AG Landbank Arrangement. On April 12, 2023, the Developer, on the one hand, and JH Bray, LLC and HCW Lathrop Investors, LLC, on the other hand, as seller, entered into an Agreement of Purchase and Sale and Joint Escrow Instructions (the “Peri/Rubi Purchase Agreement”), for the pur chase by the Developer of the Peri and Rubi sites. Prior to the applicable close of escrow under the Peri/Rubi Purchase Agreement, the Developer assigned its rights thereunder to the AG Landbank pursuant to that certain Nomination Agreement , between the AG Landbank, as nominee, and the Developer, dated August 17, 2023 (the “Peri/Rubi PSA Assignment”).
The Peri/Rubi PSA Assignment resulted in AG Landb ank acquiring the land subject to the Peri/Rubi Purchase Agreement (i.e., the Peri/Rubi sites), in order to set up a land banking structure. The AG Landbank is not an affiliate of the Developer.
To facilitate the land banking structure, the Developer and AG Landbank entered into that certain Option Agreement (DUSA, California), dated August 17, 2023 (as amended, the “AG Option Agreement”) whereby the Developer has the option, but not the obligation, to purchase the 191 residential units within Tract No. 20452 (the “Peri/Rubi Lots”) from the AG Landbank pursuant to a takedown schedule.
In addition to the AG Option Agreement, Landsea Construction LLC, a California limited liability company (the “Contractor”), a Developer affiliate, and the AG Landbank entered into a separate Construction Agreement (the “AG Construction Agreement”) granting Contractor the right to enter upon the land subject to the AG Option Agreement, for the purpose of, among other things, constructing related subdivision improveme nts thereon before the Developer acquires the land subject to the AG Opt ion Agreement from the AG Landb ank.
Pursuant to the AG Option Agreement, the Developer has the right to enter upon the land subject to the AG Option Agreement for the purpose of constructing homes thereon before the Developer acquires the subject land.
Pursuant to the AG Option Agreement, the Developer is required to, among other things, cause the completion and satisfaction of the certain on-site and offsite improvements.
During the term of the AG Option Agreement, the Developer is obligated to pay all taxes on the subject land, including the Special Taxes. Upon termination or e xpiration thereof, the AG Landbank would be solely responsible for the payment of taxes, including the Special Taxes, for any land that it owns.
Under the terms of the AG Option Agreement, the AG Landbank granted the Developer the exclusive right and option to purchase all 191 Peri/Rubi Lots subject to the AG Option Agreement in consideration for (a) 1165
35 the covenants of the Developer to timely pay monthly option payments; and (b) upon exercise of the option, the payment of the purchase price for each set of lots acquired.
The 191 Peri/Rubi lots are scheduled to be acquired by the Developer pursuant to a takedown schedules, typically on the 25th calendar day of the applicable month beginning March 25, 2024, through April 25, 2026, subject to the Developer’s right to acquire more lots than scheduled and at earlier times so long as the lots identified in the takedown schedule are acquired by the applicable takedown date and the Developer complies with the terms under the AG Option Agreement for such accelerated closings, and fu rther subject to the Developer’s right to defer acquisition of a limited number of lots for a period of one month at a time so long as the Developer pays a per lot hiatus fee each time the Developer elects to defer such acquisition and complies with the terms under the applicable AG Option Agreement for such deferred lots. The failure to timely acquire lots according to the AG Option Agreement could result in a termination of the AG Option Agreement, which could result in the Developer no longer having a r ight to purchase any of the remaining lots under the AG Option Agreement.
Through October 1, 2025, the Developer has acquired a total of 132 lots under the AG Option Agreement.
No assurance can be given that the acquisition of the remaining 59 lots the Developer plans to acquire under the AG Option Agreement will occur as expected.
The following table reflects the Developer’s expected schedule for acquiring the Peri/Rubi Lots:
Projected Lot Take-Down Schedule – Peri & Rubi Lots
AG Option Agreement
(As of October 1, 2025)
Date Option
Period Expires (1)
No. of Peri Lots
Scheduled
to be Acquired
(SFD)
No. of Rubi Lots
Scheduled
to be Acquired
(Townhomes)
Cumulative
No. Lots to be
Acquired (2)
03/24 3 6 9
05/24 5 12 26
08/24 6 - 32
09/24 - 12 44
10/24 6 - 50
12/24 8 12 70
02/25 6 - 76
03/25 - 12 88
04/25 6 - 94
06/25 8 12 114
08/25 6 12 132
10/25 6 12 150
11/25 8 - 158
12/26 9 6 173
01/26 5 - 178
02/26 5 - 183
03/26 5 - 188
04/26 3 - 191
95 96
_____________
(1) Takedown date is the twenty-fifth calendar day of the month. (2) As of October 1, 2025, all scheduled lots through the Aug. 25, 2025 option period expiration date (totaling 132 lots) have been taken down as scheduled.
Source: The Developer.
1166
36 The AG Landbank is serving as the land bank for the Developer and is not a homebuilder. In the event the Developer does not acquire the units owned by the AG Landbank, the AG Landbank expects to market and sell such lots to another homebuilder.
AG Landbank. According to the AG Landbank, the AG Landbank is an affiliate of, and managed by, Angelo Gordon. Angelo Gordon is a privately- held alternative investment firm founded in 1988 and headquartered in New York, with associated offices across the United States, Europe and Asia. Angelo Gordon manages approximately $73 billion across a broad range of credit and real estate st rategies. Neither the AG Landbank nor Angelo Gordon are affiliated entities of the Developer.
MRP Land Bank Arrangement . On June 1, 2023, Landsea Homes of California, Inc., a Delaware corporation, and affiliate of the Developer, acquired the Eave site from Haven Ontario NMC 2, LLC, a Florida limited liability company. Landsea Homes of California, Inc. subsequently conveyed the Eave site to a nother affiliate, LS-Ontario II.
On June 25, 2025, in connection with the completion of the acquisition of the Developer’s ultimate parent company, Landsea by The New Home Company Inc. (“NWHM”), LS-Ontario II and the MRP Landbank entered into an agreement for 98 of the 144 lots within Tract No. 20530 (the “Eave Lots”) to facilitate a land bank transaction. In connection therewith, LS -Ontario II and the MRP Landbank entered into an Option Agreement (Vander Eyk Project), effective June 25, 2025 (the “MRP Option Agreement”) , whereby LS-Ontario II has the option, but not the obligation, to purchase t he Eave Lots from the MRP Landb ank pursuant to a t akedown schedule. The MRP Landb ank is an affiliate of Kennedy Lewis Investment Management and n ot an affiliate of LS-Ontario II.
In addition to the MRP Option Agreement, Landsea Construction LLC, a California limited liability company (the “Contractor”), a Developer affiliate, and the MRP Landb ank entered into a separate Construction Agreement (the “MRP Construction Agreement”) granting Contractor the right to enter upon the land subject to the MRP Option Agreement, for the purpose of, among other things, constructing related subdivision improvements thereon before LS -Ontario II acquires the land subject to the MRP Opti on Agreement f rom the MRP Landbank.
Pursuant to the MRP Option Agreement, LS -Ontario II is required to, among other things, cause the completion and satisfaction of the certain on-site and offsite improvements.
During the term of the MRP Option Agreement, LS-Ontario II is obligated to pay all taxes on the subject land, including the Special Taxes. Upon termination or ex piration thereof, the MRP Landbank would be solely responsible for the payment of taxes, including the Special Taxes, for any land that it owns. In addition, LS - Ontario II can accelerate the takedown of lots and, LS -Ontario II can pull, and has pulled, building permits and can begin house construction on the Eave Lots held by the MRP Landbank before those lots are taken down. The failure to timely acquire lots according to the MRP Option Agreement could result in a termination of the MRP Option Agreement, which could result in LS-Ontario II no longer having a right to purchase any of the remaining lots under the MRP Option Agreement.
Through October 1, 2025, LS-Ontario II has acquired a total of 19 lots under the MRP Option Agreement, which were acquired ahead of the takedown schedule. No assurance can be given that the acquisition of the remaining 79 lots LS-Ontario II plans to acquire under the MRP Option Agreement will occur as expected.
The following table reflects LS-Ontario II’s expected schedule for acquiring the Eave Lots:
1167
37 Projected Lot Take-Down Schedule – Eave Lots
MRP Option Agreement
(As of October 1, 2025)
Date Option
Period Expires (1)
No. of Eave Lots
Scheduled
to be Acquired
Cumulative
No. Lots to be
Acquired (2)
01/26 9 9
04/26 9 18
07/26 9 27
10/26 9 36
01/27 9 45
04/27 9 54
07/27 9 63
10/27 9 72
01/28 9 81
04/28 9 90
07/28 8 98
98 _____________
(1) Takedown date is the twenty-fifth calendar day of the month. (2) As of October 1, 2025, LS -Ontario II has acquired 19 lots ahead of the takedown schedule.
Source: The Developer.
The MRP Landbank is serving as the land bank for LS-Ontario II and is not a homebuilder. In the event LS-Ontario II does not acquire the units owned by the MRP Landbank, the MRP Landbank expects to market and sell such lots to another homebuilder.
MRP Landbank. According to the MRP Landbank, the MRP Landbank is an affiliate of, and managed by, affiliates of Kennedy Lewis Investment Management (“Kennedy Lewis”), an institutional alternative investment firm with approximately $17 billion in assets under management. The MRP Landbank was founded in 2017 and is headquartered in New York City with offices in Miami, Geneva, Scottsdale and Philadelphia. The MRP Landb ank has extensive expertise in sourcing, underwriting, capitalizing and financing land for homebuilders.
Development Plan
General Description of the District . The District includes approximately 28.35 gross acres and approximately 23.067 net acres and is located in the southern portion of the City. The Developer is developing the property within the District into three neighborhoods: Peri, Rubi, and the second phase of Eave. The property within the District is part of a multiple phase, multiple master-planned community development know n as “Ontario Ranch,” with Peri and Rubi being a part of the West Haven Specific Plan and Eave being a part of the Rich Haven Specific Plan.
Tract Map Status . On March 21, 2024, Tract Map No. 20452 for Peri and Rubi neighborhoods was recorded in the recorder’s office of San Bernardino County creating the 95 lots in Peri and 96 units in Rubi. On April 22, 2024, Tract Map No. 20530 for the Eave neighborhood was recorded in the recorder’s office of San Bernardino County which created the four lots that were subdivided into 12 building pads, each allowing a 12- unit complex.
1168
38 Current Activity. As of August 18, 2025, the Date of Value, of the 335 attached and detached residential units planned within the District, 114 residential units 26 in Peri, 32 in Rubi, and 72 in Eave) had been completed and conveyed to individual homeowners (including 11 model units that were purchased by third-party investors and leased back to the Developer ); 96 production units were in va rious stages of construction (22 in Peri, 34 in Rubi, and 40 in Eave ); and the remaining 125 lots (47 in Peri, 30 in Rubi, and 48 in Eave ) were in a finished lot/pad condition without any home construction thereon. As of August 18, 2025, 24 production units within the District were sold and under contract (but not closed) to individual homebuyers. Homes under contract may not result in closed escrows as sales contracts are subject to cancellation.
Peri. The Peri neighborhood is planned for 95 single family detached alley-loaded homes. As of August 18, 2025, the Developer had pulled all building permits in the Peri neighborhood.
The following Table 8 sets forth the estimated number of lots, home sizes, and base sales prices for the Peri product line as of October 1, 2025. Sales of homes within the Peri neighborhood began in December 2024 and the Developer expects that all homes within the Peri neighborhood will be completed and conveyed by June 2027, but no assurance can be provided that this will occur . As of October 1, 2025, three of the Peri units were under contract to be sold to homeowners but had not closed escrow.
TABLE 9
CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 71 (NEUHOUSE PHASE 2) DEVELOPMENT STATUS – PERI
(AS OF OCTOBER 1, 2025)
Floor Plan
Approx. Square
Footage
Total Number
of Planned
Units(1)
Units
Closed to
Homeowners(2)
Units Completed
But Not Closed to
Homeowners
Units Under
Construction
Finished
Lots(3)
Estimated
Base Price(4)
1 2,075 21 7 1 2 11 $775,990
2 2,148 37 12 1 6 18 815,207
3 2,328 37 12 1 6 18 845,790
95 31 3 14 47
(1) As of October 1, 2025, 41 lots/units were owned by the AG Landbank. The number of units in each plan is an estimate and is subject to change as the market dictates.
(2) Includes three (3) model homes sold and conveyed to a third-party investor and leased back to the Developer. (3) Finished lot means that such lot has finish grade certification and is able to start home construction but home construction has not yet commenced.
(4) Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessio ns 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 s 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 or ability to close escrow or enter into future sales contracts. See “SPECIAL RISK FACTORS — Mortgage Interest Rates.”
Rubi. The Rubi neighborhood is planned for 96 attached alley-loaded townhomes in a 6-plex format. As of August 18, 2025, Developer had pulled all building permits in the Rubi neighborhood.
The following Table 9 sets forth the estimated number of units, home sizes, and base sales prices for the Rubi product line as of October 1, 2025. Sales of homes within the Rubi neighborhood began in December 2024 and the Developer expects that all homes within the Rubi neighborhood will be completed and conveyed by March 1169
39 2027, but no assurance can be provided that this will occur. A s of October 1, 2025, four of the Rubi units were under contract to be sold to homeowners but had not closed escrow.
TABLE 10
CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 71 (NEUHOUSE PHASE 2)
DEVELOPMENT STATUS - RUBI
(AS OF OCTOBER 1, 2025)
Floor Plan
Approx. Square
Footage
Total Number
of Planned
Units(1)
Units
Closed to
Homeowners(2)
Units Completed
But Not Closed to
Homeowners
Units Under
Construction
Finished
Lots(3)
Estimated
Base Price(4)
1 1,294 32 13 1 8 10 $528,757
2 1,467 32 13 1 8 10 581,757
3 1,610 32 13 1 8 10 646,757
96 39 3 24 30
(1) As of October 1, 2025, 18 lots/units were owned by the AG Landbank. The number of units in each plan is an estimate and is subject to change as the market dictates.
(2) Includes three (3) model homes sold and conveyed to a third-party investor and leased back to the Developer. (2) Finished lot means that such lot has finish grade certification and is able to start home construction but home construction has not yet commenced.
(3) Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessio ns 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 s 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 or ability to close escrow or enter into future sales contracts. See “SPECIAL RISK FACTORS — Mortgage Interest Rates.”
Eave. The second phase of the Eave neighborhood includes 144 attached cluster homes in a 12- plex format. As of August 18, 2025, the Developer had pulled all building permits in the Eave neighborhood.
The following Table 10 sets forth the estimated number of lots, home sizes, and base sales prices for the portion of the Eave product line within the District as of October 1, 2025. Sales of homes within the Eave neighborhood began in July 2024 and the Developer expects that all homes within the Eave neighborhood will be completed and conveyed by August 2028, but no assurance can be provided that this will occur. As of October 1, 2025, five of the Eave units were under contract to be sold to homeowners but had not closed escrow. 1170
40 TABLE 11
CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 71 (NEUHOUSE PHASE 2)
DEVELOPMENT STATUS - EAVE
(AS OF OCTOBER 1, 2025)
Floor Plan
Approx. Square
Footage
Total Number
of Planned
Units(1)
Units
Closed to
Homeowners(2)
Units Completed
But Not Closed to
Homeowners
Units Under
Construction
Finished
Lots(3)
Estimated
Base Price(4)
1 937 24 11 0 5 8 Temp Sold Out
2 1,092 24 11 0 5 8 $537,724
3 1,136 24 11 0 5 8 547,512
4/4X 1,468 48 21 1 10 16 592,809/582,167
5/5ACC 1,501 24 11 0 5 8 637,525/611,990
144 68 1 30 48
(1) As of October 1, 2025, 18 lots/units were owned by the AG Landbank. The number of units in each plan is an estimate and is subject to change as the market dictates.
(2) Includes five (5) model homes sold and conveyed to a third-party investor and leased back to LS-Ontario II. (3) Finished lot means that such lot has finish grade certification and is able to start home construction but home construction has not yet commenced.
(4) Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessio ns 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 s 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 or ability to close escrow or enter into future sales contracts. S ee “SPECIAL RISK FACTORS — Mortgage Interest Rates.”
Entitlements and Infrastructure . The Developer 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 August 18, 2025, all approvals and all construction on backbone infrastructure was complete. Final approval and acceptance by agencies is pending.
The Developer 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 develo pment in the District. The Developer 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.
Financing Plan
As of October 1, 2025, the Developer had expended approximately $137.2 million on land acquisition, site development and home construction costs (exclusive of marketing, sales and other soft and carrying costs) related to its development within the Distric t. The Developer expects to incur approximately $42.0 million on remaining land acquisition and site development costs and approximately $43.8 million on remaining home construction costs (exclusive of marketing, sales and other soft and carrying costs) t o complete its development within the District.
To date, the Developer has financed its land acquisition costs and various site development and home construction costs related to the property it owns in the District thr ough internally generated funds, which may 1171
41 include borrowings under the Credit Facility (described below). The Developer expects to use the same sources of funds to complete its acquisition of land and development activities within the District. Home sales revenue from the Developer’s project in the District, however, is not segregated and set aside for completing its land acquisition and construction of homes in the District. Home sales revenue is accumulated and used to pay costs of operations for the Developer and its affiliates, to pay down debt and for other corporate purposes, and may be diverted to pay costs other than the costs of completing the Developer’s activities in the District at the discretion of management. Notwithstanding the foregoing, the Developer believes that it will have sufficient funds available to complete the proposed development activities in the District in accordance with the development timing described in the Official Statement.
As of October 1, 2025, the Developer’s ultimate parent, The New Home Company Inc. (previously defined herein as “NWHM”), was a party to a $600 million unsecured revolving credit facility with JP Morgan Chase Bank, N.A. (the “Credit Facility”) which matures in June 2029. The Credit Facility contains a borrowing base and certain covenants and conditions that may limit the amount that NWHM may borrow or have outstanding at any time. As of August 1, 2025, NWHM had drawn approximately $45.0 million under the Credit Facility and had an available amount of approximately $555.0 million.
Although the Developer expects to have sufficient funds available to complete its development in the District as described herein , there can be no assurance that amounts necessary to finance the remaining development costs will be available to the Developer when needed. While Landsea has made such internal funding available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither the Developer, nor any other entity or person is under any legal obligat ion of any kind to expend funds for the development of and construction of homes on the Developer’s property in the District or the payment of ad valorem property taxes or the Special Taxes. Any contributions by the Developer or any other entity or person to fund the costs of such development are entirely voluntary.
If and to the extent that the aforementioned sources are inadequate to pay the costs to complete the planned development by the Developer within the District and other financing is not put into place, there could be a shortfall in the funds required to complete the planned development by the Developer or to pay ad valorem property taxes or Special Taxes related to the Developer’s property in the District, and the remaining portions of such development may not be completed. Many factors beyond the Developer’s control, or a decision by the Developer to alter its current plans, may cause the actual sources and uses to differ from the projections.
SPECIAL RISK FACTORS
The principal source of payment of debt service on the Series 2025 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 2025 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 2025 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 1172
42 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 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 abilit y 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 2025 Bonds may have to be included in the gross income of the owner of the Series 2025 Bonds by reason of some circumstance occurring subsequent to issuance of the Series 2025 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 2025 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 “— 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 2025 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 Me thod. 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 2025 Bonds as the same become due and payable. 1173
43 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 2025 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 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.
Further, the collection of the Special Tax pursuant to the levy is dependent upon the County properly sending tax bills and collecting Special Tax payments. The District cannot guarantee that the County will properly bill and collect the Special Tax amounts.
Collection of the Special Tax
The timely payment of the principal of and interest on the Series 2025 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 2025 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 sub ject to the unpaid amount may be sold at judicial foreclosure sale. Such judicial foreclosure action is not mandatory. The District, however, has covenanted for the benefit of the owners of the Bonds that it will institute foreclosure proceedings as auth orized 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 2025 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, the re could be a delay in payments to Owners of the Series 2025 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 2025 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.
1174
44 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 gove rnmental 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.
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 August 18, 2025, 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 335 units planned within the District, building permits had been issued for 281 units, and 114 completed homes had been conveyed to individual homeowners.
See “THE COMMUNITY FACILITIES DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” N o assurance, however, 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 2025 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 2025 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 r eal 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 2025 Bonds when due.
Series 2025 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 2025 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 2025 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 2025 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 Deve loper 1175
45 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 and pursuant to the Option Agreement s, as of August 15, 2025, the Developer is expected to be responsible for approximately 32.56% of the total Fiscal Year 2025-26 Special Tax to be levied within the District. Based on the ownership status and the Option Agreements, as of August 15, 2025, the Special Tax Consultant estimates that the Developer is projected to be responsible for approximately 21.86% of the total projected F iscal Year 2026- 27 Special Tax to be levied within the District. While the Appraisal includes completed homes owned by individual homeowners as of August 18, 2025, 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 2025 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.
Under the Options Agreements, the Developer is responsible for the payment of all property taxes, including the Special Tax, for all of the lots within the District that accrue during the term of the Option Agreements. Under the Option Agreements, the Developer has the option, but not the obligation, to acquire such lots from the Landbanks pursuant to the takedown schedules. Neither the Developer nor the Landbanks are under any obligation to develop the property in the District. The failure by the Develo per to timely acquire lots could result in the termination of the Option Agreements. In the event that the Developer does not exercise its option to acquire lots under the Option Agreements, the Landbanks, each being an investor only and not a homebuilder , would likely attempt to sell such lots to another merchant builder. In such an event, construction and sale of remaining homes and lots in the District would likely be delayed beyond the estimated timeframes described herein.
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 pr ovisions 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 ow nership, 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 2025 Bonds when due and a default would occur with respect to the payment of such principal and interest.
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46 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 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 2025 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 2025 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 1177
47 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.
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 pr operty 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.
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48 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 i mpose, 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 2025 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 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. Artic le XIIIC requir es 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 2025 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 2025 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. The special tax to be levied within the CCFD, however, 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 determini ng 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. I n 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 1179
49 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.
Initiative Measures
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 Tax.
The City cannot predict whether legislation will be enacted into law by the California state legislature. If future legislation were to be enacted, the City cannot provide any assurances as to the effect of the implementation or judicial interpretations thereof on the finances of the State, the City, or the District.
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 2025 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. T he amount of the Special Tax that may be levied against any property in the District, however, 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 Sp ecial 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 2025 BONDS — Special Tax.” 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 oblig ations 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 prospect ive 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 represen tative) 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 1180
50 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 co - equal 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 2025 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 2025 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 2025 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.
No replenishment from the proceeds of a levy of the Special Tax, however, can occur as long as the proceeds that 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 2025 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 2025 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 2025 Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, 1181
51 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 2025 Bonds and the possibility of delinquent ta x 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 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 gove rnment interest. This means that, unless Congress has otherwise provided, if a federal government entity owns a parcel 1182
52 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 un less 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 buildi ngs, 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 Jacinto- San 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.
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, Compensat ion 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 1183
53 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 liabil ities 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 2025 Bonds in the event of a payment default or other default under the terms of the Series 2025 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 2025 Bonds. The Series 2025 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 de bt service on the Series 2025 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 2025 Bonds in the event of insufficient Net 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 2025 BONDS — Covenant for Superior Court Foreclosure.” Loss of Tax Exemption
As discussed under “TAX MATTERS,” interest on the Series 2025 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 2025 Bonds in violation of the District ’s covenants with respect to the Series 2025 Bonds. Should interest become includable in gross income, the Series 2025 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.
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54 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 2025 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 2025 Bonds purchased at a price greater than par could reduce the otherwise expected yield on such Series 2025 Bonds. See “THE SERIES 2025 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 ransomware incident affecting the City of St. Paul, Minnesota, 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. 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. T here is no assurance, however, that a future attack or attempted attack would not result in disruption of City operations.
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 inflation and interest rates, persistent supply chain issues, pandemics and global market instability caused by war and other hostilities . 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.
Mortgage Interest Rates
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. Any future increases or decreases in mortgage interest rates cannot be predicted.
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55 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. The City and its related governmental entities (the “ City Entities ”) for whom City staff is responsible for undertaking compliance with continuing disclosure undertakings, however, 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 ended 2021 annual report for the Ontario Public Financing Authority 2017 Lease Revenue Refunding Bonds, the Fiscal Years ended 2021-2024 annual report for the City of Ontario 2020 Taxable Pension Obligations Bonds and Fiscal Year ended 2021 for the Ontario Public Financing Authority 2021 Lease Revenue Refunding Bonds, Series A (Federally Taxable); the City’s Fiscal Years 2020-21,2022-23, and 2023-24 audited financial statements were not available at the time of the filing of the 2021,2023 and 2024 respective annual reports. The Fiscal Year 2020-21, 2022-23 and 2023-24 audited financial statement have since been posted and such information is included in the notes to the City’s Fiscal Year 2020 -21, 2022-23 and 2023-24 audited financial statements. The full text of the form of the District Continuing Disclosure Agreement is set forth in APPENDIX G.
Developer Continuing Disclosure Certificate
Pursuant to the Developer Continuing Disclosure Certificate, Landsea Homes of California, LLC, on behalf of itself and LS -Ontario II, has agreed to provide, or cause to be provided, to EMMA, on a semi -annual basis certain information concerning the Developer and its property ownership and development within the District. Landsea Homes of California, LLC has further agreed to provide notice to EMMA of certain listed events. The Landsea Homes of California, LLC’s 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 268 or more homes in the District have been conveyed to individual homeowners . 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 Landsea Homes of California, LLC 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 Landsea Homes of California, LLC and notices of listed events to be provided by Landsea Homes of California, LLC.
Neither the District nor the City has considered, or reached any conclusion as to, whether or not the Developer 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 1186
56 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 Landsea Homes of California, LLC 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.
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 2025 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 2025 Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that interest on the Series 2025 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 2025 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 2025 Bonds is less than the amount to be paid at maturity of such Series 2025 Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2025 Bonds), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Series 2025 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 2025 Bonds is the first price at which a substantial amount of such maturity of the Series 2025 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 2025 Bonds accrues daily over the term to maturity of such Series 2025 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 2025 Bonds to determine taxable gain or loss upon trade or business disposition (including sale, redemption, or payment on maturity) of such Series 2025 Bonds. Beneficial Owners of the Series 2025 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2025 Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Series 2025 Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2025 Bonds is sold to the public.
Series 2025 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 2025 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 2025 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 2025 Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Series 2025 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 2025 Bonds. The District has made certain representations and covenanted to comply with certain restrictions, conditions and requirements 1187
57 designed to ensure that interest on the Series 2025 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 2025 Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series 2025 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 2025 Bonds may adversely affect the value of, or the tax status of interest on, the Series 2025 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 2025 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 2025 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 2025 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 2025 Bonds. Prospective purchasers of the Series 2025 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.
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 2025 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 2025 Bonds ends with the issuance of the Series 2025 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 2025 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 connecti on 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 2025 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 2025 Bonds, and may cause the District or the Beneficial Owners to incur significant expense.
Payments on the Series 2025 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 2025 Bonds may be subject to backup withholding with respect to “reportable payments,” which include interest paid on the Series 2025 Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Series 2025 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) 1188
58 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 2025 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 2025 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 2025 Bonds.
CERTAIN LEGAL MATTERS
The validity of the Series 2025 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 2025 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 2025 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 2025 Bonds, Bond Counsel may represent the Underwriter in connection with other financings and matters unrelated to the Series 2025 Bonds. Disclosure Counsel and the Issuer ’s Counsel may also represent the Underwriter in connection with other financings and matters unrelated to the Series 2025 Bonds.
UNDERWRITING
The Series 2025 Bonds are being purchased by Samuel A. Ramirez & Co., Inc. (the “Underwriter”). The Underwriter has agreed to purchase the Series 2025 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 2025 Bonds provides that the Underwriter will purchase all of the Series 2025 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 2025 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.
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59 FINANCIAL INTERESTS
The fees being paid to the Municipal Advisor, Bond Counsel, Underwriter, and Underwriter ’s Counsel are contingent upon the issuance and delivery of the Series 2025 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 2025 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 2025 Bonds. Quotations and summaries and explanations of the Series 2025 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.
CITY OF ONTARIO COMMUNITY FACILITIES DISTRICT
NO. 71 (NEUHOUSE PHASE 2)
By:
City Manager
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APPENDIX A
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 71 (NEUHOUSE PHASE 2)
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
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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
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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 2025 Bonds are special, limited obligations of the District, payable, as provided in the Indenture, solely from Net Special Tax Revenues and the other assets pled ged therefor thereunder. Ne ither 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 2025 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 M anager 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 2016-2025
Year(1) City of Ontario County of San Bernardino State of California 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(2) 175,297 2,181,654 39,538,223
2021 175,907 2,179,941 39,369,530
2022 178,591 2,183,077 39,179,680
2023 180,707 2,182,351 39,228,444
2024 182,875 2,200,351 39,420,663
2025 184,404 2,207,424 39,529,101
________________________
(1) As of January 1.
(2) As of April 1.
Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties and State, 2015-2019, with 2010 Benchmark; E-4 Population Estimates for Cities, Counties and State, 2020-2025, with 2020 Benchmark. 1195
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Employment
The following table summarizes the labor force, employment and unemployment figures for the years 2021 through 2025 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 2021 through 2025(1)
Year and Area Labor Force Employment(2) Unemployment(3) Unemployment
Rate (%)
2021
City of Ontario 88,300 82,200 6,200 7.0%
San Bernardino County 989,400 915,500 73,900 7.4
State of California 18,954,600 17,564,900 1,389,700 7.3 United States 161,204,000 152,581,000 8,623,000 5.3
2022
City of Ontario 90,500 87,000 3,500 3.8
San Bernardino County 1,000,100 958,100 42,000 4.2
State of California 19,218,300 18,393,900 824,400 4.3
United States 164,287,000 158,291,000 5,996,000 3.6
2023
City of Ontario 92,700 88,800 3,900 4.2
San Bernardino County 1,014,800 967,900 46,800 4.6
State of California 19,471,000 18,551,800 919,200 4.7
United States 167,116,000 161,037,000 6,080,000 3.6
2024
City of Ontario 93,800 89,500 4,400 4.6
San Bernardino County 1,027,800 975,200 52,600 5.1
State of California 19,644,100 18,600,900 1,043,100 5.3 United States 168,547,000 161,661,000 6,886,000 4.1
2025(4)
City of Ontario 95,000 89,700 5,300 5.6
San Bernardino County 1,042,700 977,700 65,100 6.2
State of California 19,824,400 18,621,700 1,202,800 6.1 United States 170,342,000 163,106,000 7,236,000 4.2
______________________
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.
(4) As of July 2025.
Source: U.S. Department of Labor – Bureau of Labor Statistics, California Employment Development Department. March 2024 Benchmark.
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Listed below are the major employers in the City and in the County for Fiscal Year 2023-24.
PRINCIPAL EMPLOYERS
City of Ontario
Fiscal Year 2023-24(1)
Employer Number of Employees
Ontario International Airport 5,000 to 9,999
United Parcel Service 5,000 to 9,999
Workforce Personnel, Inc. 5,000 to 9,999
Chaffey Union High School 1,000 to 4,999
City of Ontario 1,000 to 4,999
Ontario-Montclair School District 1,000 to 4,999
Primary Care Assoc. Med. Group 1,000 to 4,999
FedEx 500 to 999
The Home Depot 500 to 999
QVC, Inc. 500 to 999
______________________
(1) Last year in which information is available.
Source: City of Ontario Annual Comprehensive Financial Report for Fiscal Year ended June 30, 2024.
PRINCIPAL EMPLOYERS
San Bernardino County
Fiscal Year 2023-24
Rank Name of Business
Approximate No. of San
Bernardino County
Employees(1) Type of Business
1 Loma Linda University Medical Center ≥10,000 Medical Center 2 San Bernardino County ≥10,000 Public Administration
3 Amazon ≥10,000 Electronic Commerce
4 Ontario International Airport 5,000-9,999 Airport
5 Dignity Health Community Hospital of San Bernardino 5,000-9,999 Medical Center 6 Burlington Distribution Corp 1,000-4,999 Distribution 7 California State University, San Bernardino 1,000-4,999 Education 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 Fiscal Year ended June 30, 2024. 1197
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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 o f 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 2021 through 2025.
RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA
INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE
2021 2022 2023 2024 2025(1)
Civilian Labor Force 2,120,600 2,148,700 2,171,500 2,209,100 2,240,900 Civilian Employment 1,964,300 2,058,400 2,068,800 2,093,800 2,098,500 Civilian Unemployment 156,300 90,200 102,700 115,300 142,400 Civilian Unemployment Rate 7.4% 4.2% 4.7% 5.2% 6.4%
Total Farm 13,700 13,800 13,200 13,700 13,000
Total Nonfarm 1,575,100 1,660,200 1,681,000 1,700,400 1,694,800 Total Private 1,333,100 1,410,200 1,420,700 1,430,200 1,426,800 Goods Producing 207,700 216,300 215,300 212,900 205,800 Mining & Logging 1,400 1,500 1,500 1,600 1,500
Construction 110,100 114,700 115,400 116,200 111,900
Manufacturing 96,100 100,000 98,500 95,200 92,400
Service Providing 1,367,400 1,443,900 1,465,700 1,487,500 1,489,000 Trade, Transportation & Utilities 443,200 464,900 457,900 456,400 450,400 Wholesale Trade 67,400 69,500 68,900 68,600 68,700
Retail Trade 177,000 181,000 183,000 182,600 180,500
Transportation, Warehousing & Utilities 198,800 214,400 206,000 205,200 201,200 Information 12,500 13,000 13,300 13,000 12,800
Financial Activities 45,200 46,000 44,900 44,100 42,700 Professional & Business Services 166,600 173,900 164,400 161,800 160,800 Private Education & Health Services 254,300 267,900 287,800 306,000 320,700 Leisure & Hospitality 160,200 180,900 187,600 185,300 182,700 Other Services 43,600 47,400 49,400 50,700 50,900
Government 242,000 250,000 260,200 270,200 268,000 Total, All Industries 1,588,800 1,674,000 1,694,100 1,714,100 1,707,800 ____________________________
(1) As of July 2025.
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 2024 Benchmark. 1198
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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 2015 through 2024.
PERSONAL INCOME
City of Ontario, County of San Bernardino, State of California, and United States 2015-2024
Year
City of
Ontario
County of
San Bernardino California United States
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 99,009,671 2,769,103,000 19,600,945,000
2021 4,566,417 109,085,530 3,009,556,600 21,403,979,000 2022 4,392,483 106,853,756 3,003,826,100 22,077,232,000 2023 4,778,601 112,402,797 3,166,135,400 23,380,269,000 2024 5,351,829 --(1) 3,372,090,500 24,632,679,600
_____________________________
Note: Dollars in Thousands.
(1) County of San Bernardino figures for calendar year 2024 not yet available.
Source: U.S. Department of Commerce, Bureau of Economic Analysis and City of Ontario Annual Comprehensive Financial Report for Fiscal Year ended June 30, 2024.
PER CAPITA PERSONAL INCOME(1)
City of Ontario, County of San Bernardino, State of California, and United States 2015-2024
Year
City of
Ontario
County of
San Bernardino California United States
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 45,347 70,065 59,114
2021 24,682 49,741 76,887 64,450
2022 24,682 48,683 76,741 66,096
2023 26,687 51,194 80,771 69,418
2024 29,332 --(2) 85,518 72,425
__________________________
(1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S. Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation). (2) County of San Bernardino figures for calendar year 2024 not yet available.
Source: City of Ontario Annual Comprehensive Financial Report for Fiscal Year ended June 30, 2024; 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 o f property for Fiscal Years 2014-15 through 2023-24.
ASSESSED VALUATION OF TAXABLE PROPERTY
City of Ontario
Fiscal Years 2014-15 to 2023-24
(Dollars in Thousands)
City
Fiscal Year
Ended June 30
Secured
Value
Unsecured
Value
Less
Exemptions
Taxable
Assessed
Value
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
2024 28,446,187 2,547,814 (109,714) 30,994,001
________________________
Source: City of Ontario.
PROPERTY TAX LEVIES AND COLLECTIONS
City of Ontario
Fiscal Years 2014-15 to 2023-24
(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
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 2024 55,422,768 54,818,657 98.91 1,336,307 56,154,964 101.32 ________________________
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 2014-15 through 2023-24 Fiscal Years.
PROPERTY TAX LEVIES AND COLLECTIONS
City of Ontario
Fiscal Years 2014-15 to 2023-24
Fiscal Year
Ending June 30
Percent of Levy
Collected
Total Tax Collections
to Tax Levy to Date(1)
2015 101.87% $26,352,321
2016 101.39 27,777,778
2017 100.94 28,866,121
2018 101.46 30,921,494
2019 100.69 34,087,147
2020 99.67 36,753,080
2021 100.08 39,756,925
2022 101.01 44,111,852
2023 102.62 50,642,654
2024 101.32 56,154,964
_________________________
(1) Beginning with the City’s Comprehensive Annual Financial Report for the year ending June 30, 2019, the City did not include in its reported property tax collections pass -through payments related to the former Ontario Redevelopment Agency or Redevelopment Property Tax Trust Fund residual payments. The historical property tax collection amounts have been adjusted to reflect this change.
Source: City of Ontario.
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Largest Taxpayers
The principal property taxpayers in the City for Fiscal Year 2023-24, as compared to Fiscal Year 2014- 15, are as follows:
PRINCIPAL PROPERTY TAXPAYERS
City of Ontario
Fiscal Year 2023-24 Compared to Fiscal Year 2014-15
2024 2015
Taxpayer Taxable Value ($)
% of Total City
Taxable Value (%) Taxable Value ($)
% of Total City
Taxable Value (%)
Prologis Inc $1,438,166,872 3.57% $ 331,624,978 1.66% United Parcel Service Company 526,706,551 1.31 402,477,526 2.01 Ontario Mills LP 438,295,832 1.09 370,956,391 1.86
Costco Wholesale Corporation 402,837,408 1.00 - -
Ontario Lan Ventures LLC 378,882,004 0.94 - -
Rexford Express Corporation 375,759,895 0.93 - -
Federal Express Corporation 352,759,895 0.88 - -
WRPV XIV Ontario TA LLC 316,287,710 0.79 - -
Vineyard Industrial LLC 308,296,317 0.77 - -
Palmer Ontario Properties LP 290,893,063 0.72 - -
Catellus Finance 1 LLC - - 216,766,955 1.08
Comref So California Industrial - - 133,480,151 0.67
Majestic-CCC IV Partners - - 127,104,500 0.64
Niagara Bottling LLC - - 124,580,842 0.62
Southwest Airlines Company INC - - 100,202,023 0.50
Terracina Ontario Riverside LLC - - 95,514,284 0.48
Camden Landmark LLC - - 31,046,244 0.46 Total Top 10 Taxpayers $4,828,954,601 12.00% $1,993,753,894 9.98% Total Taxable Value $40,283,275,055 100.00% $19,995,108,986 100.00% ________________________
Source: City of Ontario.
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Taxable Sales
The table below presents taxable sales for the years 2015 through 2024 for the City.
TAXABLE SALES
City of Ontario
2015 through 2024
(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
2024 5,975 7,051,939 10,059 11,068,766
_____________________
(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 2024 for the County.
TAXABLE SALES
San Bernardino County
2015 through 2024
(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 57,933,854
2024 41,239 38,757,464 68,447 58,819,796
_________________________
(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, California Department of Tax and Fee Administration. 1203
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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 Po mona 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, Fron tier, 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 On tario 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 28 passenger gate s within two terminals and one international terminal, Ontario International Airport is the Western States Regional Terminal for United Parcel Service. In 2023 approximately 6.4 million passengers used the airport and cargo shipments decreased approximately 11.8% 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
DEVELOPER CONTINUING DISCLOSURE CERTIFICATE
of
LANDSEA HOMES OF CALIFORNIA, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
Dated as of [CLOSING DATE]
CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 71 (NEUHOUSE PHASE 2) SPECIAL TAX BONDS, SERIES 2025
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DEVELOPER CONTINUING DISCLOSURE CERTIFICATE
THIS DEVELOPER CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”), dated as of [_____], 2025, is executed by Landsea Homes of California LLC, a Delaware limited liability company (the “Developer”), on behalf of itself and LS -Ontario II LLC, a Delaware limited liability company (“LS-Ontario II”), in connection with the issuance by the City of Ontario Community Facilities District No. 71 (Neuhouse Phase 2) (the “Community Facilities District”) of the City of Ontario Community Facilities District No. 71 (Neuhouse Phase 2) Special Tax Bonds, Series 2025 (the “Series 2025 Bonds”), in the aggregate principal amount of $[ __________] pursuant to that certain Indenture, dated as of November 1, 2025 (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 2025 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 “Peri,” and “Rubi” neighborhoods, and LS-Ontario II is developing a portion of the property within the Community Facilities District that is described in the Official Statement as the “Eave” neighborhood; 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 2025 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”
means with respect to the Developer, means any other Person (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Developer, and (ii) for whom information, including financial information or operating data, concerning such Person is material to potential investors in their evaluation of the Community Facilities District and investment decision regarding the Bonds (i.e., information regarding such Person’s assets or funds that would materially affect the Developer’s ability to develop the Property as described in the Official Statement or to pay its Special Taxes on the Property (to the extent the responsibility of the Developer) prior to delinquency). For purposes hereof, the term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means the present possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
Notwithstanding the foregoing, for
purposes of this Disclosure Certificate, LS-Ontario II is an Affiliate of the Developer. The Land Banks are not Affiliates of the Developer or LS-Ontario II.
“Assumption Agreement” means an undertaking by a Major Owner (or Affiliate thereof) for the benefit of the holders and beneficial owners of the Series 2025 Bonds containing terms substantially similar to this Disclosure Certificate (as modified for such Major Owner’s development and financing plans with respect to the Community Facilities District), whereby such Major Owner or Affiliate agrees to provide Periodic Reports and notices of significant events, setting forth the information described in Sections 3 and 4 hereof, respectively, with respect to the portion of the property in the Community Facilities District owned by such Major Owner and its Affiliates and, at the option of the Developer or such Major Owner, agrees to indemnify the Dissemination Agent (if any) pursuant to a provision substantially in the form of Section 11 1208
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hereof. As set forth in Section 6(b), the sale of property to a Major Owner shall not require the execution of an Assumption Agreement if such Major Owner is already a party to a continuing disclosure certificate in form and substance similar to this Disclosure Certificate with respect to the Series 2025 Bonds, and under which the property conveyed to such Major Owner will become subject to future Semi-Annual Reports. In addition, the conveyance of property from the Landbanks to the Developer under the Opt ion Agreements is subject to this Disclosure Certificate and shall not require the Developer to enter into an Assumption Agreement.
“Community Facilities District ” means the City of Ontario Community Facilities District No. 71 (Neuhouse Phase 2), a community facilities district organized and existing under the laws of the State. “Development Plan” means, with respect to a Major Owner , the specific improvements such Major Owner intends to make, or cause to be made, in order for such Major Owner’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 – Development Plan.” “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 Owne r, the method by which such Major Owne r 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 –
Developer’s Financing Plan.”
“Indenture” means that certain Indenture, dated as of November 1, 2025, 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. “Landbanks” means, collectively, AG EHC II (LSEA) CA2, L.P., a Delaware limited partnership, and MRP HNHB LLC, a Delaware limi ted liability company, the landbanks for the Developer and LS -Ontario II pursuant to the Option Agreements.
“Listed Events” means any of the events listed in subsection (a) of Section 4 hereof. “Major Owner” means, as of any date of determination, a Person that, together with the Person’s Affiliates, owns, or has under option, 67 or more of the 335 taxable parcels in the Community Facilities District.
As of the date of this Disclosure Certificate, the Developer and LS-Ontario II are Major Owners. During the term of the Option Agreements, the Landbanks shall not be considered Major Owners. “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 [_______], relating to the Series 2025 Bonds. “Option Agreements” means, collectively, the Option Agreement (DUSA, California), dated August 17, 2023, entered into between the Developer and AG EHC II (LSEA) CA2, L.P., and the Option Agreement (Vander Eyk Project), effective June 25, 2025, entered between LS -Ontario II and MRP HNHB LLC, as amended and assigned and as they may be amended from time to time. 1209
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“Participating Underwriter” means Samuel A. Ramirez & Co. , Inc., the original underwriter of the Series 2025 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, as of any date of determination, (A) the real property within the boundaries of the Community Facilities District that is owned by (i) the Developer, (ii) any Affiliate of the Developer, (iii) the Landbanks (during the term of the Option Agreements), and (B) the property in the Community Facilities District that has been conveyed by the Developer , or any Affiliate of the Developer, to a Major Owner who has not assumed the Developer’s obligations under this Disclosure Certificate under Section 6(b) that is owned by such Major Owner. Property as of any date of determination does not include real property within the boundaries of the Community Facilities District that that is exempt from the Special Taxes, is the subject of an Assumption Agreement or has been conveyed to individual homeowners. “Report Dates” mean June 1 and December 1 of any year. If, in any year, the Report Date Falls on a Saturday, Sunday, or a holiday, such Report Date shall be extended to the next following day that is not a Saturday, Sunday, or Holiday.
“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 June 1 of each year.
“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 6, 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 June 15, 2026. 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 follow ing 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 1210
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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 Owner 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, which summarize ownership of the residential lots within the Community Facilities District as of October 1, 2025:
Status of Ownership
Information as of October 1, 2025
Owned by Developer and its Affiliates (LS-Ontario II) [__] Owned by Landbanks 138
Owned by third-party investor and leased back to Developer or LS-Ontario II(1) 11 Owned by Homeowners [__]
TOTAL 335
Status of Development of Units Owned by the Developer, LS-Ontario II, and Landbanks(2)
Information as of October 1, 2025
Completed Homes
Homes Under Construction
Finished Pad/Lot Condition(3)
TOTAL
__________________________
(1) Represents the model homes.
(2) As of the date of the Official Statement, the Developer and LS -Ontario II are the only Major Owners in the Community Facilities District. (3) [__] of such lots have been issued a building permit but signification construction has not yet commenced.
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(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 Owners 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 othe r 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 6, 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 Owner of any portion of a parcel of Property owned by such Major Owner or any Affiliate of a Major Owner to an entity that is not an Affiliate of a Major Owner, the result of which conveyance is to cause such entity to become a Major Owner. (ii) Any failure of a Major Owner, or any Affiliate of a Major Owner 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 Owner 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 Owner ’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 Owner, or any Affiliate of a Major Owner owning any Property, to pay the Special Taxes with respect to the Property owned by such Major Owner or such Affiliate prior to delinquency (to the extent the responsibility of such Major Owner or such Affiliate).
(iv) Bankruptcy, insolvency, receivership or similar event of a Major Owner or an Affiliate of a Major Owner 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 Owner or an Affiliate of a Major Owner owning any Property in a proceeding under the U.S.
Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of a Major Owner or an Affiliate of a Major Owner 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 Owner or an Affiliate of a Major Owner owning any Property.
(v) The sale of all or substantially all of the assets of a Major Owner or an Affiliate of a Major Owner owning any Property, to an entity that is not an Affiliate of a Major Owner or the Landbanks.
(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.
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(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 Owner 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. Duration of Reporting Obligation. (a) All the Developer’s obligations hereunder shall commence on the date hereof and terminate (except as provided in Section 11) on the earliest to occur of the following:
(i) upon the legal defeasance, prior redemption or payment in full of all the Series 2025 Bonds, or
(ii) at such time as the Developer is no longer a Major Owner and is no longer obligated hereunder as to any other Major Owner, including the Landbanks (in the event either Option Agreement is terminated and the Landbank is then a Major Owner) pursuant to subsection (b) below, or
(iii) the date on which the Special Taxes attributable to the Property are paid or prepaid in full.
If the obligations of the Developer under this Disclosure Certificate terminate prior to the final maturity of the Series 2025 Bonds , the Developer shall give, or cause to be given, notice of the termination of its obligations under this Disclosure Certificate in the same manner as for a Listed Event under Section 4.
(b) The Developer’s obligations hereunder shall terminate with respect to any portion of the Property on the date such portion of the Property is sold to a Person that is not a Major Owner. If any portion of the Property is sold to a Major Owner or if an Option Agreement is terminated and the Landbank would be a Major Owner, the Developer shall remain obligated hereunder with respect to such Property unless the obligations have been assumed by the Major Owner or such Landbank (if such Landbank is then a Major Owner), as applicable, pursuant to an Assumption Agreement. The Developer’s obligations under this Disclosure Certificate with respect to a Major Owner or the Landbanks (if either Option Agreement is terminated and either Landbank is then a Major Owne r) that has not executed an Assumption Agreement shall terminate upon the earlier to occur of (i) the date on which the Developer’s obligations with respect to such Major Owner or the Landbanks are assumed under an Assumption Agreement entered into pursuant to this Section 6(b), or (ii) the date on which the Major Owner or either Landbank is no longer considered a Major Owner. The Developer shall provide a copy of the executed Assumption Agreement to the Community Facilities District and the Participating Underwriter. A Major Owner, however, shall not be required to enter into an Assumption Agreement if such Major Owner is already a party to a continuing disclosure certificate in form and substance similar to this Disclosure Certificate with respect to the Series 2025 Bonds, and under which the property conveyed to such Major Owner will become subject to future Semi-Annual Reports. In addition, the conveyance of property from the Landbanks to the Developer or LS- 1213
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Ontario II under the Option Agreements is subject to this Disclosure Certificate and shall not require the Developer or LS-Ontario II to enter into an Assumption Agreement. .
Section 7. 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 Disseminati on 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 8. 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 require ments, 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 2025 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, mate rially impair the interests of o wners or beneficial owners of the Series 2025 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 ame ndment or waiver and its impact on the type of financial information or operating data being presented by the Developer.
Section 9. 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 10. Default. In the event of a failure of the Developer or the Dissemination Agent to comply with any provision of this Disclosure Certificate, the Participating Underwriter or the Owners of at least 25% of the aggregate principal amount of outstanding Series 2025 Bonds, or any Owner or Beneficial Owners, 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 11. 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 1214
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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 12. 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.
Developer: Landsea Homes
7525 Irvine Center Drive, Suite 200
Irvine, CA 92618
Attn: Shannon Whittaker, Forward Planner
and Sam Grable, Forward Planner
Email: [email protected]
[email protected]
With a copy to:
O’Neil LLP
19800 MacArthur Blvd, Suite 650
Irvine, CA 92612
Attn: Sandra Galle
Email: [email protected]
Community Facilities District: City of Ontario
303 East B Street
Ontario, CA 91764
Attn: City Manager
Email: [email protected]
Email: [email protected]
Participating Underwriter Samuel A. Ramirez & Co., Inc. 12130 Millennium Drive, Suite 300
Los Angeles, CA 90094
Attn: Eric McKean
Email: [email protected]
Section 13. 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 2025 Bonds, and shall create no rights in any other person or entity.
Section 14. 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.
LANDSEA HOMES OF CALIFORNIA, LLC, a
Delaware limited liability company
By:
Name:
Title:
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EXHIBIT A
NOTICE OF FAILURE TO FILE SEMI-ANNUAL REPORT
Name of Issuer: City of Ontario Community Facilities District No. 71 (Neuhouse Phase 2) Name of Issue: City of Ontario Community Facilities District No. 71 (Neuhouse Phase 2), Special Tax Bonds, Series 2025
Date of Issuance: [________]
NOTICE IS HEREBY GIVEN that Landsea Homes of California, LLC (the “Developer”), has not provided a Semi-Annual Report with respect to the above -named Bonds as required by the Developer Continuing Disclosure Certificate dated as of November [_], 2025, executed and delivered by the Developer. [The Developer anticipates that such Semi-Annual Report will be filed by ____________]
Dated: ,
Landsea Homes of California LLC
cc:
City of Ontario
Community Facilities District No. 71 (Neuhouse Phase 2)
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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 2025 Bonds, payment of principal, premium, if any, accreted value and interest on the Series 2025 Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interest s in the Series 2025 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 sho uld 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 2025 Bonds. The Series 2025 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 2025 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 2025 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2025 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 2025 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 2025 Bonds representing their ownership interests in Series 2025 Bonds, except in the event that use of the book-entry system for the Series 2025 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 benefici al ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2025 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2025 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. 1217
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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 2025 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2025 Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Series 2025 Bond documents. For example, Beneficial Owners of Series 2025 Bonds may wish to ascertain that the nominee holding the Series 2025 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 2025 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 2025 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 2025 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 2025 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 resp onsibility 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 2025 Bond Owner shall give notice to elect to have its Series 2025 Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Series 2025 Bonds by causing the Direct Participant to transfer the Participant’s interest in the Series 2025 Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Series 2025 Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Series 2025 Bonds are transferred by Direct Participants on DTC ’s records and followed by a book- entry credit of tendered Series 2025 Bonds to the Trustee’s DTC account.
DTC may discontinue providing its services as depository with respect to the Series 2025 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 2025 Bonds will be printed and delivered to DTC.
THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE SERIES 2025 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 2025 BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
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