successfully completed all classes in addition to successfully completing the writing of a Demonstration Report and taking the Comprehensive Exam. Became a Member of the Appraisal Institute in December 1996. Have completed over 100 hours of continuing education through the Appraisal Institute every five years.

Employment
1988 - Present:

Self-Employed Real Estate Appraiser. Duties include the appraisal of various types of properties such as commercial, retail, industrial and vacant land. More complex assignments include easements, right-of-ways and special assessment districts. From 1996 to present, specialized in special assessment districts and community facilities districts appraisals for public entities, including Jurupa Community Services District, Corona Norco Unified School District, City of Corona, City of Chula Vista, City of San Marcos and City of Moreno Valley.
1986-1988:

Project Manager of Development for Ferguson Partners, Irvine, California. Duties included land acquisitions; review of fee appraisals and valuations; analysis of proposed development; planning and design; and management of development, construction and lease-up. The types of properties developed were commercial and industrial. Duties ranged from raw, vacant site development through property management of recently developed projects.
1981 - 1986
Manager of Finance, Construction for Community Development Division, The Irvine Company, Irvine, California. Duties included originating and managing a newly formed division of finance to bridge between the accounting functions and project management functions. Worked with analysis and budgets for Community Development Division. Coordinated with cities in forming new Assessment Districts and Community Facilities Districts to finance major infrastructure improvements.

Types of properties were apartments and single-family residential lots on a for sale basis to apartment and homebuilders.
1980 - 1981
Investment Counselor, Newport Equity Funds, Newport Beach, California. Duties included obtaining private financing for residential properties, working with appraisals of properties and analyzing the investments.
2452
Licenses
Real Estate Sales Person, State of California, 1980
Certified General Appraiser, State of California (#AG004793) Organizations
MAI #11145 - The Appraisal Institute
Public Financing
CASTOFF Meetings, 2006, 2007, 2008, 2009, 2010, 2011, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2022
Speaker, Mello-Roos & Special Assessment Financing, UCLA Extension Public Policy Program, February 2009 and March 2011
2453
Department: Engineering
Prepared By: Craig Cruz
Staff Member Presenting: Scott Murphy,
Executive Director Community Development
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 30
SUBJECT: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA, ADDING ARTICLE 22 (VALET PARKING) TO CHAPTER 6 (TRAFFIC) OF TITLE 4 (PUBLIC SAFETY) OF THE ONTARIO MUNICIPAL CODE, ESTABLISHING

REGULATIONS RELATING TO VALET PARKING

CITY OF ONTARIO
Agenda Report
June 4, 2024
SECTION:

ADMINISTRATIVE

REPORTS/DISCUSSION/ACTION
RECOMMENDATION: That the City Council introduce an Ordinance adding Article 22 (Valet Parking) to Chapter 6 (Traffic) of Title 4 (Public Safety) and amending Section 4-6.1202 of the Ontario Municipal Code, establishing regulations relating to valet parking.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Operate in a Businesslike Manner
Focus Resources in Ontario's Commercial and Residential Neighborhoods FISCAL IMPACT: There is not a direct fiscal impact associated with this action. The proposed fee will cover the costs associated with the processing of the valet parking permit application.

BACKGROUND & ANALYSIS: With an increase in development and/or the popularity of certain businesses, an increase of parking demand and decrease of off-street parking facilities, both temporarily and permanently, can occur. Valet parking can provide for efficient use of limited parking spaces and provide an additional visitor/patron amenity.

The Ontario Municipal Code currently does not contain any provisions regulating valet parking. This Ordinance would establish a legal framework to guide the implementation, operation, and regulation of a valet parking permitting system. The Engineering Department would administer the valet parking permit application process, which would include, but not be limited to, establishing fees, reviewing the map of the valet services, and reviewing the placement of signs and pedestals.

Valet parking permits would be valid for not more than one year from the date of issuance and can be renewed. Valet parking zone inspections will be conducted to ensure compliance with the ordinance, the permit and any conditions of approval.

The Fiscal Year 2024-25 Proposed Citywide Fee Schedule will include the new fees for a valet parking permit application and will be presented at the June 17, 2024, special City Council budget meeting for Council's consideration.
2454
ORDINANCE NO. ________

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA, ADDING ARTICLE 22 (VALET PARKING) TO CHAPTER 6 (TRAFFIC) OF TITLE 4 (PUBLIC SAFETY) AND AMENDING SECTION 4-6.1202 OF THE ONTARIO MUNICIPAL CODE, ESTABLISHING
REGULATIONS RELATING TO VALET PARKING.

WHEREAS, the Ontario Municipal Code currently does not contain any provisions regulating valet parking; and
WHEREAS, the City Council wishes to regulate valet parking and valet parking operators through a permitting system to enhance public safety and to avoid potential public nuisances;
WHEREAS, pursuant to Article XI, Section 7 of the California Constitution, the City has broad discretionary power to make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws; and WHEREAS, this Ordinance establishes a legal framework to guide the implementation, operation, and regulation of a valet parking permitting system.

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ONTARIO DOES ORDAIN AS FOLLOWS:

SECTION 1. The Recitals set forth above are incorporated herein and made an operative part of this Ordinance.

SECTION 2. Article 22 (Valet Parking), is hereby added to Chapter 6 (Traffic) of Title 4 (Public Safety) of the Ontario Municipal Code to read in its entirety as follows:

Article 22 (Valet Parking), of Chapter 6 (Traffic), of Title 4 (Public Safety) Sec. 4-6.2201 Purpose.

Sec. 4-6.2202 Definitions.

Sec. 4-6.2203 Designation of Valet Parking Zones.

Sec. 4-6.2204 High-Visibility Safety Apparel Required.

Sec. 4-6.2205 Rules and Regulations.

Sec. 4-6.2206 Conformance with Applicable Laws.

Sec. 4-6.2207 Permit Required.

Sec. 4-6.2208 Application for Valet Parking Permits.

Sec. 4-6.2209 Duration of Permit.

Sec. 4-6.2210 Insurance
Sec. 4-6.2211 Valet Parking Permit.

Sec. 4-6.2212 Permit Revocation.

Sec. 4-6.2213 Penalties.
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Sec. 4-6.2201 Purpose.

The primary purpose of public streets and rights-of-way is the free and unobstructed right of travel. The city recognizes that the use of public streets and rightsof-way for valet parking operations, while providing a public benefit, may impede travel, interfere with rights of others using the streets and rights-of-way, and may affect the public safety and create a public nuisance. The city may therefore permit and restrict valet parking operations as a special privilege, not as a matter of right, in order to foster public safety and to prevent public nuisances. The approval of any permit under this chapter for the use of the public right-of-way is on a temporary and nonpermanent basis and is for a nonexclusive use of that public right-of-way. Permittees shall have neither a property interest in nor any entitlement to the granting or continuation of any permit for the use of any public right-of-way. For the reasons set forth in this article, a system of valet parking permits is enacted for the City of Ontario.

Sec. 4-6.2202 Definitions.

For purposes of this article, the following terms shall have the prescribed meaning:

1. “City council” shall mean the city council of the City of Ontario.

2. “High-visibility safety apparel” means any vest, shirt, or jacket which meets the following conditions: the outer material color shall be fluorescent orange-red, fluorescent yellow-green or a combination of the two as defined by the American National Standards Institute/International Equipment Safety Association for class 2 or 3 risk exposure; the retroreflective material shall be orange, yellow, white, silver, yellow-green, or a fluorescent version of these colors; and the apparel shall be designed to clearly identify the wearer as a person.

3. “Parking facility” shall mean any area dedicated for public parking, including but not limited to dedicated curbside parking areas, parking lots, and parking structures.

4. “Permittee” shall mean any person who holds a valid valet parking permit and who is engaged in running a valet parking operation.

5. “Person” shall mean a natural person, firm, partnership, association, corporation or other business entity, and employees, agents and subcontractors thereof.

6. “Public right-of-way” shall mean any area within the City of Ontario designated for public use as a public street, pedestrian way, or other thoroughfare, including but not limited to roadways, parkways, alleys, sidewalks, and pedestrian ways.

7. “Sponsor” shall mean any person who operates, or causes to be operated, a valet parking operation at the sponsor’s place of business or function. 2456

8. “Valet parking” shall mean and include any person, firm or corporation engaged in, conducting or managing the receiving, taking possession of, driving, moving, parking, or leaving standing other persons’ motor vehicles, whether or not a charge is levied, and whether or not such persons are employed by, or under contract to the business for which the vehicles are being parked.

9. “Valet parking attendant” means any employee or agent of a Permittee or Valet Parking Operator, or any employee or agent of a sponsor providing valet parking to its customers, who receives, takes possession of or moves any vehicle, or who handles the keys to any vehicle left with the attendant for valet parking.

10. “Valet parking operator” means any Permittee or person engaged in the business of valet parking operations, including any person contracting with a valet parking operator to provide valet parking, or any person engaged in providing valet parking services to the public.

11. "Valet parking permit" means a permit issued in accordance with this division for the approved use of valet parking in a valet parking zone.

12. "Valet parking zone" means an area for a standard single passenger vehicle on the public right-of-way that has been set aside by the city engineer for valet parking.

Sec. 4-6.2203 Designation of Valet Parking Zones.

1. The city engineer shall consider the following in evaluating approval of valet parking zones:
a. Safety and convenience for the people of the City of Ontario; b. Actual number of passengers to be served by the zone; c. Proximity of existing valet parking zones;
d. Existing demands for curb use such as the number and location of existing transit, taxi, and transportation network company loading zones, and existing commercial loading zones in the general area of the requested zone;
e. Overall determination of available on street parking for the area; and f. Designation of the valet parking zone will cause no significant impact on the environment.
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2. Valet parking zones may also be used for on-street public parking, or for loading and unloading of persons or property.

Sec. 4-6.2204 High-Visibility Safety Apparel Required.

1. No Valet Parking Operator shall employ, direct or otherwise permit, a valet parking attendant to park or retrieve any vehicle on, along, or across any public right-of-way, unless that valet parking attendant is wearing highvisibility safety apparel as specified in this chapter.

2. Valet parking attendants shall wear high-visibility safety apparel at all times while valet parking on any public right-of-way, including while walking on, along or across any public right-of-way.

Sec. 4-6.2205 Rules and Regulations.

The city council may establish rules and regulations, by resolution, for the implementation and enforcement of the provisions of this chapter and when duly adopted by the city council such rules shall be in full force and effect.

Sec. 4-6.2206 Conformance with Applicable Laws.

Nothing in this article is intended to authorize the parking of motor vehicles by Valet Parking Operators, their agents, employees, and valet parking attendants in a manner contrary to any applicable state laws and local parking and traffic regulations, including this code.

Sec. 4-6.2207 Permit Required.

No person shall operate, engage in, conduct, manage, or cause to be operated any valet parking operation or any related activity upon any portion of a public street or public right-of-way or other city property, including any city-owned parking facility, except under the terms and conditions of a current valet parking permit and, if using the public street or public right-of-way in any manner for drop-off and pick-up of vehicles, under the terms and conditions of a current sponsor’s valet parking permit.

Sec. 4-6.2208 Application for Valet Parking Permits.

1. The city engineer is authorized to issue, upon written application, a valet parking permit in accordance with section 7-3.04. Applications for valet parking shall be made upon application forms provided by the city engineer and shall be accompanied by a filing fee. The fee for each permit application shall be paid at the time of application. The permit fees shall be based on the reasonable cost of application, plan review, study, and other services as required for permit approval. Other fees based on the cost of private usage of the public right-of-way will also be assessed per valet 2458
parking zone spaces. Such fees shall be established by resolution of the City Council.

2. The application shall include:
a. The business name and address of the corporation, partnership or other business entity seeking the permit;
b. The identifying number of the applicant's City of Ontario business license;
c. The business name, address, contact information, and seating capacity of the business served by the valet parking Valet Parking Operator.
d. Proof of insurance pursuant to Section 4-6.2210.
e. Any other information consistent with this chapter or Section 7-3.04 of this Code that the city engineer deems necessary for persons applying for valet parking permits.
f. A map of the immediate area showing the location of the valet service and the off-street parking lot(s) to be used for the storage of vehicles.

Any changes in this provision shall require the approval of the city engineer.
g. Any agreement between the Valet Parking Operator and the offstreet parking lot operator for the storage of vehicles.

3. An applicant may appeal the denial of a valet parking permit as set forth in Section 7-3.06 of this Code.

Sec. 4-6.2209 Duration of Permit.

1. Each valet parking permit issued by the city engineer shall be valid for not more than one (1) year from date of issuance. Each application renewal of a valet parking permit will be subject to an annual valet parking zone inspection. All renewals granted under this chapter shall also require a fee as may be set from time to time by the City Council.

Sec. 4-6.2210 Insurance

1. Required Insurance. Permittee shall provide upon request proof of insurance as required by the City Engineer.

Sec. 4-6-2211 Valet Parking Permit And Valet Parking Operator Obligations 2459

1. The valet parking permit shall authorize the Valet Parking Operator to provide valet parking in a designated valet parking zone.

2. The Valet Parking Operator shall operate the valet parking zone in such a manner as to provide ample opportunities for its use by motorists who do not wish to utilize the valet parking service.

3. The Valet Parking Operator shall be the business owner, under contract to or employed by the business or businesses to be served.

4. The Valet Parking Operator shall agree to provide and maintain one moveable ground sign or pedestal sign identifying the availability of valet parking, the Valet Parking Operator’s name, the address and telephone number of the business, the hours of operation, the valet parking permit number, and the valet parking fees, if any. If fees are charged, such fees also shall be stated as follows:
a. Rates per hour;
b. Rates per fraction of an hour, if any;
c. Rates for subsequent hours or fractions thereof;
d. Parking Taxes, if applicable, per the Title 3, Chapter 8 of the Ontario Municipal Code; and
e. The maximum charge.

Prior to placement of any sign or pedestal sign in the public right-of-way, the sign owner must first obtain approval of its location and size from the City Engineer. The sign or pedestal sign shall only be visible from the public right-of-way during the approved hours that valet parking is in operation.

The sign or pedestal sign shall be no more than twenty-four inches wide and not more than four feet high. The sign or pedestal sign must be located within twenty-four inches of the face of the curb and be placed in such a manner as not to create an impediment to pedestrians. All signs and stands shall be set so that a continuous clear width of pedestrian access complies with the Americans with Disability Act of 1990 and any minimum clearances set forth in this Code.

5. The Valet Parking Operator shall not allow the valet parking zone or any other public right-of-way to be used for the storing of valet parked cars.

6. Valet Parking Operator shall ensure that pedestrian' walkways are not blocked at any time during valet parking operations.
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7. The Valet Parking Operator shall at no time allow any patron's vehicle to be parked upon private property without a signed statement of authorization by the owner or other person having legal control of such private property.

8. The Valet Parking Operator shall employ sufficient valet parking attendants to park vehicles so that traffic on streets or sidewalks will not be impeded by the activities of the Valet Parking Operator.

9. The Valet Parking Operator shall ensure that all valet parking attendants who drive a patron's vehicle or who handle a patron's vehicle keys have a current and valid California driver's license and wear a standard uniform that conspicuously identifies the attendant by their full name and the name of the Operator. The Valet Parking Operator shall ensure that all valet parking attendants who receive, take possession of, or move a patron's vehicle upon any portion of the public right-of-way wear high-visibility apparel.

10. The Valet Parking Operator shall not allow any valet parking attendant who has been convicted within the previous seven (7) years of a felony or any offense involving violence, dishonesty, automobile theft, automobile, vandalism, reckless driving or driving under the influence of drugs or alcohol to drive a patron's vehicle or handle a patron's vehicle keys.

11. Every Valet Parking Operator shall maintain:
a. A continuously updated list of the names and residence addresses of its employees and valet parking attendants who perform valet parking. Such list shall be maintained at the business address listed on the permit application and shall be produced on demand of any peace officer or City official.
b. All financial records related to the Valet Parking operation for a minimum of three (3) years and shall make them available to the City Engineer for inspection at any time during the Valet Parking Operator's hours of operation.

12. Nothing in this chapter is intended to authorize, or authorizes, the parking of motor vehicles by the Valet Parking Operator in a manner contrary to applicable state laws or local parking and traffic regulations

13. Valet Parking Operators that conduct, manage, or operate a valet parking operation shall comply with all of the requirements set forth in this Article.

Sec. 4-6.2212 Permit Revocation.

1. The Permittee is responsible for the proper operation of the valet parking zone. Any violation of the conditions enumerated in this article shall be 2461
sufficient cause for revocation of the valet parking permit by the city engineer.

2. A valet parking permit may be temporarily suspended without a hearing if the city engineer determines that the continued operation is an immediate hazard to public safety or is in violation of this article. The suspension will be effective for sixty (60) days or until a hearing, whichever is less. Once a hearing has convened, the suspension will continue through its conclusion.

3. The city engineer shall revoke a valet parking permit if, after a hearing on the matter, the hearing officer finds the grounds exist which would have constituted just cause for refusal to issue the permit, or that the Permittee has failed to comply with any requirements imposed by this article or conditions of the permit. Written notice of the revocation hearing, setting forth the time and place of hearing and a brief statement of the reason(s) for the proposed revocation, shall be served on or mailed to the Permittee at the business address listed in the permit application no less than ten (10) days prior to the hearing.

Sec. 4-6.2213 Penalties.

1. The city has determined that this chapter is necessary to protect health, life, and property of the city and its inhabitants.

2. Any violation of the provisions of this chapter by any person shall be subject to the administrative penalty provisions set forth in section 7-3.20 and the Penalty Schedule contained within this code.

3. It is unlawful and a violation of this chapter for any person to operate, engage in, conduct, manage, or cause to be operated on any public street or right-of-way any valet parking without a valid valet parking permit issued by the city engineer.

4. This article authorizes any deputy sheriff, or city employee or agent of the city designated by the director of any city department, to administer, implement, and enforce the provisions of this chapter.

5. It is unlawful and a violation of this chapter for a person to falsely represent themselves as eligible for a valet parking permit or to furnish false information in an application for a valet parking permit.

6. It is unlawful and a violation of this chapter for a person holding a valet parking permit to permit the use or display of the permit for any purpose other than that for which the permit is issued.

7. It is unlawful and a violation of this chapter for a person to copy, produce or otherwise bring into existence a facsimile or counterfeit valet parking permit without written authorization from the city manager. It shall further be 2462
unlawful and a violation of this chapter for a person to transfer the beneficial ownership of or a continuous right to use a valet parking permit.

8. Any person violating any of the provisions of this article or the regulations hereunder or the terms and conditions of any valet parking permit issued hereunder is deemed guilty of a misdemeanor and, upon conviction thereof, shall be punishable in accordance with Title 1, Chapter 2 of this Code.

SECTION 3 Subsection (a)(3) of Section 4-6.1202 of the Ontario Municipal Code is hereby amended to read in its entirety as follows:
(a) The City Traffic Engineer is hereby authorized, subject to the provisions and limitations of this chapter to place, and when required by the provisions of this chapter shall place, the following curb markings to indicate parking or standing regulations, which curb markings shall have the following meanings:
(1) Red shall mean no stopping, standing, or parking at any time except as permitted by the Vehicle Code and except that a bus may stop in a red zone marked or signed as a bus zone.
(2) Yellow shall mean no stopping, standing, or parking at any time between 7:00 a.m. and 6:00 p.m. of any day except Sundays and holidays for any purpose other than the loading or unloading of passengers or materials; provided, however, the loading or unloading of passengers shall not consume more than three (3) minutes, and the loading or unloading of materials shall not consume more than twenty (20) minutes.
(3) White shall mean no stopping, standing, or parking for any purpose other than the loading or unloading of passengers, including valet parking, or for the purpose of depositing mail in an adjacent mailbox, which shall not exceed three (3) minutes, and such restrictions shall apply between 7:00 a.m. and 6:00 p.m. of any day except Sundays and holidays and except as follows:
(i) When such zone is in front of or adjacent to a terminal serving a public transportation agency, a hotel, or a mailbox, the restrictions shall apply at all times.
(ii) When such zone is in front of a theater, the restrictions shall apply at all times except when such theater is closed.
(b) When the City Traffic Engineer, as authorized by the provisions of subsection (a) of this section, has caused curb markings to be placed, no person shall stop, stand, or park a vehicle adjacent to any such legible curb markings in violation of the provisions of this section. 2463
SECTION 4. If any section, sentence, clause, or phrase of this Ordinance of the application thereof to any entity, person, or circumstance is held for any reason to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect other provisions or applications of the Ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this Ordinance are severable. The People of the City of Ontario hereby declare that they would have adopted this Ordinance and each section, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsections, sentences, clauses, or phrases by declared invalid or unconstitutional.

SECTION 5. The City Council finds that adoption of this Ordinance is exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15358 (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Moreover, the City Council finds that this Ordinance is also exempt under CEQA pursuant to Guidelines Section 15061(b)(3) (there exists no possibility that the activity will have a significant adverse effect on the environment).

SECTION 6. This Ordinance shall become effective thirty (30) days after its adoption by the City Council.

SECTION 7. The Mayor shall sign this Ordinance and the City Clerk shall certify as to the adoption and shall cause a summary thereof to be published at least once, in a newspaper of general circulation in the City of Ontario, California within fifteen (15) days of the adoption. The City Clerk shall post a certified copy of this Ordinance, including the vote for and against the same, in the Office of the City Clerk, in accordance with Government Code Section 36933.

PASSED, APPROVED, AND ADOPTED this ________ day of _________ 2024. _____________________________________
PAUL S. LEON, MAYOR
ATTEST:
_________________________________

SHEILA MAUTZ, CITY CLERK
APPROVED AS TO FORM:
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_______________________________

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 Ordinance No. _______ was duly introduced at a regular meeting of the City Council of the City of Ontario held _____________ and adopted at the regular meeting held ___________, 2024 by the following roll call vote, to wit:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:
_________________________________

SHEILA MAUTZ, CITY CLERK
(SEAL)
I hereby certify that the foregoing is the original of Ordinance No. _______ duly passed and adopted by the Ontario City Council at their regular meeting held ____________ and that Summaries of the Ordinance were published on ___________ and _____________, in the Inland Valley Daily Bulletin newspaper.
__________________________________

SHEILA MAUTZ, CITY CLERK
(SEAL)
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