Palmdale City Council
October 24, 2022

The Council Chamber is open for in-person public comment and seating.

The
Mayor and/or one or more members of the City Council may participate virtually in this meeting.

How to observe the meeting virtually:

1. Spectrum local access Channel 27

2. Online live webcast at www.cityofpalmdale.org.

How to Submit Public Comments:

VERBAL PUBLIC COMMENT DURING THE MEETING – ZOOM Number: US: +1 669 444 9171 Webinar ID: 852 5148 9881 Passcode: 839844
Webinar attendee link
https://us06web.zoom.us/j/85251489881?
pwd=Q2Q5ZTRkck1IZnY4OGpIdHMzeVBGUT09
.

Verbal comments must be limited to three (3) minutes. Public comments submitted will become part of the official meeting record.

The safety and well-being of employees and the public remains the City's top priority. The City of Palmdale appreciates your patience and understanding during these challenging times.

CITY COUNCIL MEETING

SPECIAL MEETING

CITY COUNCIL CHAMBERS
38300 SIERRA HIGHWAY

SUITE B
PALMDALE, CA 93550
MONDAY, OCTOBER 24, 2022
6:00 p.m.
www.cityofpalmdale.org

WELCOME
City Council
Monday, October 24, 2022

The City Council is making every effort to follow the spirit and intent of the Brown Act and other applicable laws regulating the conduct of public meetings in order to maximize transparency and public access.

In accordance with the Americans with Disabilities Act of 1990, if you require a disability- related modification or accommodation to participate in this meeting, please contact the City Clerk’s Office at (661) 267-5151 at least 72 hours prior to the meeting.

If you require oral Spanish translation, please contact the City Clerk’s Office at (661) 267- 5151 at least 72 hours prior to the meeting.

Your courtesy is requested to help our meetings run smoothly. If you’ll be kind enough to follow these simple rules, we can make the best possible use of your time and ours:

Please refrain from public displays or outbursts, such as unsolicited applause, comments, cheering, foul language or obscenities.

Any disruptive activities that substantially interfere with the ability of the City Council to carry out its meeting will not be permitted and offenders will be asked to leave the meeting.

Please turn off/mute your cell phones and mobile devices.

6:00 P.M.

1. CALL MEETING TO ORDER

2. PLEDGE OF ALLEGIANCE AND MOMENT OF SILENCE IN HONOR OF OUR TROOPS

3. ROLL CALL

MAYOR HOFBAUER, MAYOR PRO TEM LOA,

COUNCILMEMBERS CARRILLO, BISHOP, BETTENCOURT

4. WAIVER OF FULL READING OF RESOLUTION(S) and ORDINANCE(S) Staff Recommendation: Move to waive full reading of the Resolution (s) and/or Ordinance(s) to be considered and voted on at this meeting.

5. PUBLIC HEARING INSTRUCTIONS
This meeting is a special meeting. Therefore, public comments are to be only on the items listed on the agenda. Public comment on each of the public hearing matters will be considered during each of those public hearings. To address the Council regarding an item on the agenda, please fill out a Speaker's Form and submit it to the City Clerk City Council
Monday, October 24, 2022
BEFORE
the Mayor announces the public comment portion of the public hearing is open.

Each person addressing the Council is customarily given up to three mi nutes to speak
(with double the time allotted to non-English speakers using a translator). The amount of time authorized may be adjusted by the chair. If you wish to provide information to the Council, please present the City Clerk with 7 copies. Otherwise, your materials will simply be added to the administrative record. If you are attending the meeting by phone, please press *9 to "raise your hand." If attending by personal computer, please click the "raise your hand" button. Press *6 to un-mute yourself, state your name and begin speaking.

6. PUBLIC HEARINGS

6.1 Adopt Resolution No. CC 2022-106, a Resolution of the City Council of the City of Palmdale of formation of the Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services), authorizing the levy of special tax within the District, and preliminarily establishing an appropriations limit for the District;

Adopt Resolution No. CC 2022-107, a Resolution of the City Council of the City of Palmdale calling a special election within Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services);

Adopt Resolution No. CC 2022-108, a Resolution of the City Council of the City of Palmdale declaring results of special election and directing recording of notice of special tax lien- Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services);

Introduce and Adopt Ordinance No. 1596, an Ordinance of the City Council of the City of Palmdale levying special taxes within City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services). (Staff Reference: Director of Finance Samson)

1. Staff Report-CFD 2022-2 Final Formation Proceeding.pdf

2. Reso 2022-106 Formation J18534.docx

3. Reso 2022-107 CallSpecElection J18535.docx

4. Reso 2022-108 DeclarResults J18536.docx

5. Ordinance 1596 LevyingSpTx J18531.docx

6.2 Adopt Resolution No.CC 2022-109, a Resolution of the City Council of the City of Palmdale of formation of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), authorizing the levy of a special tax within the District , preliminarily establishing an appropriations limit for the District, and approving acquisition agreement;

Adopt Resolution No. CC 2022-110, a Resolution of the City Council of the City of Palmdale determining the necessity to incur bonded indebtedness for the City of City Council
Monday, October 24, 2022
Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities);

Adopt Resolution No. CC 2022-111, a Resolution of the City Council of the City of Palmdale calling special election within Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities);

Adopt Resolution No. CC 2022-112, a Resolution of the City Council of the City of Palmdale declaring results of special election and directing recording of notice of special tax lien - Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities);

Introduce and Adopt Ordinance No. 1597, an Ordinance of the City Council of the City of Palmdale levying special taxes within City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities). (Staff Reference: Director of Finance Samson)

1. Staff_Report_-_CFD 2022-3 Final Formation Proceedings.pdf

2. Reso 2022-109 Formation J18546.docx

3. Reso 2022-110 DetermNecess J18548.docx

4. Reso 2022-111 CallSpecElection J18544.docx

5. Reso 2022-112 DeclarResults J18545.docx

6. Ordinance 1597 LevyingSpTx J18541.docx

7. ADJOURNMENT
City Council
Monday, October 24, 2022

City Council Staff Report

DATE: OCTOBER 24, 2022
TO: HONORABLE MAYOR AND CITY COUNCIL
FROM: CITY MANAGER’S OFFICE – FINANCE DIVISION
DISTRICT: ALL
SUBJECT: ADOPT RESOLUTION NO. CC 2022-106, A RESOLUTION OF THE

CITY COUNCIL OF THE CITY OF PALMDALE OF FORMATION OF
THE COMMUNITY FACILITIES DISTRICT NO. 2022-2 (RITTER

RANCH MAINTENANCE SERVICES), AUTHORIZING THE LEVY OF

A SPECIAL TAX WITHIN THE DISTRICT, AND PRELIMINARILY
ESTABLISHING AN APPROPRIATIONS LIMIT FOR THE DISTRICT;
ADOPT RESOLUTION NO. CC 2022-107, A RESOLUTION OF THE

CITY COUNCIL OF THE CITY OF PALMDALE CALLING A SPECIAL
ELECTION WITHIN COMMUNITY FACILITIES DISTRICT NO. 2022-2 (RITTER RANCH MAINTENANCE SERVICES); ADOPT
RESOLUTION NO. CC 2022-108, A RESOLUTION OF THE CITY

COUNCIL OF THE CITY OF PALMDALE DECLARING RESULTS OF

SPECIAL ELECTION AND DIRECTING RECORDING OF NOTICE OF
SPECIAL TAX LIEN - COMMUNITY FACILITIES DISTRICT NO. 2022- 2 (RITTER RANCH MAINTENANCE SERVICES); AND INTRODUCE
AND ADOPT ORDINANCE NO. 1596, AN ORDINANCE OF THE CITY

COUNCIL OF THE CITY OF PALMDALE LEVYING SPECIAL TAXES

WITHIN CITY OF PALMDALE COMMUNITY FACILITIES DISTRICT
NO. 2022-2 (RITTER RANCH MAINTENANCE SERVICES)

ISSUE
Adopt Resolution No. CC 2022-106, a Resolution of the City Council of the City of Palmdale of formation of the Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services), authorizing the levy of a special tax within the District, and preliminarily establishing an appropriations limit for the District.

Adopt Resolution No. CC 2022-107, a Resolution of the City Council of the City of Palmdale calling a special election within Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services).

Adopt Resolution No. CC 2022-108, a Resolution of the City Council of the City of Palmdale declaring results of special election and directing recording of notice of special tax lien - Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services).

Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-2 for Ritter Ranch, Phase 1 October 24, 2022

Introduce and adopt Ordinance No. 1596, an Ordinance of the City Council of the City of Palmdale levying special taxes within City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services).

RECOMMENDATION
Staff recommends that the City Council:

1. Receive public testimony regarding Resolution No. CC 2022-099;

2. Adopt Resolution No. CC 2022-106, a Resolution of the City Council of the City of Palmdale of formation of the Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services), authorizing the levy of a special tax within the District, and preliminarily establishing an appropriations limit for the District;

3. Adopt Resolution No. CC 2022-107, a Resolution of the City Council of the City of Palmdale calling a special election within Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services);

4. Conduct special election for CFD 2022-2;

5. Adopt Resolution No. CC 2022-108, a Resolution of the City Council of the City of Palmdale declaring results of special election and directing recording of notice of special tax lien - Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services); and

6. Introduce, receive public testimony and adopt Ordinance No. 1596, an Ordinance of the City Council of the City of Palmdale levying special taxes within City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services).

BACKGROUND
In connection with the proposed master planned development of an area known as Ritter Ranch (“Project”), the City formed City of Palmdale Community Facilities District 93-1 (“CFD 93-1”) to finance certain public facilities for the Project. The City issued Special Tax Bonds for CFD 93-1 in 1995 for that purpose (“93-1 Bonds”). The outstanding 93- 1 Bonds were purchased by Preston Hollow Capital, LLC (“PHC”) in 2018.

In 2020, PHC acquired the property within CFD 93-1 and transferred the land to RdR Development Holdings, LLC (“RdR”), a limited liability company for which PHC is the sole member. Collectively, PHC and RdR are referred to as the RdR Parties. PHC continues to own the 93-1 Bonds and RdR continues to own the property within CFD 93-1.

In response to requests by RdR Parties, on September 1, 2020, the City Council adopted a resolution approving certain actions related to the Project, including a deferral of 93-1 Bonds bond payments and an agreement with PHC to pay costs of the City related to the development, and approved agreements with consultants to assist the City with matters related to proposed agreements and land use approvals for the Project and the 93-1 Bonds.

Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-2 for Ritter Ranch, Phase 1 October 24, 2022

The RdR Parties are now prepared to proceed with development of the first phase of the Project, encompassing 1,180 residential units (“Phase 1”). They have requested the formation of a new community facilities district for the Phase 1 property (“CFD 2022-3”) to fund public infrastructure and improvements necessary for the development of the Project and to refinance a portion of the 93-1 Bonds, the removal of the Phase 1 property from CFD 93-1 and elimination of the CFD 93-1 special tax levy on the Phase 1 property.

The City has required that an overlapping community facilities district be formed to provide monies for certain maintenance services for property within the new CFD 2022-

3. On September 21, 2022, the City Council took the first steps in forming the overlapping community district for maintenance, Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services) (“CFD 2022-2”), and adopted Resolution No. CC 2022- 099, including a description of services eligible to be funded by CFD 2022-2 and the Rate and Method of Apportionment of Special Taxes (“RMA”) which details the manner in which special taxes may be levied on property to be included in CFD 2022-2, and preliminary approval of a map of the boundaries of CFD 2022-2.

Formation of CFD 2022-3 is being considered by the City Council as a separate agenda item.

DISCUSSION
Special Tax Rates - Maintenance Services
The special taxes to be levied in CFD 2022-2 are meant to fund the negative fiscal impact to the City to provide public safety services for the Phase 1 property when developed, as well as incorporate existing City property tax assessments for parks, street lighting and drainage. This is consistent with the method used in the recently formed City-wide maintenance and services CFD 2022-1 for new development (“CFD 2022-1”), eliminating individual assessments for various purposes and combining them into one consolidated special tax.

This tax rate is initially set at $1,067 per year for single-family homes and $993 per year for each unit for multi-family homes (townhomes and clustered homes). The initial special tax rates (starting in Fiscal Year 2023-24) were established pursuant to a Fiscal Impact Analysis commissioned by the City and prepared by NBS Government Finance Group, the City’s regular special tax consultant. The public safety component special tax rate is $673 initially and the remaining $394 is consistent with the existing assessments to be levied on developed property for the maintenance of streetlights, parks and drainage and related administrative costs.

The CFD 2022-2 annual special tax for maintenance and public safety services also includes an annual inflation factor similar to the formula contained in the recently formed City-wide maintenance and services CFD 2022-1, and, like CFD 2022-1, is in effect in Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-2 for Ritter Ranch, Phase 1 October 24, 2022

perpetuity. CFD 2022-2 also contains a provision that, subsequent to any final payment of CFD 2022-3 Bonds, if the Phase 1 homeowners association is not fulfilling its obligation to maintain landscaping along major arterials in the Project, CFD 2022-2 can increase its annual special tax levies for this purpose, up to the amount that was being levied for debt service in CFD 2022-3.

Formation Proceedings
Public Hearing re CFD 2022-2 Formation - The City Council is required to hold a public hearing regarding the proposed CFD 2022-2. The resolution of intention to form CFD 2022-2 adopted by the City on September 21, 2022 called for such public hearing to be held on October 24, 2022. The public hearing allows all interested persons desiring to be heard on all matters pertaining to the formation of CFD 2022-2 and the services eligible to be funded by CFD 2022-2, and the levy of the special tax, to be heard. The notice of the public hearing was published in the Antelope Valley Press.

A report by the acting Director of Public Works (“Report”) as to the costs of the services to be funded by the CFD 2022-2 will be presented (Attachment 1) at the public hearing.

After the public hearing, if less than a majority of owners of the land proposed to be included in CFD 2022-2 have filed written protests against the establishment of CFD 2022-2, the City Council may proceed with the actions to form CFD 2022-2 and authorize the levy of the special tax. If the owners of one-half or more of the area of the land in the territory proposed to be included in CFD 2022-2 and not exempt from the special tax file written protests against the establishment of CFD 2022-2, and protests are not withdrawn so as to reduce the value of the protests to less than a majority, no further proceedings to create CFD 2022-2 will be conducted at this meeting. RdR is the only owner of land in CFD 2022-2, and there are no persons registered to vote residing in CFD 2022-2.

Resolution of Formation - The first action required if the City Council determines to proceed with the formation is the adoption of Resolution No. CC 2022-106 establishing CFD 2022-2 (“Resolution of Formation”). The Resolution of Formation:
 determines that all prior actions taken in connection with the formation of CFD 2022-2 and the levy of the special tax on property within CFD 2022-2 have been duly considered and determined to be valid and in conformity with the Mello-Roos Community Facilities Act of 1982, (“Act”);
 establishes CFD 2022-2;
 approves the boundaries of CFD 2022-2 (Attachment 2);  confirms the types of services to be funded by CFD 2022-2;  provides for the levy of the special taxes in accordance with the RMA;  provides for an initial annual appropriations limit for CFD 2022-2; and  requires the proposition of the levy of special tax and the proposition of the establishment of the appropriations limit to be submitted to the qualified elector of CFD 2022-2.

Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-2 for Ritter Ranch, Phase 1 October 24, 2022

Special Election - Following the adoption of the Resolution of Formation, the City Council will consider the adoption of Resolution No. CC 2022-107, a resolution calling for a special election. A written waiver executed by the sole owner of the property to be included in CFD 2022-2 allowing for a shortening of time for the special election to expedite the CFD 2022-2 formation process and waiving any requirement for notice, analyses and arguments in connection with the special election is on file with the City Clerk. As a result, the special election for CFD 2022-2 is being held at this meeting.

Once the special election has been held and the City Clerk has canvassed the election, the City Clerk will execute a Canvass and Statement of Result of Special Election, attached to Resolution No. CC 2022-108, a resolution declaring the results of special election, as Exhibit A. Following the adoption of Resolution No. CC 2022-108, the City Clerk will cause a notice of special tax lien (Attachment 3) to be recorded in the Los Angeles County Recorder’s Office.

Public Hearing re Special Tax Levy; Ordinance No. 1596 - Following the public hearing on the formation, election and adoption of the foregoing resolutions, the City Council will be asked to introduce Ordinance No. 1596, an Ordinance Levying Special Taxes within CFD 2022-2 (“Ordinance”). Following the introduction of the Ordinance, a public hearing will then be held regarding the Ordinance, and the City Council will then consider approval of the Ordinance.

FISCAL IMPACT
Formation Costs - The costs of formation of CFD 2022-2, including any legal, financial or staff costs, is being funded from monies deposited by PHC with the City for that purpose. There is no fiscal impact to the City’s General Fund.

CFD 2022-2 - Special taxes levied on developed homes within CFD 2022-2 will provide funding for City public safety, street lighting, parks and drainage serving the 1,180 proposed dwelling units within Phase 1. Special taxes will begin to be levied on each dwelling unit when a building permit is issued for the dwelling unit. Development is expected to occur over several years.

The Fiscal Year 2022-23 tax rate would generate approximately $800,000 for public safety and $450,000 for maintenance costs for the total 1,180 dwelling units (in today’s dollars). The larger portion of the cost of providing for public safety for the new development will be funded from development-generated revenues, such as property tax, sales tax and franchise fees, while the special tax is intended to fund the balance of costs not covered by such revenues.

An annual escalation factor has been included in the CFD 2022-2 special tax rate to keep up with inflation of costs of services and maintenance to be provided. CFD 2022-2 also provides for additional special tax to be levied once the CFD 2022-3 special tax terminates, in order to provide for additional landscaping costs on major Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-2 for Ritter Ranch, Phase 1 October 24, 2022

arterial roads in Ritter Ranch in the event such costs are not being funded by the homeowner’s association for Phase 1 properties.

STRATEGIC PLAN
Goal III: Invest in infrastructure to improve community livability.

A. Seek innovative, cost effective, customer focused methods of service delivery.

C. Plan and maintain safe and attractive neighborhoods, streets, facilities, and public spaces with exciting programming that promotes active fun for everyone.

Prepared by: Janelle Samson, Director of Finance
Certified as to availability of Funds: Janelle Samson, Director of Finance Approved by: Ronda Perez, Interim City Manager
Approved as to form: Scott E. Porter, Acting City Attorney

ATTACHMENTS

1. Community Facilities District Report for CFD 2022-2

2. Boundary Map for CFD 2022-2

3. Notice of Special Tax Lien for CFD 2022-2

4. Resolution CC 2022-106 Formation of CFD 2022-2

5. Resolution CC 2022-107 Call for Special Election for CFD 2022-2

6. Resolution CC 2022-108 Declaring Results of Special Election for CFD 2022-2

7. Ordinance No. 1596 Levying Special Tax for CFD 2022-2

Quint & Thimmig LLP 9/29/22
16007.49:J18530

RECORDING REQUESTED BY AND
AFTER RECORDATION RETURN TO:

City Clerk
City of Palmdale
38300 North Sierra Highway
Palmdale, CA 93550

NOTICE OF SPECIAL TAX LIEN

CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-2
(RITTER RANCH MAINTENANCE SERVICES)

Pursuant to the requirements of Section 3114.5 of the Streets and Highways Code of California and the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 and following of the California Government Code (the “Code”), the undersigned City Clerk of the City of Palmdale (the “City”), County of Los Angeles, State of California, hereby gives notice that a lien to secure payment of a special tax is hereby imposed by the City Council of the City, County of Los Angeles, State of California. The special tax secured by this lien is authorized to be levied for the purpose of paying the costs of certain maintenance and services, as described on Exhibit A attached hereto and by this reference made a part hereof, and otherwise to pay the costs of administering the below-mentioned community facilities district.

The special tax is authorized to be levied within the City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services), which has now been officially formed and the lien of the special tax is a continuing lien which shall secure each annual levy of the special tax and which shall continue in force and effect until the special tax ceases to be levied and a notice of cessation of special tax is recorded in accordance with Section 53330.5 of the Code, as incorporated by reference into the Code.

The rate, method of apportionment, and manner of collection of the authorized special tax is as set forth in Exhibit B attached hereto and by this reference made a part hereof.

Conditions under which the obligation to pay the special tax may be prepaid and permanently satisfied and the lien of the special tax canceled are as follows: none.

Notice is further given that upon the recording of this notice in the office of the County Recorder of the County of Los Angeles, the obligation to pay the special tax levy shall become a lien upon all nonexempt real property within the City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services), in accordance with Section 3115.5 of the California Streets and Highways Code.
-2-

The name(s) of the owner(s) and the assessor’s tax parcel number(s) of the real property included within this community facilities district and not exempt from the special tax are as set forth in Exhibit C attached hereto and hereby made a part hereof. -3-

Reference is made to the boundary map of the community facilities district recorded on September 26, 2022 at 1:46 p.m. in Book 196 of Maps of Assessment and Community Facilities Districts at Page 38 (instrument no. 20220937556), in the office of the County Recorder for the County of Los Angeles, State of California, which map is the final boundary map of the community facilities district.

For further information concerning the current and estimated future tax liability of owners or purchasers of real property or interests therein subject to this special tax lien, interested persons should contact the Finance Director of the City of Palmdale, 38300 Sierra Highway, Palmdale, Suite D, California 93550, telephone number (661) 267-5440.

Dated: October __, 2022.

By:

City Clerk,
City of Palmdale
16007.49:J18530
A-1

EXHIBIT A

CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-2
(RITTER RANCH MAINTENANCE SERVICES)

MAINTENANCE SERVICES:

The maintenance services eligible to be funded, in whole or in part, by the community facilities district (the “District”) include all direct and incidental costs related to providing the following:

• Maintenance and lighting of streets, roadways, parks, parkways, trails and open space.

• Flood and storm protection services.

• Police protection, fire protection and suppression services and ambulance and paramedic services.

• Maintenance and irrigation of landscaping in public rights of way.

The District may fund any of the following related to the services described above: obtaining, constructing, furnishing, operating and maintaining equipment, apparatus or facilities, paying the salaries and benefits of personnel (including but not limited to maintenance workers, patrol guards and other personnel), and for payment of other related expenses (including but not limited to employee benefit expenses and an allocation of general overhead expenses), payment of insurance costs and other related expenses and the provision of reserves for repairs and replacements and for the future provision of services and capital replacements.

Any services to be funded by the District must be in addition to those provided in the territory of the District before the District was created, and may not supplant services already available within that territory when the District is created. It is expected that the services will be provided by the City of Palmdale (the “City”), either with its own employees or by contract with third parties, or any combination thereof.

ADMINISTRATIVE EXPENSES:

The administrative expenses to be funded by the District include the direct and indirect expenses incurred by the City in carrying out its duties with respect to the District (including, but not limited to, the levy and collection of the special taxes) including the fees and expenses of attorneys, any fees of the City related to the District or the collection of special taxes, an allocable share of the salaries of any City staff directly related thereto and a proportionate amount of the City’s general administrative overhead related thereto, any amounts paid by the City from its general fund with respect to the District or the services authorized to be financed by the District, and expenses incurred by the City in undertaking action to foreclose on A-2
properties for which the payment of special taxes is delinquent, and all other costs and expenses of the City in any way related to the District.

OTHER:

The incidental expenses that may be funded by the District include, in addition to the administrative expenses identified above, the payment or reimbursement to the City of all costs associated with the establishment of the District and any property annexed to the District.

B-1

EXHIBIT B

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR CITY OF PALMDALE COMMUNITY FACILITIES DISTRICT NO. 2022-2 (RITTER RANCH MAINTENANCE SERVICES) A Special Tax, as hereinafter defined, shall be levied and collected in the City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services) (“CFD No. 2022-2”) each Fiscal Year commencing in Fiscal Year 2023/24, in an amount determined by the application of the procedures below. All Taxable Property, as hereinafter defined, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meaning: “Accessory Dwelling Unit” or “ADU” means all Assessor’s Parcels of Residential Property for which a building permit(s) has been issued for an “Accessory Dwelling Unit” as defined in California Government Code Section 65852.2(j)(1), as may be amended from time to time, that is accessory to a primary Unit. The ADU may be located on the same Assessor’s Parcel as the primary Unit that is the primary Unit or on a separate Assessor’s Parcel. For purposes of clarification, where an ADU and primary Unit are on the same Assessor’s Parcel, the ADU located on such Assessor’s Parcel is considered a separate Unit from the primary Unit on such Assessor’s Parcel for purposes of the Special Tax. Should an Assessor’s Parcel contain only an ADU, such Assessor’s Parcel will be taxed as an ADU Unit only. "Acre” or “Acreage" means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map. In the event that the Assessor’s Parcel Map shows no acreage, the Acreage for any Assessor’s Parcel may be determined by the CFD Administrator based upon, in the CFD Administrator’s discretion, the applicable condominium plan, final map, parcel map, Assessor’s Data or by using available spatial data and GIS. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1, Division 2 of Title 5 of the Government Code of the State. “Administrative Expenses” means the actual or reasonably estimated costs directly related to the administration of CFD No. 2022-2 including, but not limited to, the following: the costs of computing the Annual Special Tax Requirement and the annual Special Tax and of preparing the annual Special Tax collection schedules and the City’s annual administration fees and third party expenses; the costs of collecting the Special Tax, including any charges levied by the County Auditor’s Office, Tax Collector’s Office or Treasurer’s Office; the costs of the City or designee in complying with the disclosure requirements of the California Government Code (including the Act), including public inquiries regarding the Special Tax; the costs of the City or designee related to an appeal of the Special Tax; and the costs of commencing and pursuing to completion any action arising from any delinquent Special Tax in CFD No. 2022-2. Administrative Expenses shall also include any other amounts incurred by the City or CFD No. 2022-2 in connection with the administration of CFD No.

B-2
2022-2, and amounts estimated or advanced by the City or CFD No. 2022-2 for any other administrative purposes, including, but not limited to, attorney’s fees. “Annual Services Costs” means the respective annual amounts determined by the CFD Administrator as reasonably needed to fund the Authorized Services authorized to be funded by CFD No. 2022-2 for the applicable yearly period. “Annual Special Tax Requirement” means that amount with respect to CFD No. 2022-2 determined by the CFD Administrator as required in any Fiscal Year to pay: (1) the Administrative Expenses, (2) the Annual Services Costs, and (3) the amount required to establish or replenish any reserve or replacement fund established in connection with CFD No. 2022-2, and (4) an amount equal to reasonably anticipated delinquencies in the payment of the annual Special Tax based on the delinquency rate for any Special Tax levied in the previous Fiscal Year (or as projected by the CFD Administrator for the first Fiscal Year’s Special Tax levy). In and following the Transition Year, the Annual Special Tax Requirement shall also include the Contingent Special Tax Requirement. “Assessor’s Data” means the property characteristic data compiled and maintained by the County Assessor for each Assessor’s Parcel, including, but not limited to, Assessor’s Parcel Number, Acreage, and Units. “Assessor’s Parcel” or “Parcel” means a lot or parcel shown in an Assessor’s Parcel Map with an assigned Assessor’s Parcel Number. “Assessor’s Parcel Map” means an official map of the Assessor of the County designating parcels by Assessor’s Parcel Number. “Assessor’s Parcel Number” or “APN” means, with respect to an Assessor’s Parcel, that number assigned to such Assessor’s Parcel by the County Assessor for purposes of identification. “Authorized Services” means the services authorized to be funded as indicated in the resolution of intention, in whole or in part, by CFD No. 2022-2. “Building Permit” means a permit issued by the City for new construction of a residential or non-residential building on an Assessor’s Parcel. “Building Square Feet” or “BSF” means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Building Square Feet shall be made by reference to the building permit(s) issued for such residential dwelling unit. In the event that the building permit does not show Building Square Feet, other records of the City or Assessor’s Data shall be used as determined by the CFD Administrator. “CFD Administrator” means an official of the City, or designee thereof, responsible for determining the Annual Special Tax Requirement (including the Annual Services Costs) and providing for the levy and collection of the Special Taxes. “CFD No. 2022-2” means the City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services).

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"CFD No. 2022-3" means City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), established by the City Council pursuant to the Act. “CFD No. 2022-3 Bonds” means bonds or other Debt (as defined in section 53317 of the Act), whether in one or more series, issued or assumed by or on behalf of the City for CFD No. 2022-3 under the Act, and secured by pledge of the Special Taxes. “City” means the City of Palmdale, California. “City Council” means the City Council of the City, acting as the legislative body of CFD No. 2022-2. “Contingent Services” means those Authorized Services to be provided initially by a POA, but that may be provided by the City or contractor(s) of the City should the POA request or the City determine that the POA is unable to provide the Contingent Services to the City’s standards or pay for the costs of such services. “Contingent Special Tax” means that amount levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property to fund the Contingent Special Tax Requirement. “Contingent Special Tax Requirement” means that amount as required in any Fiscal Year if the POA is unable to provide the Contingent Services to the City’s standards or pay for the costs of Contingent Services incurred or otherwise payable. “County” means the County of Los Angeles, California. “County Assessor” means the County Assessor of the County. “Developed Property” means, in any Fiscal Year, all Taxable Property in CFD No. 2022-2 for which a Building Permit for new construction was issued by the City prior to March 1 of the preceding Fiscal Year. “Exempt Property” means all Assessors’ Parcels within the boundary of CFD No. 2022-2 which are exempt from the Special Tax pursuant to Section E below. “Fiscal Year” means the period starting July 1 and ending on the following June 30. “GIS” or “Geographic Information System” means a system designed to capture, store, manipulate, analyze, manage, and present spatial or geographic data. “Land Use Class” means any of the classes listed in Table 1 and Table 2. "Maximum Special Tax” means the Maximum Special Tax, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property. “Maximum Contingent Special Tax” means the Maximum Contingent Special Tax, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property. “Non-Residential Property” means, in any Fiscal Year all Assessor’s Parcels of Developed Property for which a building permit(s) was issued for a structure intended for non-residential use.

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“Open Space Property” means property within the boundaries of CFD No. 2022-2 which (i) has been designated with specific boundaries and Acreage on a final subdivision map as open space, (ii) has been irrevocably offered for dedication as open space to the federal government, the State, the County, the City, or any other public agency, or (iii) is encumbered by an easement or other restriction required by the City limiting the use of such property to open space. “Property Owner’s Association” or “POA” means any duly constituted property owner’s association. As used in this definition, a Property Owner’s Association includes any home-owner’s association, condominium owner’s association, master or sub-association or non-residential owner’s association. “Property Owner’s Association Property” means any property within the boundaries of CFD No. 2022-2 which is (a) owned by a Property Owner’s Association or (b) designated with specific boundaries and acreage on a final subdivision map as Property Owner Association Property. “Proportionately” means, for Developed Property, that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for Developed Property. For Undeveloped Property, “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for Undeveloped Property. The Contingent Special Tax shall also be levied such that the ratio of the actual Contingent Special Tax Levy to the Maximum Contingent Special Tax is equal for Developed Property and Undeveloped Property respectively. “Public Property” means any property within the boundaries of CFD No. 2022-2 which (i) is owned by a public agency, (ii) has been irrevocably offered for dedication to a public agency, or (iii) is designated with specific boundaries and Acreage on a final subdivision map as property which will be owned by a public agency. For purposes of this definition, a public agency includes the federal government, the State, the County, the City, school districts, or any other governmental agency. “Rate and Method of Apportionment” means this Rate and Method of Apportionment of Special Taxes for CFD No. 2022-2. “Residential Property” means all Assessor’s Parcels of Developed Property for which a Building Permit has been issued for purposes of constructing one or more residential Units. “Ritter Ranch Specific Plan” means Specific Plan 89-02 approved by the City on March 3, 1992 by Ordinance No. 964, as amended on October 11, 1995 by Ordinance No. 1076 (Specific Plan Amendment 95-1-RR). “Single Family Residential Attached Property” means all Assessor’s Parcels of Residential Property for which a building permit(s) has been issued for (i) an attached residential structure or (ii) property with a single family attached designation according to the Ritter Ranch Specific Plan including detached and paired townhomes. “Single Family Residential Detached Property” means all Assessor’s Parcels of Residential Property for which a building permit(s) has been issued for a detached residential structure intended as a single primary Unit.

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“Special Tax(es)” means the annual special tax to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property to fund the Annual Special Tax Requirement. “State” means the State of California. “Tax Escalation Factor” means on July 1 of each Fiscal Year, commencing on July 1, 2024, the Maximum Special Tax as shown in Section C shall be increased by a minimum of two percent (2%) to a maximum of six percent (6%), determined by the CFD Administrator on an annual basis as needed to increase the Maximum Special Tax to satisfy the Special Tax Requirement for the succeeding and future Fiscal Years. “Taxable Property” means all the Assessor’s Parcels within the boundaries of CFD No. 2022-2 that are not exempt from the Special Tax pursuant to law or Section E below. “Transition Event” means the earlier of (i) Fiscal Year 2084/85 or (ii) the Fiscal Year when the CFD Administrator determines that both of the following events have occurred (i) all CFD No. 2022-3 Bonds secured by the levy and collection of the Special Tax in CFD No. 2022-1 have been fully repaid or are no longer outstanding and the City determines that no additional Bonds are to be issued, and (ii) all Administrative Expenses from prior Fiscal Years have been paid or reimbursed to the District. “Transition Year” means the Fiscal Year in which the CFD Administrator determines that the Transition Event occurred in the prior Fiscal Year. “Undeveloped Property” means all the Assessor’s Parcels of Taxable Property within the boundaries of CFD No. 2022-2 that are not classified as Developed Property. “Unit” means (i) for Single Family Residential Property, an individual single family detached residential unit, (ii) for Multi-Family Residential Property, a townhome, condominium, apartment, or other residential dwelling unit, including each separate living area within a half-plex, duplex, triplex, fourplex, or other residential structure, and (iii) and ADU. The number of Units assigned to each Assessor’s Parcel may be determined by (i) referencing Assessor’s Data, (ii) site surveys and physical unit counts, and/or (iii) other research by the CFD Administrator. “Welfare Exempt Property” means, in any Fiscal Year, all Parcels within the boundaries of CFD No. 2022-2 that (a) have been granted a welfare exemption by the County under subdivision (g) of Section 214 of the Revenue and Taxation Code indicated in the Assessor’s Data finalized as of January 1 of the previous Fiscal Year, and (b) are exempt from the Special Tax pursuant to Section 53340(c) of the Act. B. DETERMINATION OF TAXABLE PARCELS Each Fiscal Year, the CFD Administrator shall determine the Assessor’s Parcel Numbers for all Taxable Property within CFD No. 2022-2 for the then-current Fiscal Year. To the extent a Parcel or Parcels of Taxable Property are subdivided, consolidated, or otherwise reconfigured, the Maximum Special Tax shall be assigned to the new Assessor’s Parceln Numbers pursuant to Section C. The CFD Administrator shall also determine: (i) which Parcels are Developed Property and Undeveloped Property; (ii) the number of Units or Acreage each Parcel contains; (iii) the property type, i.e., Single Family Residential Attached Property, Single Family Residential Detached Property, Accessory B-6
Dwelling Unit, Non-Residential Property; and (iv) the Annual Special Tax Requirement for the Fiscal Year. C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. The Maximum Special Tax for each Assessor’s Parcel of Taxable Property shall be assignedaccording to the following table prior to the Transition Year.TABLE 1 MAXIMUM SPECIAL TAX FISCAL YEAR 2023/24 Land Use Class Description Maximum Special Tax Rate Per 1 Single Family Residential Detached Property $1,067.00 Unit 2 Single Family Residential Attached Property $993.00 Unit 3 Accessory Dwelling Units See Below Unit 4 Undeveloped Property $9,295.00 Acre The Maximum Special Tax for an Accessory Dwelling Unit shall be calculated as a percentage of the Maximum Special Tax for the primary Unit the ADU is accessory to, based on Building Square Footage. For example, if a primary Unit in Land Use Class 1 of 2,000 BSF has an ADU of 800 BSF, the Maximum for the ADU Special Tax shall be calculated by the following steps: 1. 800 BSF / 2,000 BSF = 0.40 or 40%2. $1,067 Maximum Special Tax per Unit x 40% = $426.80 Maximum Special Tax for suchADUOn July 1 of each Fiscal Year, commencing on July 1, 2024, the Maximum Special Tax shall be increased by an amount equal to the Tax Escalation Factor. 2. The Maximum Special Tax for each Assessor’s Parcel of Taxable Property shall be assignedaccording to the following table in and following the Transition Year.TABLE 2 MAXIMUM CONTINGENT SPECIAL TAX FISCAL YEAR 2023/24 Land Use Class Description Maximum Contingent Special Tax Rate Per 1 Single Family Residential Detached Property $3,125 Unit 2 Single Family Residential Attached Property $2,352 Unit B-7
3 Accessory Dwelling Units See Below Unit 4 Undeveloped Property $22,531 Acre The Maximum Contingent Special Tax for an Accessory Dwelling Unit shall be calculated as a percentage of the Maximum Contingent Special Tax for the primary Unit the ADU is accessory to, based on Building Square Footage. For example, if a primary Unit in Land Use Class 1 of 2,000 BSF has an ADU of 800 BSF, the Maximum Contingent Special Tax for the ADU shall be calculated by the following steps: 1. 800 BSF / 2,000 BSF = 0.40 or 40%2. $1,067 Maximum Contingent Special Tax per Unit x 40% = $426.80 MaximumContingent Special Tax for such ADUOn July 1 of each Fiscal Year, commencing on July 1, 2024, the Maximum Contingent Special Tax shall be increased by an amount equal to the Tax Escalation Factor. In some instances, an Assessor’s Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor’s Parcel shall be the sum of the Special Tax for all Land Use Classes located on that Assessor’s Parcel. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX All Taxable Property shall be subject to an annual Special Tax defined as follows. The Special Tax shall be levied each Fiscal Year as calculated by the CFD Administrator. The Annual Special Tax Requirement shall be apportioned to each Parcel within CFD No. 2022-2 by the method shown below. First: Determine the Annual Special Tax Requirement. Second: Levy the Special Tax on each Parcel of Developed Property, Proportionately, up to the applicable Maximum Special Tax and Maximum Contingent Special Tax. Third: If additional monies are needed to satisfy the Annual Special Tax Requirement after the second step has been completed, the Special Tax shall be levied on each Parcel of Undeveloped Property, Proportionately, up to the applicable Maximum Special Tax and Maximum Contingent Special Tax. Notwithstanding the foregoing, under no circumstances will the Special Tax on any Assessor’s Parcel used for private residential purposes be increased by more than 10% as a consequence of delinquency or default by the owner of any other Assessor’s Parcel within CFD No. 2022-2. E. EXEMPTIONS Notwithstanding any other provision of this Rate and Method of Apportionment, no Special Tax shall be levied on Property Owner’s Association Property, Assessor’s Parcels with public or utility easements making impractical their utilization for any use other than the purposes set forth in the easement, or Public Property, except as otherwise provided in Sections 53317.3, 53317.5, and 53340.1 of the Act.

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No Special Tax shall be levied on any Assessor’s Parcel in any Fiscal Year in which such Assessor’s Parcel is classified as Welfare Exempt Property. F. APPEAL OF SPECIAL TAX LEVY Any property owner may file a written appeal of the Special Tax with the CFD Administrator claiming that the amount or application of the Special Tax is not correct with respect to one or more specific Assessor’s Parcels. The appeal must be filed not later than one calendar year after having paid the Special Tax that is disputed, and the appellant must be current in all payments of the Special Taxes theretofore levied on the Assessor’s Parcel(s). In addition, during the term of the appeal process, all Special Tax levied must be paid for the subject Assessor’s Parcel(s) prior to delinquency. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the property owner disagrees with the CFD Administrator’s decision relative to the appeal, the owner may then file a written appeal with the City Council whose subsequent decision shall be final and binding on all interested parties. If the decision of the CFD Administrator or subsequent decision by the City requires the Special Tax to be modified or changed in favor of the property owner, then an adjustment shall be made to credit future Special Taxes. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to filing any legal action by such owner. G. INTERPRETATION OF RATE AND METHOD OF APPORTIONMENT The City may, by resolution or ordinance, interpret, clarify and/or revise this Rate and Method of Apportionment to correct any inconsistency, vagueness, or ambiguity as it relates to the Special Taxes, method of apportionment, the classification of Assessor’s Parcels, or any definition used herein, as long as such correction does not materially affect the levy and collection of Special Taxes on any Assessor’s Parcel. In addition, the interpretation and application of any section of this document shall be at the CFD Administrator’s discretion. H. MANNER AND DURATION OF SPECIAL TAX The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided that the CFD Administrator may directly bill the Special Tax, may collect the Special Tax at a different time or in a different manner if needed to meet the financial obligations of CFD No. 2022-2. A Special Tax shall be levied commencing in Fiscal Year 2023/24 to the extent necessary to satisfy the Annual Special Tax Requirement and/or Contingent Special Tax Requirement (commencing with the Transition Year) and shall be levied each Fiscal Year thereafter for as long as required to satisfy the Annual Special Tax Requirement and/or Contingent Special Tax Requirement. I. PREPAYMENT OF SPECIAL TAX The Special Tax may not be prepaid.

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EXHIBIT C

ASSESSOR’S PARCEL NUMBERS AND OWNER OF LAND WITHIN

CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-2
(RITTER RANCH MAINTENANCE SERVICES)

Names of Property Owner
Los Angeles County
Assessor’s Parcel Nos.

RdR Development Holdings, LLC
1717 Main Street, Suite 3900
Dallas, Texas 75201
3206-020-017
3206-026-005
3206-026-007
3206-027-002
3206-027-004
3206-027-005
3206-027-006
3206-027-007
3206-027-008
3206-027-009
3206-027-010
3206-027-012

CITY COUNCIL

CITY OF PALMDALE, CALIFORNIA
RESOLUTION NO. CC 2022 -106

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE

OF FORMATION OF THE CITY OF PALMDALE COMMUNITY FACILITIES DISTRICT NO. 2022-2 (RITTER RANCH MAINTENANCE SERVICES),

AUTHORIZING THE LEVY OF A SPECIAL TAX WITHIN THE DISTRICT,

AND PRELIMINARILY ESTABLISHING AN APPROPRIATIONS LIMIT

FOR THE DISTRICT
WHEREAS, on September 21, 2022, this City Council adopted Resolution No. CC 2022-099 entitled “A Resolution of the City Council of the City of Palmdale Declaring Its Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes Therein – Ritter Ranch Maintenance Services” (the “Resolution of Intention”), stating its intention to form the City of Palmdale Community Facilities District No. 2022- 2 (Ritter Ranch Maintenance Services) (the “District”), pursuant to the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 and following of the California Government Code (the “Code”); and
WHEREAS, the Resolution of Intention, incorporating a map of the proposed boundaries of the District and stating the type of maintenance and services to be funded by the District (the “Services”), and the rate and method of apportionment of the special tax to be levied within the District (the “Rate and Method”) to pay for the Services, is on file with the City Clerk of the City of Palmdale (the “City”) and the provisions thereof are incorporated herein by this reference as if fully set forth herein; and …Indent first line and insert text; and
WHEREAS, on this date, this City Council held a noticed public hearing as required by the Code and the Resolution of Intention relative to the proposed formation of the District; and
WHEREAS, at the hearing evidence was presented to this City Council on the matters before it, including a report by the acting Director of Public Works of the City (the “Report”) as to the costs of the Services to be funded by the District, a copy of which Report is on file with the City Clerk, and this City Council at the conclusion of the hearing was fully advised regarding the District; and
WHEREAS, written protests with respect to the formation of the District, the Services to be funded by the District and the Rate and Method have not been filed with the City Clerk by fifty percent (50%) or more of the registered voters residing within the Resolution No. CC 2022-106

territory of the District or the owners of one-half (1/2) or more of the area of land within the District and not exempt from the levy of the special tax; and WHEREAS, the special tax proposed to be levied in the District, as set forth in the Rate and Method, has not been eliminated by protest by fifty percent (50%) or more of the registered voters residing within the territory of the District or the owners of one-half (1/2) or more of the area of land within the District and not exempt from the special tax.

NOW THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF

PALMDALE DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS:

SECTION 1. The foregoing recitals are true and correct.

SECTION 2. The proposed special tax to be levied within the District has not been precluded by majority protest pursuant to Section 53324 of the Code.

SECTION 3. All prior proceedings taken by this City Council in connection with the formation of the District and the levy of the special tax on property in the District have been duly considered and are hereby found and determined to be valid and in conformity with the requirements of the Code.

SECTION 4. The community facilities district designated “City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services)” is hereby established pursuant to the Code.

SECTION 5. The boundaries of the District as set forth in the map of the District recorded on September 26, 2022, in Book 196 at page 38 of Maps of Assessment and Community Facilities Districts in the office of the County Recorder for the County of Los Angeles (instrument no. 20220937556), are hereby finally approved, are incorporated herein by this reference and shall be the boundaries of the District.

SECTION 6. The types of Services to be funded by the District are as described in Exhibit A to the Resolution of Intention, which Exhibit is by this reference incorporated herein.

SECTION 7. Except to the extent that funds are otherwise available to the District to pay for the costs of the Services, a special tax sufficient to pay such costs, secured by recordation of a continuing lien against all non-exempt real property in the District, will be levied annually on property located within the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council or its designee shall determine, including direct billing of the affected property Resolution No. CC 2022-106

owners. The proposed Rate and Method, in sufficient detail to allow each landowner within the District to estimate the maximum amount such owner will have to pay, is set forth in Exhibit B attached to the Resolution of Intention, which Exhibit is by this reference incorporated herein.

This City Council hereby finds that the basis for the levy and apportionment of the special tax, as set forth in the Rate and Method, is reasonable.

This City Council hereby further finds that the provisions of Sections 53313.6, 53313.7 and 53313.9 of the Code (relating to adjustments to ad valorem property taxes and schools financed by a community facilities district), are inapplicable to the District.

SECTION 8. The Finance Director of the City of Palmdale, 38300 Sierra Highway, Suite D, Palmdale, California 93550, telephone number (661) 267-5440 is the officer of the City that will be responsible for preparing annually a current roll of special tax levy obligations by assessor’s parcel number and which will be responsible for estimating future special tax levies pursuant to Section 53340.2 of the Code.

SECTION 9. Upon recordation of a notice of special tax lien pursuant to Section 3114.5 of the California Streets and Highways Code, a continuing lien to secure each levy of the special tax shall attach to all nonexempt real property in the District and this lien shall continue in force and effect until the special tax obligation is prepaid and permanently satisfied and the lien canceled in accordance with law or until collection of the tax by the City ceases.

SECTION 10. In accordance with Section 53325.7 of the Code, the annual appropriations limit, as defined by subdivision (h) of Section 8 of Article XIII B of the California Constitution, of the District is hereby preliminarily established at $85,000,000 and said appropriations limit shall be submitted to the qualified electors of the District as hereafter provided. The proposition establishing said annual appropriations limit shall become effective if approved by the qualified electors voting thereon and shall be adjusted in accordance with the applicable provisions of Section 53325.7 of the Code.

SECTION 11. Pursuant to the provisions of the Code, the proposition of the levy of the special tax and the proposition of the establishment of the appropriations limit specified above shall be submitted to the qualified electors of the District at an election the time, place and conditions of which election shall be as specified by a separate resolution of this City Council.

Section 12. This Resolution shall take effect upon its adoption.

Resolution No. CC 2022-106

PASSED, APPROVED and ADOPTED this 24th day of October, 2022. _________________________________
Approved as to form: Steven D. Hofbauer, Mayor
ATTEST:
___________________________ _________________________________ Scott E. Porter Rochelle Scott, Acting City Clerk
Interim City Attorney
I, Rochelle Scott, Acting City Clerk of Palmdale, California, do hereby certify that the foregoing resolution was duly passed, approved, and adopted by the City Council of the City of Palmdale at a regular meeting of said Council held on the 24th day of October, 2022 by the following roll call vote:

AYES:

NOES:___________________________________________________________ ABSTAIN:______________________ABSENT:___________________________ Date:

Rochelle Scott, Acting City Clerk

CITY COUNCIL

CITY OF PALMDALE, CALIFORNIA
RESOLUTION NO. CC 2022-107

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE

CALLING SPECIAL ELECTION WITHIN COMMUNITY FACILITIES
DISTRICT NO. 2022-2 (RITTER RANCH MAINTENANCE SERVICES) WHEREAS, on this date, this City Council adopted Resolution No. CC 2022-106 entitled “A Resolution of the City Council of the City of Palmdale of Formation of the City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services), Authorizing the Levy of a Special Tax Within the District, and Preliminarily Establishing an Appropriations Limit for the District” (the “Resolution of Formation”), ordering the formation of the City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services) (the “District”), authorizing the levy of a special tax on property within the District, and preliminarily establishing an appropriations limit for the District; and
WHEREAS, pursuant to the provisions of the Resolution of Formation, the propositions of the levy of said special tax and the establishment of the appropriations limit shall be submitted to the qualified electors of the District as required by the Mello- Roos Community Facilities Act of 1982, constituting Section 53311 and following of the California Government Code (the “Code”).

NOW THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF

PALMDALE DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS:

SECTION 1. Pursuant to Sections 53326 and 53325.7 of the Code, the issues of the levy of said special tax and the establishment of said appropriations limit shall be submitted to the qualified electors of the District at an election called therefor as provided below.

SECTION 2. As authorized by Section 53353.5 of the Code, the two propositions described in Section 1 above shall be combined into a single ballot measure, the form of which is attached hereto as Exhibit A and by this reference incorporated herein. Said form of ballot is hereby approved.

SECTION 3. This City Council hereby finds that fewer than 12 persons have been registered to vote within the territory of the District for each of the ninety (90) days preceding the close of the public hearing heretofore conducted and concluded by this City Council for the purposes of these proceedings. Accordingly, and pursuant to Resolution No. CC 2022-107

Section 53326 of the Code, this City Council finds that for purposes of these proceedings the qualified elector is the sole owner of the land initially included within the District and that the vote shall be by said landowner or its authorized representative, having one vote for each acre or portion thereof the landowner owns in the District as of the close of the public hearing.

SECTION 4 . This City Council hereby calls a special election to consider the measures described in Section 2 above, which election shall be held in the City Council Chambers immediately following adoption of this Resolution. The City Clerk is hereby designated as the official to conduct said election. It is hereby acknowledged that the City Clerk has on file a copy of the Resolution of Formation, a copy of the map of the proposed boundaries of the District, and a sufficient description to allow the City Clerk to determine the boundaries of the District.

SECTION 5. Pursuant to Section 53327 of the Code, the election shall be conducted by mail or hand-delivered ballot pursuant to the California Elections Code, and as otherwise permitted by the Code.

SECTION 6. This City Council acknowledges that the City Clerk has caused to be delivered to the sole qualified elector of the District a ballot in the form set forth in Exhibit A hereto. The ballot indicates the number of votes to be voted by the landowner.

The ballot was accompanied by all supplies and written instructions necessary for the use and return of the ballot. The envelope to be used to return the ballot was enclosed with the ballot, had the return postage prepaid, and contained the following: (a) the name and address of the landowner, (b) a declaration, under penalty of perjury, stating that the voter is the owner of record or authorized representative of the landowner entitled to vote and is the person whose name appears on the envelope, (c) the printed name, signature and address of the voter, (d) the date of signing and place of execution of the declaration pursuant to clause (b) above, and (e) a notice that the envelope contains an official ballot and is to be opened only by the canvassing board.

Analysis and arguments with respect to the ballot measures have been waived by the landowner in its petition to form the District, as permitted in Section 53327 of the Code.

SECTION 7. The City Clerk shall accept the ballot of the qualified elector in the City Council Chambers upon or prior to the adoption of this Resolution, whether said ballot be personally delivered or received by mail. The City Clerk shall have available a ballot which may be marked at said location on the election day by the qualified elector.

SECTION 8. This City Council hereby further finds that the provision of Section 53326 of the Code requiring a minimum of 45 days following the adoption of the Resolution of Formation to elapse before said special election is for the protection of the Resolution No. CC 2022-107

qualified elector of the District. The ballot to be executed by the qualified elector of the District contains a waiver of the time for said special election to expedite the process of formation of the District and a waiver of any requirement for ballot measure analysis and arguments in connection with the election. Accordingly, this City Council finds and determines that the qualified elector has been fully apprised of and has agreed to the shortened time for the election and waiver of ballot measure analysis and arguments, and has thereby been fully protected in these proceedings. This City Council also finds and determines that the City Clerk has concurred in the shortened time for the election.

SECTION 9. This Resolution shall take effect upon its adoption PASSED, APPROVED and ADOPTED this 24th day of October 2022. _________________________________
Approved as to form: Steven D. Hofbauer, Mayor
ATTEST:
___________________________ _________________________________ Scott E. Porter Rochelle Scott, Acting City Clerk
Interim City Attorney
I, Rochelle Scott, Acting City Clerk of Palmdale, California, do hereby certify that the foregoing resolution was duly passed, approved, and adopted by the City Council of the City of Palmdale at a regular meeting of said Council held on the 24th day of October 2022 by the following roll call vote:

AYES:

NOES:___________________________________________________________ ABSTAIN:______________________ABSENT:___________________________ Date:

Rochelle Scott, Acting City Clerk

EXHIBIT A
Resolution No. CC 2022-107

CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-2
(RITTER RANCH MAINTENANCE SERVICES)

OFFICIAL BALLOT
Special Tax Election
(October 24, 2022)
This ballot is for a special, landowner election. You must return this ballot in the enclosed postage paid envelope to the office of the City Clerk of the City of Palmdale no later than immediately after adoption on October 24, 2022 of the resolution of the City Council calling said election, either by mail or in person.

The City Clerk’s office is located at 38300 North Sierra Highway, Palmdale, California 93550.

To vote, mark a cross (X) on the voting line after the word “YES” or after the word “NO”. All marks otherwise made are forbidden. All distinguishing marks are forbidden and make the ballot void.

If you wrongly mark, tear, or deface this ballot, return it to the City Clerk of the City of Palmdale and obtain another.

BALLOT MEASURE: Shall a special tax payable solely from lands within the City of Palmdale Community Facilities District No. 2022- 2 (Ritter Ranch Maintenance Services) (the “District”) be levied annually upon lands within the District to pay for the costs of the services eligible to be funded by the District and the costs of the City in administering the District, and shall the initial annual appropriations limit of the District be established in the amount of $85,000,000?
Yes:

No:

By execution in the space provided below, you also indicate your waiver of the time limit pertaining to the conduct of the election and any requirement for analysis and arguments with respect to the ballot measure, as such waivers are described and permitted by Section 53326(a) and 53327(b) of the California Government Code.

Number of Votes: 236
Property Owned by Property Owner: See attachment A
Property Owner: RdR Development Holdings, LLC,
a Delaware limited liability company
By: Preston Hollow Capital, LLC,
its sole member
By:

Name:

Title:

Resolution No. CC 2022-107

ATTACHMENT A

LOS ANGELES COUNTY ASSESSORS PARCEL NUMBERS
OF LAND OWNED WITHIN THE PROPOSED CFD 2022-2
3206-020-017
3206-026-005
3206-026-007
3206-027-002
3206-027-004
3206-027-005
3206-027-006
3206-027-007
3206-027-008
3206-027-009
3206-027-010
3206-027-012

CITY COUNCIL

CITY OF PALMDALE, CALIFORNIA
RESOLUTION NO. CC 2022-108

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE

DECLARING RESULTS OF SPECIAL ELECTION AND DIRECTING
RECORDING OF NOTICE OF SPECIAL TAX LIEN – COMMUNITY
FACILITIES DISTRICT NO. 2022-2 (RITTER RANCH MAINTENANCE

SERVICES)
WHEREAS, in proceedings heretofore conducted by this City Council pursuant to the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 and following of the California Government Code (the “Code”), this City Council on this date adopted Resolution No. CC 2022-107 entitled “A Resolution of the City Council of the City of Palmdale Calling Special Election Within Community Facilities District No. 2022- 2 (Ritter Ranch Maintenance Services)”, calling for a special election of the qualified electors within the City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services) (the “District”); and
WHEREAS, pursuant to the terms of said Resolution, which are by this reference incorporated herein, the special election was held on this date, and the City Clerk has on file a Canvass and Statement of Results of Election, a copy of which is attached hereto as Exhibit A; and,
WHEREAS, this City Council has reviewed the Canvass and Statement of Results of Election and hereby approves it.

NOW THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF

PALMDALE DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS:

SECTION 1 . The issues presented at the special election were the levy of a special tax within the District to be levied in accordance with the rate and method of apportionment of special taxes heretofore approved by this City Council by its Resolution No. CC 2022-106 adopted this date entitled “A Resolution of the City Council of the City of Palmdale of Formation of the City of Palmdale Community Facilities District No. 2022- 2 (Ritter Ranch Maintenance Services), Authorizing the Levy of a Special Tax Within the District, and Preliminarily Establishing an Appropriations Limit for the District,” and the approval of an initial annual appropriations limit in the amount of $85,000,000 pursuant to said Resolution.

Resolution No. CC 2022-108

SECTION 2. Pursuant to the Canvass and Statement of Results of Election on file with the City Clerk, the issues presented at the special election were approved by the sole qualified elector of the District by its votes cast at the special election.

SECTION 3. Pursuant to said voter approval, the District is hereby declared to be fully formed with the authority to levy special taxes as heretofore provided in these proceedings and in the Code.

SECTION 4. Section 4. It is hereby found that all prior proceedings and actions taken by this City Council with respect to the District were valid and in conformity with the Code.

SECTION 5. The City Clerk is hereby directed to execute and cause to be recorded in the office of the County Recorder of the County of Los Angeles a notice of special tax lien in a form provided by the City’s District Formation Counsel, said recording to occur no later than fifteen days following adoption by the City Council of this Resolution.

SECTION 6. This Resolution shall take effect upon its adoption.

PASSED, APPROVED and ADOPTED this 24th day of October 2022 _________________________________
Approved as to form: Steven D. Hofbauer, Mayor
ATTEST:
___________________________ _________________________________ Scott E. Porter Rochelle Scott, Acting City Clerk
Interim City Attorney
Resolution No. CC 2022-108

I, Rochelle Scott, Acting City Clerk of Palmdale, California, do hereby certify that the foregoing resolution was duly passed, approved, and adopted by the City Council of the City of Palmdale at a regular meeting of said Council held on the 24th day of October, 2022 by the following roll call vote:

AYES:

NOES:___________________________________________________________ ABSTAIN:______________________ABSENT:___________________________ Date:

Rochelle Scott, Acting City Clerk
Resolution No. CC 2022-108

EXHIBIT A

CANVASS AND STATEMENT OF RESULT OF ELECTION

CITY OF PALMDALE
Community Facilities District No. 2022-2
(Ritter Ranch Maintenance Services)
I hereby certify that on October 24, 2022, I canvassed the returns of the election held on October 24, 2022, in the City of Palmdale Community Facilities District No. 2022- 2 (Ritter Ranch Maintenance Services) and the total number of votes cast in said District and the total number of votes cast for and against the measure are as follows and the totals as shown for and against the measure are full, true and correct:

Qualified
Landowner
Votes
Votes
Cast YES NO
City of Palmdale Community
Facilities District No. 2022-2
(Ritter Ranch Maintenance
Services) Special Tax Election,
October 24, 2022.
236
BALLOT MEASURE: Shall a special tax payable solely from lands within the City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services) (the “District”) be levied annually upon lands within the District to pay for the costs of the services eligible to be funded by the District, and the costs of the City in administering the District, and shall the initial annual appropriations limit of the District be established in the amount of $85,000,000?
IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HAND this 24th day of October, 2022.

By:

City Clerk,
City of Palmdale

CITY OF PALMDALE

COUNTY OF LOS ANGELES, CALIFORNIA
ORDINANCE NO. 1596

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALMDALE

LEVYING SPECIAL TAXES WITHIN CITY OF PALMDALE COMMUNITY FACILITIES DISTRICT NO. 2022-2 (RITTER RANCH MAINTENANCE

SERVICES)
WHEREAS, on September 21, 2022, this City Council adopted Resolution No.

CC 2022-099 entitled “A Resolution of the City Council of the City of Palmdale Declaring Its Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes Therein – Ritter Ranch Maintenance Services” (the “Resolution of Intention”) stating its intention to establish the City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services) (the “District”) pursuant to the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 and following of the California Government Code (the “Code”), to provide funds to pay the costs of certain maintenance and services (the “Services”), as described therein; and WHEREAS, notice was published as required by the Code relative to the intention of this City Council to form the District and to fund costs of the Services; and WHEREAS, on October 24, 2022, this City Council has held a noticed public hearing as required by Code relative to the determination to proceed with the formation of the District and the rate and method of apportionment of the special tax to be levied within the District to fund costs of the Services; and
WHEREAS, at said hearing all persons desiring to be heard on all matters pertaining to the formation of the District and the levy of said special taxes were heard, substantial evidence was presented and considered by this City Council and a full and fair hearing was held; and
WHEREAS, subsequent to said hearing, this City Council adopted Resolution No.

CC 2022-106 entitled “A Resolution of the City Council of the City of Palmdale of Formation of City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services), Authorizing the Levy of a Special Tax Within the District, and Preliminarily Establishing an Appropriations Limit for the District, and Resolution No. CC 2022-107 entitled “A Resolution of the City Council of the City of Palmdale Calling Special Election Within Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services)”, which resolutions established the District, authorized the levy of a special tax with the District, and called an election within the District on the proposition of levying a special tax on property in, and establishing an appropriations limit for, the District, respectively; and
Ordinance No. 1596
October 24, 2022

WHEREAS, an election was held within the District in which the sole qualified landowner elector approved said propositions, and this City Council adopted Resolution No. CC 2022-108 entitled “A Resolution of the City Council of the City of Palmdale Declaring Results of Special Election and Directing Recording of Notice of Special Tax Lien – Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services),” declaring the results of the election.

THE CITY COUNCIL OF THE CITY OF PALMDALE DOES ORDAIN AS FOLLOWS:

SECTION 1. By the passage of this Ordinance this City Council hereby authorizes and levies special taxes within the District pursuant to Code Sections 53328 and 53340 at the rate and in accordance with the method of apportionment set forth in Exhibit B to the Resolution of Intention (the “Rate and Method of Apportionment”). The special taxes are hereby levied commencing in fiscal year 2022-23 and in each fiscal year thereafter.

SECTION 2. The Finance Director of the City is hereby authorized and directed each fiscal year to determine the specific special tax rate and amount to be levied for the next ensuing fiscal year for each parcel of real property within the District, in the manner and as provided in the Rate and Method of Apportionment.

SECTION 3. Properties or entities of the State, federal or local governments shall be exempt from any levy of the special taxes, to the extent set forth in the Rate and Method of Apportionment. In no event shall the special taxes be levied on any parcel within the District in excess of the maximum tax specified in the Rate and Method of Apportionment.

SECTION 4. All of the collections of the special tax shall be used as provided for in the Code, the Rate and Method of Apportionment, and in the Resolution of Formation including, but not limited to, the payment of the costs of the City in administering the District and the costs of collecting and administering the special tax.

SECTION 5. The special taxes shall be collected from time to time as necessary to meet the financial obligations of the District on the secured real property tax roll in the same manner as ordinary ad valorem taxes are collected. The special taxes shall have the same lien priority, and be subject to the same penalties and the same procedure and sale in cases of delinquency as provided for ad valorem taxes. In addition, the provisions of Section 53356.1 of the Code shall apply to delinquent special tax payments. The Finance Director is hereby authorized and directed to provide all necessary information to the auditor/tax collector of the County of Los Angeles and to otherwise take all actions necessary in order to effect proper billing and collection of the special tax, so that the special tax shall be levied and collected in sufficient amounts and Ordinance No. 1596
October 24, 2022

at the times necessary to satisfy the financial obligations of the District in each fiscal year.

Notwithstanding the foregoing, the Finance Director of the City may collect one or more installments of the special taxes by means of direct billing by the City of the property owners within the District if, in the judgment of the Finance Director, such means of collection will reduce the administrative burden on the City in administering the District or is otherwise appropriate in the circumstances. In such event, the special taxes shall become delinquent if not paid when due as set forth in any such respective billing to the property owners.

SECTION 6. The Finance Director is hereby directed to establish an account for the District (which need not be a separate deposit account, but may be a separate general ledger account so long as such proceeds can be separately accounted for) into which proceeds of the special tax levied for the District will be deposited, and the Finance Director is hereby directed to file an annual report with this City Council as required by Section 50075.3 of the Code.

SECTION 7. Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase in this Ordinance or any part thereof is for any reason held to be unconstitutional or invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof irrespective of the fact that any one (1) or more subsections, subdivisions, paragraphs, sentences, clauses or phrases be declared unconstitutional, or invalid, or ineffective, provided the basic purposes of this Ordinance and the benefits to the City and the public are not substantially impaired.

SECTION 8. The City Clerk shall certify to the adoption of this Ordinance and shall cause this Ordinance to be published or posted as required by law.

PASSED, APPROVED and ADOPTED this 24th day of October ,2022. ________________________________
Approved as to form: Steven D. Hofbauer, Mayor
ATTEST:
_______________________________ ________________________________ Scott E. Porter, Rochelle Scott, Acting City Clerk
Interim City Attorney
Ordinance No. 1596
October 24, 2022

I, Rochelle Scott, Acting City Clerk of Palmdale, California, do hereby certify that the foregoing Ordinance was duly introduced, passed, approved, and adopted by the City Council of the City of Palmdale at a regular meeting of said Council held on the 24th day of October, 2022 effective on the 24th day of October , 2022 by the following roll call vote:

AYES:

NOES:___________________________________________________________ ABSTAIN:______________________ABSENT:___________________________ Date:

Rochelle Scott, Acting City Clerk

City Council Staff Report

DATE: OCTOBER 24, 2022
TO: HONORABLE MAYOR AND CITY COUNCIL
FROM: CITY MANAGER’S OFFICE – FINANCE DIVISION
DISTRICT: ALL
SUBJECT: ADOPT RESOLUTION NO. CC 2022-109, A RESOLUTION OF THE

CITY COUNCIL OF THE CITY OF PALMDALE OF FORMATION OF
THE CITY OF PALMDALE COMMUNITY FACILITIES DISTRICT NO.
2022-3 (RITTER RANCH PHASE 1 PUBLIC FACILITIES),

AUTHORIZING THE LEVY OF A SPECIAL TAX WITHIN THE

DISTRICT, PRELIMINARILY ESTABLISHING AN APPROPRIATIONS

LIMIT FOR THE DISTRICT, AND APPROVING ACQUISITION
AGREEMENT; ADOPT RESOLUTION NO. CC 2022-110, A

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE

DETERMINING THE NECESSITY TO INCUR BONDED

INDEBTEDNESS FOR THE CITY OF PALMDALE COMMUNITY
FACILITIES DISTRICT NO. 2022-3 (RITTER RANCH PHASE 1
PUBLIC FACILITIES); ADOPT RESOLUTION NO. CC 2022-111, A

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE

CALLING A SPECIAL ELECTION WITHIN COMMUNITY FACILITIES
DISTRICT NO. 2022-3 (RITTER RANCH PHASE 1 PUBLIC
FACILITIES); ADOPT RESOLUTION NO. CC 2022-112, A

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE

DECLARING RESULTS OF SPECIAL ELECTION AND DIRECTING

RECORDING OF NOTICE OF SPECIAL TAX LIEN - COMMUNITY
FACILITIES DISTRICT NO. 2022-3 (RITTER RANCH PHASE 1
PUBLIC FACILITIES); AND INTRODUCE AND ADOPT ORDINANCE
NO. 1597, AN ORDINANCE OF THE CITY COUNCIL OF THE CITY

OF PALMDALE LEVYING SPECIAL TAXES WITHIN CITY OF
PALMDALE COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)

ISSUE
Adopt Resolution No. CC 2022-109, a Resolution of the City Council of the City of Palmdale of formation of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), authorizing the levy of a special tax within the District, preliminarily establishing an appropriations limit for the District and approving acquisition agreement.

Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-3 for Ritter Ranch, Phase I October 24, 2022

Adopt Resolution No. CC 2022-110, a Resolution of the City Council of the City of Palmdale determining the necessity to incur bonded indebtedness for the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities).

Adopt Resolution No. CC 2022-111, a Resolution of the City Council of the City of Palmdale calling special election within Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities).

Adopt Resolution No. CC 2022-112, a Resolution of the City Council of the City of Palmdale declaring results of special election and directing recording of notice of special tax lien - Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities).

Introduce and Adopt Ordinance No. 1597, an Ordinance of the City Council of the City of Palmdale levying special taxes within City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities).

RECOMMENDATION
Staff recommends that the City Council:

1. Receive public testimony regarding Resolution Nos. CC 2022-100 and CC 2022- 101;

2. Adopt Resolution No. CC-2022-109, a Resolution of the City Council of the City of Palmdale of formation of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), authorizing the levy of a special tax within the District, preliminarily establishing an appropriations limit for the District and approving acquisition agreement;

3. Adopt Resolution No. CC 2022-110, a Resolution of the City Council of the City of Palmdale determining the necessity to incur bonded indebtedness for the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities);

4. Adopt Resolution No. CC-2022-111, a Resolution of the City Council of the City of Palmdale calling special election within Community Facilities District No. 2022- 3 (Ritter Ranch Phase 1 Public Facilities);

5. Conduct special election for CFD 2022-3;

6. Adopt Resolution No. CC-2022-112, a Resolution of the City Council of the City of Palmdale declaring results of special election and directing recording of notice of special tax lien - Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities); and

7. Introduce, receive public testimony and adopt Ordinance No. 1597, an Ordinance of the City Council of the City of Palmdale levying special taxes within City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities).
.

Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-3 for Ritter Ranch, Phase I October 24, 2022

BACKGROUND
In connection with the proposed master planned development of an area known as Ritter Ranch (“Project”), the City formed City of Palmdale Community Facilities District 93-1 (“CFD 93-1”) to finance certain public facilities for the Project. The City issued Special Tax Bonds for CFD 93-1 in 1995 for that purpose (“93-1 Bonds”). The outstanding 93- 1 Bonds were purchased by Preston Hollow Capital, LLC (“PHC”) in 2018. In 2020, PHC acquired the property within CFD 93-1 and transferred the land to RdR Development Holdings, LLC (“RdR”), a limited liability company for which PHC is the sole member.

Collectively, PHC and RdR are referred to as the RdR Parties. PHC continues to own the 93-1 Bonds and RdR continues to own the property within CFD 93-1.

In response to requests by RdR Parties, on September 1, 2020, the City Council adopted a resolution approving certain actions related to the Project, including a deferral of 93-1 Bonds bond payments and an agreement with PHC to pay costs of the City related to the development, and approved agreements with consultants to assist the City with matters related to proposed agreements and land use approvals for the Project and the 93-1 Bonds.

The RdR Parties are now prepared to proceed with development of the first phase of the Project, encompassing 1,180 residential units (“Phase 1”). They have requested the formation of a new community facilities district for the Phase 1 property (“CFD 2022-3”) to fund public infrastructure and improvements necessary for the development of the Project and to refinance a portion of the 93-1 Bonds, the removal of the Phase 1 property from CFD 93-1 and elimination of the CFD 93-1 special tax levy on the Phase 1 property.

The City has required that an overlapping community facilities district be formed (“CFD 2022-2”) to provide monies for certain maintenance services for property within the new CFD 2022-3.

On September 21, 2022, the City Council took the first steps in forming Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) (“CFD 2022-3”) and adopted Resolution No. CC 2022-100, including a description of facilities (“Facilities”) eligible to be financed by CFD 2022-3 and the Rate and Method of Apportionment of Special Taxes (“RMA”) which details the manner in which special taxes may be levied on property to be included in CFD 2022-3 to pay costs of the Facilities and the principal and interest on bonds proposed to be issued for CFD 2022-3 to finance costs of the Facilities and administration of CFD 2022-3, and preliminary approval of a map of the boundaries of CFD 2022-3. The City Council also adopted Resolution No. CC 2022- 101, declaring its intention to incur bonded indebtedness of CFD 2022-3.

Formation of CFD 2022-2 is being considered by the City Council as a separate agenda item.

Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-3 for Ritter Ranch, Phase I October 24, 2022

DISCUSSION
Special Tax Rates – Facilities
The special tax rates for CFD 2022-3 to pay for public facilities and refinance 93-1 Bonds are designed so that the total property tax burden on each dwelling unit will not exceed 2% of the assessed value of such property. This tax burden incorporates all ad valorem taxes - the 1% general levy and any school, college or AVEK general obligation bond tax levy – as well as any special assessments or fees included on the property tax bill.

These additional special assessments will also include the special taxes for CFD 2022-

2. The 2% limit is initially measured by the expected base sales price of each dwelling unit.

To calculate the maximum CFD 2022-3 tax rates, the City commissioned a Price Point Study (“PPS”) to determine a reasonable sales price for each unit type proposed for Phase 1. This includes single family detached homes on lots ranging from 5,000 to 7,000 square feet expected to be developed in Phase 1A (553 dwelling units) and single family detached homes on 5,000 square foot lots, clustered homes and townhomes in Phase 1B (627 dwelling units).

Based on 2% of the sales price, all other taxes and assessments were deducted (including the proposed new CFD 2022-2 maintenance and services special tax) to arrive at the limit of amount available for CFD 2022-3 special taxes. These limits were then incorporated into the Rate and Method of Apportionment of Special Tax (“RMA”) for CFD 2022-3, the document that governs how special taxes will be levied on property within the new CFD 2022-3 going forward. The special taxes are scaled in proportion to the home/lot size and range from $2,352 for the smallest townhome to $4,809 for the largest single-family homes on the largest lots.

In the event that the market price of the homes declines before new CFD 2022-3 special tax bonds (“CFD 2022-3 Bonds”) can be sold, the RMA provides that the City can commission a new PPS and reduce the maximum tax rates to stay within the 2% limit at the time the CFD 2022-3 Bonds are issued.

The 2% limit exceeds the City’s current 1.8% limit contained in its Local Goals and Policies for Community Facilities District - Residential Property (“Goals and Policies”) adopted May 26, 2004. Resolution No. CC 2022-109 includes the City’s waiver of this

1.8% limit contained in the Goals and Policies.

The RdR Parties have requested a maximum 40-year term for any issue of CFD 2022- 3 Bonds, and an escalation of the maximum tax rates by 2% per year for a period of 15 years rates (starting in Fiscal Year 2023-24). These terms, including the 2% limit on the maximum tax rate, were deemed reasonable given the amount of investment by the RdR Parties to date and the amount required to continue to move Phase 1 property forward to development and sale of homes to individual homeowners.

Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-3 for Ritter Ranch, Phase I October 24, 2022

The Mello-Roos Community Facilities Act of 1982 (“Act”) provides that under no circumstance may the special tax on a Parcel of Developed Property that is in private residential use be increased in any Fiscal Year (as such capitalized terms are used in the RMA) as a consequence of delinquency or default in payment of the special tax levied on another Parcel or Parcels by more than ten percent (10%) above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults.

CFD 2022-2 also contains a provision that, subsequent to any final payment of CFD 2022-3 Bonds, if the Phase 1 homeowners association is not fulfilling its obligation to maintain landscaping along major arterials in the Project, CFD 2022-2 can increase its annual special tax levies for this purpose, up to the amount that was being levied for debt service in CFD 2022-3.

Formation Proceedings
Public Hearing re CFD 2022-3 Formation – The City Council is required to hold a public hearing regarding the proposed CFD 2022-3. The resolution of intention to form CFD 2022-3 adopted by the City on September 21, 2022 called for such public hearing to be held on October 24, 2022. The public hearing allows all interested persons desiring to be heard on all matters pertaining to the formation of CFD 2022-3 and the Facilities eligible to be financed by CFD 2022-3, the issuance of bonds by the City for CFD 2022- 3 and the levy of the special tax, to be heard. The notice of the public hearing was published in the Antelope Valley Press.

A report by the acting Director of Public Works (“Report”) as to the costs of the Facilities to be financed by the CFD 2022-3 will be presented (Attachment 1) at the public hearing.

After the public hearing, if less than a majority of owners of the land proposed to be included in CFD 2022-3 have filed written protests against the establishment of CFD 2022-3, the City Council may proceed with the actions to form CFD 2022-3 and authorize the levy of the special tax. If the owners of one-half or more of the area of the land in the territory proposed to be included in CFD 2022-3 and not exempt from the special tax file written protests against the establishment of CFD 2022-3, and protests are not withdrawn so as to reduce the value of the protests to less than a majority, no further proceedings to create CFD 2022-3 will be conducted at this meeting. RdR is the only owner of land in CFD 2022-3, and there are no persons registered to vote residing in CFD 2022-3.

Resolution of Formation – The first action required if the City Council determines to proceed with the formation is the adoption of Resolution No. CC 2022-109 establishing CFD 2022-3 (“Resolution of Formation”). The Resolution of Formation:

Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-3 for Ritter Ranch, Phase I October 24, 2022

 determines that all prior actions taken in connection with the formation of CFD 2022-3 and the levy of the special tax on property within CFD 2022-3 have been duly considered and determined to be valid and in conformity with the Act;  establishes CFD 2022-3;
 approves the boundaries of CFD 2022-3 (Attachment 2);  confirms the types of Facilities to be financed by CFD 2022-3;  provides for the levy of the special taxes in accordance with the RMA;  provides for an initial annual appropriations limit for CFD 2022-3;  approves the form of an Acquisition Agreement (Attachment 3) between the City and RdR relating to the Facilities that will be financed by CFD 2022-3; and  requires the proposition of the levy of special tax and the proposition of the establishment of the appropriations limit to be submitted to the qualified electors of CFD 2022-3.

Resolution of Necessity - The City will next consider adoption of Resolution No. CC 2022-110 determining the necessity to incur bonded indebtedness for CFD 2022-3 (“Resolution of Necessity”). The Resolution of Necessity provides $75,000,000 as the maximum principal amount of bonded indebtedness to be incurred for CFD 2022-3 and a 40-year maximum term for any series of bonds issued. The Resolution of Necessity requires the proposition of incurring the bonded indebtedness authorized by the resolution to be submitted to the qualified electors of CFD 2022-3 and consolidated with the election on the propositions required by the Resolution of Formation.

Special Election – Following the adoption of the Resolution of Formation and Resolution of Necessity, the City Council will consider the adoption of Resolution No. CC 2022-111, a resolution calling for a special election. A written waiver executed by the sole owner of the property to be included in CFD 2022-3 allowing for a shortening of time for the special election to expedite the CFD 2022-3 formation process and waiving any requirement for notice, analyses and arguments in connection with the special election is on file with the City Clerk. As a result, the special election for CFD 2022-3 is being held at this meeting.

Once the special election has been held and the City Clerk has canvassed the election, the City Clerk will execute a Canvass and Statement of Result of Special Election, attached to Resolution No. CC 2022-112, a resolution declaring the results of special election, as Exhibit A. Following the adoption of Resolution No, CC 2022-112, the City Clerk will cause a notice of special tax lien (Attachment 4) to be recorded in the Los Angeles County Recorder’s Office.

Public Hearing re Special Tax Levy; Ordinance No. 1597 – Following the public hearing on the formation, election and adoption of the foregoing resolutions, the City Council will be asked to introduce Ordinance No. 1597, an Ordinance Levying Special Taxes within CFD 2022-3 (“Ordinance”). Following the introduction of the Ordinance, a public hearing Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-3 for Ritter Ranch, Phase I October 24, 2022

will then be held regarding the Ordinance, and the City Council will then consider approval of the Ordinance.

FISCAL IMPACT
Formation Costs - The costs of formation of CFD 2022-3, including any legal, financial or staff costs, is being funded from monies deposited by PHC with the City for that purpose. There is no fiscal impact to the City’s General Fund.

CFD 2022-3 - Special taxes levied on undeveloped property or developed homes within CFD 2022-3 will finance public facilities necessary to proceed with the proposed residential development of 1,180 new dwelling units, and pay the costs to administer CFD 2022-3. The special tax levied in CFD 2022-3 has no fiscal impact to the City’s General Fund.

Bond Issuance Costs - The CFD 2022-3 Bonds will not be issued to fund public facilities or refinance the 93-1 Bonds until the value of property in CFD 2022-3 and other factors support the issuance in accordance with the City’s Goals and Policies. The issuance of any CFD 2022-3 Bonds will, in any event, be the subject of a future City Council resolution. Any bond issuance costs will be paid from bond proceeds and will have no fiscal impact to the City’s General Fund.

STRATEGIC PLAN
Goal III: III: Invest in infrastructure to improve community livability.

A. Seek innovative, cost effective, customer focused methods of service delivery.

C. Plan and maintain safe and attractive neighborhoods, streets, facilities, and public spaces with exciting programming that promotes active fun for everyone.

Prepared by: Janelle Samson, Director of Finance
Certified as to availability of Funds: Janelle Samson, Director of Finance Approved by: Ronda Perez, Interim City Manager
Approved as to form: Scott E. Porter, Interim City Attorney

ATTACHMENTS

1. Community Facilities District Report for CFD 2022-3

2. Boundary Map for CFD 2022-3

3. Form of Acquisition Agreement

4. Notice of Special Tax Lien for CFD 2022-3

5. Resolution No. CC 2022-109 Formation of CFD 2022-3

6. Resolution No. CC 2022-110 Necessity to Incur Bonded Indebtedness for CFD 2022-3

7. Resolution No. CC 2022-111 Call for Special Election for CFD 2022-3 Report to Mayor and City Council
Re: Resolutions of Formation for CFD 2022-3 for Ritter Ranch, Phase I October 24, 2022

8. Resolution No. CC 2022-112 Declaring Results of Special Election for CFD 2022- 3 9. Ordinance No. 1597 Levying Special Tax for CFD 2022-3

Quint & Thimmig LLP 9/15/22
10/3/22
16007.48:J18561

ACQUISITION AGREEMENT

by and between the

CITY OF PALMDALE, CALIFORNIA

and

RDR DEVELOPMENT HOLDINGS, LLC

dated as of ____________, 2022

relating to:

City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)

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TABLE OF CONTENTS

ARTICLE I

DEFINITIONS
Section 1.01. Definitions .................................................................................................................................................................................... 1

ARTICLE II

RECITALS
Section 2.01. The CFD ......................................................................................................................................................................................... 5 Section 2.02. The Development ...................................................................................................................................................................... 5 Section 2.03. The Facilities ................................................................................................................................................................................ 5 Section 2.04. The Financing .............................................................................................................................................................................. 5 Section 2.05. The Bonds ..................................................................................................................................................................................... 5 Section 2.06. No Advantage to City Construction .................................................................................................................................. 5 Section 2.07. Agreements ................................................................................................................................................................................. 6

ARTICLE III

FUNDING
Section 3.01. City Proceedings ........................................................................................................................................................................ 7 Section 3.02. Improvement Fund ................................................................................................................................................................... 7 Section 3.03. Bond Proceeds ............................................................................................................................................................................ 7 Section 3.04. No Change in Obligations Under Conditions of Approval ...................................................................................... 8 Section 3.05. Refunding Bonds ....................................................................................................................................................................... 8 Section 3.06. Special Taxes ............................................................................................................................................................................... 8

ARTICLE IV

CONSTRUCTION OF FACILITIES
Section 4.01. Plans ................................................................................................................................................................................................ 9 Section 4.02. Duty of Developer to Construct .......................................................................................................................................... 9 Section 4.03. Relationship to Public Works ............................................................................................................................................. 10 Section 4.04. Developer is Independent ................................................................................................................................................... 11 Section 4.05. Performance and Payment Bonds .................................................................................................................................... 11 Section 4.06. Contracts and Change Orders ........................................................................................................................................... 12 Section 4.07. Time for Completion .............................................................................................................................................................. 12

ARTICLE V

ACQUISITION AND PAYMENT
Section 5.01. Inspection ................................................................................................................................................................................... 13 Section 5.02. Agreement to Sell and Purchase Facilities .................................................................................................................... 13 Section 5.03. Payment Requests................................................................................................................................................................... 14 Section 5.04. Processing Payment Requests ........................................................................................................................................... 14 Section 5.05. Payment....................................................................................................................................................................................... 14 Section 5.06. Restrictions on Payments ..................................................................................................................................................... 15 Section 5.07. Use of Excess Funds in the Improvement Fund.......................................................................................................... 18 Section 5.08. Defective or Nonconforming Work ................................................................................................................................. 18 Section 5.09. Modification of Discrete Components ........................................................................................................................... 18

ARTICLE VI

OWNERSHIP AND TRANSFER OF FACILITIES
Section 6.01. Facilities to be Owned by the City – Conveyance of Acceptable Title to City ............................................... 20 Section 6.02. Facilities to be Owned by the City – Title Evidence .................................................................................................. 20 Section 6.03. Facilities Constructed on Private Lands ......................................................................................................................... 20 -ii-
Section 6.04. Facilities Constructed on City Land.................................................................................................................................. 21 Section 6.05. Facilities to be Acquired by Other Public Agencies .................................................................................................. 21 Section 6.06. Maintenance and Warranties ............................................................................................................................................. 21

ARTICLE VII

INSURANCE
Section 7.01. Insurance Requirements ....................................................................................................................................................... 22 Section 7.02. Evidence of Insurance ............................................................................................................................................................ 23 Section 7.03. Termination for Failure to Maintain Insurance ........................................................................................................... 24

ARTICLE VIII

REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 8.01. Representations, Covenants and Warranties of the Developer ........................................................................... 25 Section 8.02. Indemnification and Hold Harmless ................................................................................................................................ 27

ARTICLE IX

TERMINATION
Section 9.01. No Bonds; Final Payments ................................................................................................................................................... 28 Section 9.02. Mutual Consent ........................................................................................................................................................................ 28 Section 9.03. City Election for Cause .......................................................................................................................................................... 28 Section 9.04. Force Majeure ........................................................................................................................................................................... 29

ARTICLE X

MISCELLANEOUS
Section 10.01. Limited Liability ........................................................................................................................................................................ 31 Section 10.02. Excess Costs ............................................................................................................................................................................... 31 Section 10.03. Audit ............................................................................................................................................................................................. 31 Section 10.04. Attorney’s Fees ......................................................................................................................................................................... 31 Section 10.05. Notices ......................................................................................................................................................................................... 31 Section 10.06. Severability ................................................................................................................................................................................. 32 Section 10.07. Successors and Assigns ........................................................................................................................................................ 32 Section 10.08. Other Agreements .................................................................................................................................................................. 32 Section 10.09. Waiver .......................................................................................................................................................................................... 33 Section 10.10. Merger ......................................................................................................................................................................................... 33 Section 10.11. Parties in Interest ..................................................................................................................................................................... 33 Section 10.12. Amendment ............................................................................................................................................................................... 33 Section 10.13. Counterparts.............................................................................................................................................................................. 33 Section 10.14. Governing Law .......................................................................................................................................................................... 33 Section 10.15. Survival of Certain Provisions ............................................................................................................................................. 33

EXHIBIT A DESCRIPTION OF FACILITIES ELIGIBLE FOR FINANCING BY THE CFD

EXHIBIT B DESCRIPTION OF FACILITIES, DISCRETE COMPONENTS AND BUDGETED COSTS

EXHIBIT C FORM OF PAYMENT REQUEST

EXHIBIT D PUBLIC WORKS BID PROCEDURES

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ACQUISITION AGREEMENT

THIS ACQUISITION AGREEMENT (the “Acquisition Agreement”), dated as of ______________, 2022, is by and between the City of Palmdale, California, a charter city and municipal corporation (the “City”), for the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) (the “CFD”), and RdR Development Holdings, LLC, a Delaware limited liability company (the “Developer”).

ARTICLE I

DEFINITIONS

Section 1.01. Definitions. The following terms shall have the meanings ascribed to them in this Section 1.01 for purposes of this Acquisition Agreement.

“Acceptable Title” means title to land or interest therein, in form acceptable to the public entity that will own and operate the applicable Facility, is free and clear of all liens, taxes, assessments, leases, easements and encumbrances, whether or not recorded, but subject to any exceptions determined by the Director (upon consultation with representatives of the public entity that will own and operate the applicable Facility, if other than the City) as not interfering with the actual or intended use of the land or interest therein. Notwithstanding the foregoing, an irrevocable offer of dedication may constitute land with an “Acceptable Title” if: (a) such offer is necessary to satisfy a condition to a tentative or final parcel map, (b) such offer is in a form acceptable to the Director, (c) the Director has no reason to believe that such offer of dedication will not be accepted by the applicable public agency, and (d) the Developer commits in writing not to allow any liens to be imposed on such property prior to its acceptance by the applicable public agency.
“Acceptance Date” means (a) with respect to any Facility involving the conveyance of an interest to the City, the date the City Council takes final action to accept dedication of or transfer of title to, or transfer of Acceptable Title to, such a Facility; and (b) with respect to all other Facilities, the date on which the Facilities have been accepted by the public entity that will own the Facility, based on written advise from such public agency or based on such other evidence as the Director determines to be acceptable.
“Acquisition Agreement” means this Acquisition Agreement, together with any Supplement hereto.
“Act” means the Mello-Roos Community Facilities Act of 1982, Section 53311 et seq. of the California Government Code, as amended.
“Actual Cost” means the substantiated cost of a Facility or a Discrete Component, which costs may include: (a) the costs (evidenced by payments to parties unrelated to the Developer) incurred by the Developer for the construction of the Facility or Discrete Component, including -2-
demolition and site grading costs directly related to such construction, general condition costs and general contractor fees (but only if the general contractor is not the Developer or an Affiliate of the Developer), (b) the costs incurred by the Developer in preparing the Plans for the Facility or Discrete Component and the related costs of design, engineering and environmental evaluations of the Facility or Discrete Component, (c) the fees paid to governmental agencies or public entities for obtaining permits, licenses or other governmental approvals for the Facility or Discrete Component, (d) professional costs incurred by the Developer associated with the Facility or Discrete Component, such as engineering, legal, accounting, inspection, construction staking, materials testing and similar professional services; (e) costs directly related to the construction and/or acquisition of the Facility or Discrete Component, such as costs of payment, performance and/or maintenance bonds, and insurance costs (including costs of any title insurance required hereunder); and (f) the out-of-pocket cost to the Developer of any real property or interest therein that the Developer must acquire from one or more entities that are not Affiliates of the Developer and which acquisition is required for the construction of a Facility and which real property or interest therein is required to be conveyed to the public entity that will own or operate such Facility. Actual Cost may also include an amount not in excess of five percent (5.0%) of the cost described in clause (a) of the preceding sentence in respect of any construction, project management or other similar fee, which fee may be payable to the Developer, any party related thereto or a third party. In no event, however, shall Actual Cost include any payment for any cost of carry or interest expense with respect to any construction loan obtained by the Developer or otherwise with respect to the Facilities or Discrete Components, or any premium paid to a contractor for early completion of any improvement.
“Administrative Expenses” means the expenses of the City incurred in connection with the administration of the CFD and the levy and collection of the Special Taxes, including any and all out-of-pocket expenses as well as an allocable portion of the salaries (and City overhead related thereto) of City Staff for time working on such matters. “Affiliate” of another Person means (a) a Person directly or indirectly owning, controlling, or holding with power to vote, 20% or more of the outstanding voting securities of such other Person, (b) any Person 20% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other Person, and (c) any Person directly or indirectly controlling, controlled by, or under common control with, such other Person; for purposes hereof, control means the power to exercise a controlling influence over the management or policies of a Person, unless such power is solely the result of an official position with such Person.
“Bonds” means any bonds, notes or other obligations issued by the City for the CFD, payable from Special Taxes.
“Budgeted Cost” means the estimated cost of a Facility or Discrete Component as shown on Exhibit B hereto.
“Business Day” means a day on which the City’s Public Works Department is open for business.
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“CFD” means the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), formed by the City Council of the City under the Act. “City“ means the City of Palmdale, California.
“Conditions of Approval” means the conditions of approvals and mitigation measures imposed from time to time by the City or other public agencies in connection with the granting of the land use entitlements for the development of land in the CFD, and any subdivision improvement, development or other agreement with the City relating to the development of the land in the CFD or the installation of the Facilities. As of the date of this Acquisition Agreement, the Conditions of Approval include, but are not limited to: (a) the Specific Plan approved by the City on March 3, 1992 by City Council Ordinance No. 964, as amended by City Council Ordinance No. 1076; (b) Conditional Use Permit 22-001, Planned Development 21-001; (c) Vesting Tentative Track Maps 51604, 51605, 51606, 51607, 52093 and 52116; and (d) Phase 1 Interim Agreement – Ritter Ranch Development (A-7796), dated April 20, 2022, among the Developer, Preston Hollow Capital, LLC and the City. It is acknowledged that, as of the date of this Acquisition Agreement, the documents described in clauses (b) through and including (d) of the prior sentence apply only to property in the area identified as Phase 1A of the Ritter Ranch Development, and it is expected that the Conditions of Approval applicable to the property in the CFD will include those in various other maps and agreements as they become applicable.
“County” means the County of Los Angeles, California.
“Developer” means RdR Development Holdings, LLC, a Delaware limited liability company, and its successors and assigns to the extent permitted under Section 10.07 hereof. “Director” means the acting Director of Public Works of the City, or such person’s written designee acting as such under this Acquisition Agreement. “Discrete Component” means a functional segment or major component of a Facility that the Director has agreed can be separately identified as a major component of a completed facility, and be the subject of a Payment Request hereunder. For Discrete Components of any Facility the purchase value of which is $1,000,000 or less, the Discrete Component must be a portion or phase of a Facility that is capable of serviceable use, as determined by the Director. The Discrete Components are shown on Exhibit B hereto.
“Eligible Facilities” means the public facilities described in Exhibit A hereto which are eligible to be financed by the CFD.
“Facilities” means those Eligible Facilities listed in Exhibit B hereto, as amended from time to time.
“Fiscal Agent” means the entity acting in the capacity as fiscal agent under the Fiscal Agent Agreement, or any successor thereto acting as fiscal agent under the Fiscal Agent Agreement. “Fiscal Agent Agreement” means an agreement by that name between the City and the Fiscal Agent, providing for, among other matters, the issuance of the Bonds and the establishment of the Improvement Fund, as it may be amended from time to time. -4-
“Fiscal Year” means the fiscal year of the City for accounting purposes. “Improvement Fund” means the Improvement Fund established by the Fiscal Agent Agreement.
“Payment Request” means a document, substantially in the form of Exhibit C hereto, to be used by the Developer in requesting payment of a Purchase Price. “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof.
“Plans” means the plans, specifications, schedules and related construction contracts and supplemental agreements (change orders) for the Facilities and/or any Discrete Components thereof approved pursuant to the applicable standards of the entity that will own, operate or maintain the Facilities when completed and acquired; including with respect to Facilities to be owned by the City, the City standards for construction which incorporate those set forth in the Green Book, Standard Specifications for Public Works Construction (SSPWC), by Public Works Standards, Inc., as modified by any applicable City special provisions. “Purchase Price” means the amount paid by the City for a Facility and/or any Discrete Components thereof determined in accordance with Article V hereof, being an amount equal to the Actual Cost of such Facility or Discrete Component, but subject to the limitations and reductions provided for in Article V.
“Rate and Method of Apportionment” means the rate and method of apportionment of special taxes for the CFD, as approved in the proceedings to form the CFD, and as it may thereafter be altered in accordance with the Act.
“Special Taxes” means the special taxes authorized to be levied by the City on property in the CFD in accordance with the Rate and Method of Apportionment, pursuant to the Act and the proceedings to form the CFD.
“State” means the State of California.
“Supplement” means a written document amending, supplementing or otherwise modifying this Acquisition Agreement and any exhibit hereto, including any amendments to the list of Facilities and Discrete Components in Exhibit B, and/or the addition to Exhibit B of additional Facilities (and Discrete Components) to be financed with the proceeds of the Bonds deposited in the Improvement Fund.
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ARTICLE II

RECITALS

Section 2.01. The CFD. The City Council of the City is conducting proceedings under the Act to form the CFD for the purpose of financing of the acquisition, construction and installation of the Eligible Facilities listed in Exhibit A hereto.

Section 2.02. The Development. The Developer is developing the land located within the CFD.

Section 2.03. The Facilities. The Facilities are within or in the vicinity of the CFD, and the City and the Developer will benefit from a coordinated plan of design, engineering and construction of the Facilities and the development of the land located within the CFD. The Developer acknowledges that the inclusion of Eligible Facilities in Exhibit A hereto in no way, in itself, obligates the City to issue any Bonds to acquire the Facilities from the Developer or implies that the City has in any way engaged the Developer to construct the Facilities, except as specifically provided in this Acquisition Agreement. Moreover, except for those Facilities listed in Exhibit B, this Acquisition Agreement shall in no way, by itself, obligate the Developer to construct the Eligible Facilities. The Facilities which are the subject of acquisition by the City from the Developer under this Acquisition Agreement are only the Facilities listed in Exhibit B hereto, as such Exhibit may be amended and/or supplemented by any Supplement.

Section 2.04. The Financing. The Developer and the City wish to finance the acquisition of the Facilities by the City and the payment therefor by entering into this Acquisition Agreement for the acquisition of the Facilities, and payment for Discrete Components thereof as shown in Exhibit B hereto (as it may be amended and supplemented) with proceeds of Bonds on deposit in the Improvement Fund.

Section 2.05. The Bonds. The City expects to conduct proceeding for the authorization and issuance of the Bonds under the Act and the Fiscal Agent Agreement, the proceeds of which Bonds are to be used, in part, to finance costs of the acquisition of the Facilities. However, the execution by the City of this Acquisition Agreement in no way obligates the City to issue any Bonds, or to acquire any Facilities with proceeds of any Bonds issued except the Facilities listed in Exhibit B (as such Exhibit B may be amended from time to time) which are to be acquired subject to the terms and conditions set forth in this Acquisition Agreement.

Section 2.06. No Advantage to City Construction. The City, by its approval of this Acquisition Agreement, has determined that it will obtain no advantage from undertaking the construction by the City directly of the Facilities, and that the provisions of this Acquisition Agreement require that each Facility be constructed pursuant to Plans approved by the City (or other public entity that will own the respective Facility), and each Facility must be inspected by the City (or other public entity that will own the respective Facility) and found to be in compliance with applicable building codes and standards. The Developer hereby represents that it or one of -6-
its members has experience in the supervision of the construction of public facilities of the character of the Facilities.

Section 2.07. Agreements. In consideration of the mutual promises and covenants set forth herein, and for other valuable consideration the receipt and sufficiency of which are hereby acknowledged, the City and the Developer agree that the foregoing recitals, as applicable to each of them, are true and correct and further make the agreements set forth herein. -7-

ARTICLE III

FUNDING

Section 3.01. City Proceedings. The City expects to conduct all necessary proceedings under the Act for the issuance, sale and delivery of the Bonds; provided, however, that nothing herein shall be construed as requiring the City to issue the Bonds. Upon the written request of the Developer, the Developer and the City staff shall meet regarding the amount, timing and other material aspects of the Bonds, but the legal proceedings and the principal amount, interest rates, maturity dates, and other terms and conditions, and timing of the sale of the Bonds shall be in all respects subject to the approval of the City Council of the City. The authorized aggregate principal amount of the Bonds is $75,000,000.00.

Section 3.02. Improvement Fund. The City shall not be obligated to pay the Purchase Price of the Facilities or any Discrete Components except from amounts on deposit in the Improvement Fund. The City makes no warranty, express or implied, that if and when Bonds are issued, the proceeds of the Bonds deposited and held in the Improvement Fund, and any investment earnings thereon deposited to the Improvement Fund, will be sufficient for payment of the Purchase Price of all of the Facilities.

Section 3.03. Bond Proceeds. The proceeds of the Bonds, if and when the Bonds are issued, shall be deposited, held, invested, reinvested and disbursed as provided in the Fiscal Agent Agreement. A portion of the proceeds of the Bonds (other than proceeds of refunding bonds) are expected to be set aside under the Fiscal Agent Agreement in the Improvement Fund. Moneys in the Improvement Fund shall be withdrawn therefrom in accordance with the provisions of the Fiscal Agent Agreement and the applicable provisions hereof for payment of all or a portion of the Purchase Prices of the Facilities (including payment of the Purchase Price of Discrete Components thereof), all as herein provided.

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

The City shall have no responsibility whatsoever to the Developer with respect to any investment of funds made by the Fiscal Agent under the Fiscal Agent Agreement, including any loss of all or a portion of the principal invested or any penalty for liquidation of an investment.

Any such loss may diminish the amounts available in the Improvement Fund to pay the Purchase Price of Facilities and Discrete Components hereunder. The Developer further acknowledges that the obligation of any owner of real property in the CFD, including the Developer to the extent it owns any real property in the CFD, to pay Special Taxes levied in the CFD when and if it is formed is not in any way dependent on: (a) the availability of amounts in the Improvement Fund to pay for all or any portion of the Facilities or Discrete Components thereof, or (b) the alleged or actual misconduct of the City in the performance of its obligations under this Acquisition Agreement, -8-
the Fiscal Agent Agreement, the Conditions of Approval, any developer agreement or amendment thereto, any subdivision improvement agreement, or any other agreement to which the Developer and the City are signatories.

Section 3.04. No Change in Obligations Under Conditions of Approval. The Developer acknowledges that any failure by the City to form the CFD and issue the Bonds, or any lack of availability of amounts in the Improvement Fund to pay the Purchase Price of Facilities or Discrete Components if the Bonds are issued, shall in no way diminish any obligation of the Developer with respect to the construction of or contributions for public facilities and mitigation measures required by the Conditions of Approval to which the Developer or any land within the CFD is subject.

Section 3.05. Refunding Bonds. The City may, in its sole and absolute discretion, determine at any time to issue bonds the net proceeds of which are used to refund any outstanding Bonds (the term “refund” as used in this sentence, and the term “refunding” as used in the next sentence, includes any purchase in lieu of redemption of any Bonds). The Developer shall have no right whatsoever in connection with any such refunding bond issue, including but not limited to any right to any reduction in Special Taxes levied or to be levied by the CFD, or to any additional funds whether pursuant to this Acquisition Agreement or otherwise as a consequence of any such refunding.

Section 3.06. Special Taxes. The City agrees to levy the Special Taxes on property in the CFD in accordance with the Rate and Method of Apportionment. -9-

ARTICLE IV

CONSTRUCTION OF FACILITIES

Section 4.01. Plans. To the extent that it has not already done so, the Developer shall cause Plans to be prepared for the Facilities. The Developer shall obtain the written approval of the Plans for each Facility in accordance with applicable resolutions, ordinances and regulations of the public entity that will own and operate the respective Facilities and, in any event, such approvals will be sought and given in accordance with the Conditions of Approval. Copies of all Plans shall be provided by the Developer to the Director (in both printed format and in an electronic format approved by the City) upon request therefor, and, in any event, as built drawings (in both printed format and in an electronic format approved by the City) and a written assignment of the Plans for any Facility to be owned by the City shall be provided to the City prior to its acceptance of the related Facility.

Section 4.02. Duty of Developer to Construct. All Facilities to be acquired hereunder specified in Exhibit B hereto as amended from time to time, shall be constructed substantially in accordance with the approved Plans (including any supplemental agreements) by the Developer or by a licensed general contractor which is under the direct supervision of the Developer. The Developer shall perform all of its obligations hereunder and shall monitor the performance of any applicable general contractor to confirm that all operations with respect to the construction of Facilities are conducted in a good and workmanlike manner, with the standard of diligence and care normally employed by duly qualified persons utilizing their best efforts in the performance of comparable work and in accordance with generally accepted practices appropriate to the activities undertaken.

The Developer shall require that each general contractor performing work in connection with the Facilities (and any Discrete Components thereof) employ at all times adequate staff or consultants with the requisite experience and applicable licenses and registrations necessary to administer and coordinate all work related to the design, engineering, acquisition, construction and installation of the Facilities (and any Discrete Components thereof) to be acquired by the City from the Developer hereunder. The Developer shall at all times have adequate staff or consultants with the requisite experience and licenses to discharge its obligations under this Acquisition Agreement.

The Developer shall be obligated: (a) to construct and cause conveyance to the applicable governmental agency all Facilities and Discrete Components thereof listed in Exhibit B hereto, and (b) to use its own funds to pay all costs thereof in excess of the Purchase Prices thereof to be paid therefor hereunder.

The Developer shall not be relieved of its obligation to construct each Facility and Discrete Component thereof listed in Exhibit B hereto and convey each Facility to the applicable governmental agency that will own and operate it in accordance with the terms hereof, even if (a) because of the limitations imposed by Section 5.06 hereof, the Purchase Price for such Discrete -10-
Component or Facility is less that the Actual Cost, or cost to the Developer, of such Discrete Component or Facility, or (b) there are insufficient funds in the Improvement Fund to pay the Purchase Prices thereof; and, in any event, this Acquisition Agreement shall not affect any obligation of any owner of land in the CFD under the Conditions of Approval or any other agreement or any other governmental approval to which any land within the CFD is subject, with respect to the public improvements required in connection with the development of the land within the CFD. Such obligation of the Developer to construct and convey such Facilities, and pay the costs thereof in excess of available monies in the Improvement Fund, shall be an obligation of the Developer as a party to this Acquisition Agreement without regard to any governmental conditions to development of the land in the CFD that may otherwise apply to the owners of land in the CFD.

This Acquisition Agreement shall not affect any obligation of the Developer or of any other owner of land in the CFD under the Conditions of Approval.

Section 4.03. Relationship to Public Works. This Acquisition Agreement is for the acquisition by the City of the Facilities and payment for the Facilities (including any Discrete Components thereof) listed in Exhibit B hereto from moneys in the Improvement Fund and is not intended to be a public works contract by the City for construction of the Facilities. The City and the Developer agree that, because the City is a charter city, and that the Facilities are of local, and not state-wide concern, the provisions of the California Public Contract Code shall not apply to the construction of the Facilities. The City and the Developer agree that the Developer shall award all contracts for the construction of the Facilities and Discrete Components listed in Exhibit B hereto and that this Acquisition Agreement is necessary to assure the timely and satisfactory completion of the Facilities and that compliance with the Public Contract Code with respect to the Facilities would work an incongruity and would not produce an advantage to the City or the CFD.

Notwithstanding the foregoing, the Developer shall, or shall cause the Developer’s general contractor to, award all contracts and any subcontracts for construction of the Facilities (and any Discrete Components thereof) listed in Exhibit B hereto and materials related thereto by means of a bid process that complies with the requirements set forth in Exhibit D hereto. In any event, bids for general contractors shall require that general contractors provide reasonable opportunity for local contractors to participate as subcontractors. Upon written request of the Director, the Developer shall provide an analysis of bids received for the construction of the Facilities.

The Director may, in the Director’s discretion, waive in writing any bidding requirements with respect to long lead time materials, specialty materials or work, or similar items, if requested in writing by the Developer identifying the specific contract, and the Director shall be entitled to discuss the bidding process with the Developer at any time and from time to time, and to require reasonable changes thereto for future contracts if, in the judgment of the Director, said process is not resulting in competitive bids for the Facilities.

The Developer shall develop or cause to be developed and shall maintain or cause to be maintained a cost-loaded project schedule, using the critical path method, providing for all major -11-
project elements included in the construction of any Facility to be acquired hereunder, so that the whole project is scheduled in the most efficient manner. The Developer shall provide the Director with complete copies of the schedule and each update to the schedule for the Director to review.

From time to time upon reasonable advance written notice by the Director to the Developer, the Developer shall meet and confer with City staff and consultants at a mutually agreed-upon time (not more than seven days after receipt by the Developer of such notice unless otherwise agreed to by the Director in his discretion) regarding matters arising hereunder with respect to the Facilities, Discrete Components and the progress in constructing and acquiring the same, and as to any other matter related to the Facilities or this Acquisition Agreement. The Developer shall advise the Director in advance of any coordination and scheduling meetings to be held with contractors relating to the Facilities, in the ordinary course of performance of an individual contract. The Director or the Director’s designated representative shall have the right to be present at such meetings, and to meet and confer with individual contractors if deemed advisable by the Director to resolve disputes and/or ensure the proper completion of the Facilities.

In addition to using City Staff for such purposes, the City in the discretion of the Director, may employ an independent firm as a construction monitor and to otherwise assist the City in administering this Acquisition Agreement. The fees and expenses of any such firm and any successor or replacement firm engaged by the City for such purpose shall be payable from (a) proceeds of the Bonds deposited to a Public Works Administration Account established under a Fiscal Agent Agreement in an amount reasonably determined by the City, or (b) if there are no amounts available therein (or no such account is created under the Fiscal Agent Agreement), from Bond proceeds deposited to the Improvement Fund, or (c) if the Bonds are not issued for any reason, from advances by the sole member of the Developer under and as required by the Deposit Agreement (A-7107), dated as of September 1, 2020, between the City and Preston Hollow Capital, LLC. In the event that at any time there is no acting construction monitor engaged by the City, the City will designate a specific City Staff member as a primary contact of the City to interface with the Developer under this Acquisition Agreement.

Section 4.04. Developer is Independent Contractor. In performing this Acquisition Agreement, the Developer is an independent contractor and not the agent or employee of the City or the CFD. Neither the City nor the CFD shall be responsible for making any payments to any officer or employee of the Developer or any contractor, subcontractor, agent, consultant, employee or supplier selected by the Developer.

Section 4.05. Performance and Payment Bonds. The Developer agrees to comply with all applicable performance and payment bonding requirements of the City (and other applicable public entities and/or public utilities) with respect to the construction of the Facilities. All contractors and/or subcontractors providing work in connection with the construction of Facilities shall provide a labor and materials and performance bonds which name the City (and the public agency, if different from the City, that will own any respective Facility) as an additional insured.

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Section 4.06. Contracts and Change Orders. The Developer shall be responsible for entering into all contracts and any supplemental agreements (commonly referred to as “change orders”) required for the construction of the Facilities listed in Exhibit B hereto, as amended from time to time, and all such contracts and supplemental agreements shall be submitted to the Director. Prior approval of supplemental agreements by the Director shall only be required for such change orders (a) which materially alter the quality or character of the subject Facilities, or (b) which involve an amount equal to or greater than ten percent (10%) of the amount of the bid for the related Facility. Any such contract or supplemental agreement shall in any event be deemed approved if the Plans contemplating such changes are signed by the City.

Within five (5) Business Days of receipt by the Director of a contract or supplemental agreement that needs the prior approval of the Director, the Director will determine if the costs related to such contract or supplemental agreement, if the contract or supplemental agreement is actually approved by the Director, will be considered an Actual Cost that is payable as a portion of the Purchase Price of the related Facility. Within fifteen (15) Business Days of receipt by the Director of a contract or supplemental agreement that needs the prior approval of the Director, the Director will either (a) if no change is needed to the then-approved Plans for the respective Facility by reason of such contract or change order, approve or deny such contract or supplemental agreement (any such denial to be in writing, stating the reasons for denial and the actions, if any, that can be taken to obtain later approval), or (b) notify the Developer that it needs additional time (not to exceed an additional fifteen (15) Business Days) to approve or deny the contract or supplemental agreement. The Director will use a good faith effort to grant approvals or provide denials on a more expeditious basis in the event that the Developer identifies in writing that the subject contract or supplemental agreement is needed to address an emergency or critical path situation. To the extent that a supplemental agreement permitted by this Section 4.06 or otherwise approved by the Director increases the Actual Cost of a Discrete Component or Facility, such increased cost may be payable as part of the Purchase Price of the related Discrete Component or Facility as provided in Section 5.06A. hereof.

Section 4.07. Time for Completion. The Developer agrees that this Acquisition Agreement is for the benefit of the City and the Developer and, therefore, the Developer represents that it expects the Facilities to be completed and to have requested payment for the Facilities under this Acquisition Agreement prior to the date which is thirty-six (36) calendar months from the date of the closing of the first series of the Bonds. The Developer agrees to use its good faith efforts to cause all Facilities initially listed in Exhibit B to be completed prior to the date which is thirty-six (36) calendar months from the date of closing of the first series of the Bonds. Any failure to complete the Facilities within said time period shall not, however constitute a breach by the Developer of the terms of this Acquisition Agreement.
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ARTICLE V

ACQUISITION AND PAYMENT

Section 5.01. Inspection. No payment hereunder shall be made by the City to the Developer for a Facility or Discrete Component thereof until the Facility or Discrete Component thereof has been inspected and found to be completed in accordance with the approved Plans (including any supplemental agreements), and found to be in compliance with applicable building codes and standards, by the applicable public entity or utility. The applicable departments of the City shall make or cause to be made regular, on-going site inspections of the Facilities and any Discrete Components thereof to be acquired hereunder which are expected to be owned by the City in accordance with customary inspection practices of public agencies for similar public improvements, and consistent with the payment processing provisions of Section 5.04 below; provided that in no event shall the City incur any liability for any delay in the inspection of any Facilities or Discrete Components. For Facilities to be acquired by other public entities, the Developer shall be responsible for obtaining inspections by the applicable public agencies of the Facilities and any Discrete Components thereof to be owned by them and to take any required actions to correct all deficiencies identified by the inspectors. The Developer agrees to pay all inspection, permit and other similar fees applicable to construction of the Facilities and any Discrete Components thereof, subject to reimbursement therefor as an Actual Cost of the related Facility or Discrete Component.

Section 5.02. Agreement to Sell and Purchase Facilities. The Developer hereby agrees to convey the Facilities listed in Exhibit B hereto to the applicable public agency that will own the respective Facility, and the City hereby agrees to use amounts in the Improvement Fund to pay the Purchase Prices thereof to the Developer, subject to the terms and conditions hereof.

The City shall not be obligated to finance the purchase of any Facility until the Facility has been completed and the Acceptance Date for such Facility has occurred; provided that the City has agreed hereunder to make certain payments to the Developer for Discrete Components of Facilities expressly shown in Exhibit B hereto, as it may be supplemented by any Supplement. The Developer acknowledges that the Discrete Components have been identified for payment purposes only, and that the applicable public agency that will own a Facility is not expected to accept a Facility of which a Discrete Component is a part until the Facility has been completed.

The City acknowledges that the Discrete Components do not have to be accepted by the applicable public agency that will own a Facility as a condition precedent to the payment of the Purchase Price therefor, but any such payment shall not be made until the Discrete Component has been completed in accordance with the Plans for such Discrete Component, as determined by the Director.

In any event, the City shall not be obligated to pay the Purchase Price for any Facility or Discrete Component except from the moneys in the Improvement Fund.

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Section 5.03. Payment Requests. In order to receive the Purchase Price for a Facility or Discrete Component, inspection thereof under Section 5.01 shall have been made and the Developer shall deliver to the Director: (a) a Payment Request in the form of Exhibit C hereto for such Facility or Discrete Component, together with all attachments and exhibits required by Exhibit C and this Section 5.03 to be included therewith (including, but not limited to Attachments 1 and 2 to Exhibit C), (b) if the property on which the Facility is located is not owned by the applicable public agency that will own the Facility or the subject of a recorded easement at the time of the request, a copy of the recorded documents conveying to the applicable public agency that will own the Facility Acceptable Title to the real property on, in or over which such Facility is located, as described in Section 6.01 hereof, (c) a copy of the recorded notice of completion of such Facility (if applicable), (d) to the extent paid for with the proceeds of the Bonds, an assignment to the CFD of any reimbursements that may be payable with respect to the Facility, such as public or private utility reimbursements, and (v) an assignment of the warranties and guaranties for such Facility, as described in Section 6.04 hereof, in a form acceptable to the Director.

Section 5.04. Processing Payment Requests. The Director expects that within ten (10) Business Days of receipt of any Payment Request, the Director will review the request for completeness and notify the Developer whether such Payment Request is complete, and, if not, the Director will provide in reasonable detail a description of what additional documentation must be provided. The Director expects that within thirty (30) days following receipt of a complete Payment Request (and all accompanying documentation), the Director will (a) conduct a review in order to confirm that the Facility or Discrete Component identified therein was constructed in accordance with the Plans therefor, and to verify and approve the Actual Cost of such Facility or Discrete Component specified in such Payment Request; (b) confirm the matters certified in the Payment Request; and (c) provide a written approval or denial (specifying in reasonable detail the reason for any denial and the corrective action or actions needed to eliminate the factor or factors giving rise to the denial) of the request. The Developer agrees to cooperate with the Director in conducting each such review and to provide the Director with such additional information and documentation as is reasonably necessary for the Director to conclude each such review. If a Payment Request seeking reimbursement for more than one Facility or Discrete Component is denied, the Director shall state whether the Payment Request is nevertheless approved and complete for any one or more Facilities or Discrete Components and any such Facilities or Discrete Components shall be processed for payment under Section 5.05 notwithstanding such partial denial.

Section 5.05. Payment. Upon approval of the Payment Request by the Director, the Director promptly shall sign the Payment Request and forward the same to the City Finance Director. Upon receipt of the reviewed and fully signed Payment Request, the City Finance Director shall cause the same to be paid from amounts in the Improvement Fund. The City Finance Director shall use his or her best efforts to cause each fully signed Payment Request to be paid by the Fiscal Agent under the applicable provisions of the Fiscal Agent Agreement within thirty (30) days of receipt by the City Finance Director of the fully signed Payment Request. Any approved Payment Request not paid in full due to an insufficiency of funds in the Improvement Fund shall be paid following the deposit into the Improvement Fund of proceeds of any investment earnings -15-
or of additional Bonds, or other amounts, transferred to the Improvement Fund under the terms of the Fiscal Agent Agreement.

The parties hereto acknowledge that (a) the Developer may be constructing Discrete Components or Facilities prior to the issuance of Bonds, the proceeds of which will be used to reimburse the Developer for those Discrete Components or Facilities, (b) prior to the issuance of Bonds, the only funds that will be deposited to the Improvement Fund will be Special Tax proceeds pursuant to Section 3.06 hereof, (c) the Developer may be submitting Payment Requests to the City in advance of the issuance of Bonds, with knowledge that there may be insufficient funds available in the Improvement Fund for reimbursement, (d) the Discrete Components or Facilities that are the subject of the Payment Requests submitted when there are no proceeds or insufficient proceeds in the Improvement Fund will be inspected and reviewed by the Director as set forth in this Article V and that such Payment Requests will be reviewed by the Director in the manner set forth in Sections 5.03, 5.04 and 5.05, (e) the Director will forward any approved Payment Request to the City Finance Director as described in the preceding paragraph, and (f) all approved Payment Requests so submitted to the City Finance Director shall be payable as described in the preceding paragraph. The conveyance to the City or other applicable public agency of a Facility prior to the payment in full of the Purchase Price from the proceeds of Bonds shall not be construed as a dedication or gift, or a waiver of the unpaid balance of such Purchase Price, and such unpaid amount shall be paid only from funds available in the Improvement Fund.

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

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

A. Amounts of Payments. Subject to the following paragraphs of this Section 5.06, payments for each Discrete Component or Facility will be made only in the amount of the Purchase Price for the respective Discrete Component or Facility; however, if the Actual Cost exceeds the Budgeted Cost for a Discrete Component or a Facility, the excess shall be borne by the Developer until such time as a Budgeted Cost for another Discrete Component or Facility is lower than the Actual Cost therefore, in which event the savings shall be applied to reduce any excess of Actual Cost over Budgeted Cost previously paid for any Facility or Discrete Component by the Developer. Any savings attributable to the Actual Cost being less than Budgeted Cost which are not disbursed under the previous sentence to cover unreimbursed Actual Costs or as otherwise consented to by the Developer shall be carried forward to be credited against future cost overruns, or costs related to supplemental agreements (change orders), or if not needed for either of the -16-
foregoing purposes, to be disposed of as provided in the Fiscal Agent Agreement for excess monies in the Improvement Fund.

Nothing herein shall require the City in any event (i) to pay more than the Actual Cost of a Facility or Discrete Component, or (ii) to make any payment beyond the available funds in the Improvement Fund. The parties hereto acknowledge and agree that all payments to the Developer for the Purchase Prices of Facilities and Discrete Components are intended to be reimbursements to the Developer for monies already expended or for immediate payment by the Developer (or directly by the City) to third parties in respect of such Facilities and/or Discrete Components.

B. Withholding Payments. The City shall be entitled to withhold any payment hereunder for a Discrete Component or a Facility if the Developer or any Affiliate of the Developer is delinquent in the payment of ad valorem real property taxes, special assessments or taxes, or Special Taxes levied in the CFD for which the Developer or such Affiliate is responsible. In the event of any such delinquency, the City shall only make payments hereunder, should any be made at the City’s sole discretion, directly to contractors or other third parties employed in connection with the construction of the Facilities or Discrete Components (and not to the Developer or any Affiliate of the Developer), until such time as the Developer provides the Director with evidence that all such delinquent taxes and assessments have been paid.

The City shall withhold payment for any Discrete Component of any Facility, or for any Facility that does not have Discrete Components, in each case constructed on land, until Acceptable Title to such land is conveyed to the public entity that will own the respective Facility, as described in Article VI hereof.

The City shall be entitled to withhold any payment hereunder for a Discrete Component or Facility that is the subject of a Payment Request until it is satisfied that any and all claims for labor and materials have been paid by the Developer for the Discrete Component or Facility that is the subject of a Payment Request, or conditional lien releases have been provided by the Developer for such Discrete Component or Facility. The City, in its discretion, may waive this limitation upon the provision by the Developer of letters of credit deemed satisfactory by the Director, upon consultation with the City Attorney, to assure payment of such claims.

The City shall be entitled to withhold payment for any Facility hereunder (or a Discrete Component of any Facility) until: (i) the Director determines that such Facility (or Discrete Component) is ready for its intended use (e.g., a sewer improvement is ready for its intended use when the sewer line is connected to the sewer system and the sewer line is otherwise ready to carry sewer flows, a street improvement is ready for its intended use when it has been connected to the City street system and the street improvement is otherwise ready to allow for vehicular traffic), (ii) all inspections of such Facility or Discrete Component have been completed and any identified deficiencies for such Facility or -17-
Discrete Component have been corrected, (iii) the Acceptance Date for the Facility has occurred and the requirements of Section 6.01, if applicable to such Facility, have been satisfied, and (iv) a Notice of Completion executed by the Developer, in a form acceptable to the Director, has been recorded for the Facility and general lien releases conditioned solely upon payment from the proceeds of the Bonds to be used to acquire such Facility (or final Discrete Component) have been submitted to the Director for the Facility. The City hereby agrees that the Developer shall have the right to post or cause the appropriate contractor or subcontractor to post a letter of credit with the City and/or the public entity that will own the Facility to indemnify it for any losses sustained by the City and/or such entity because of any liens that may exist at the time of acceptance of such a Facility, so long as such letter of credit is drawn on a bank and is otherwise in a form acceptable to the Director, upon consultation with the City Attorney, and the applicable public entity.

The City shall be entitled to withhold the payment for any Facility (or the final Discrete Component of any such Facility) until the Developer provides the Director with evidence that the public entity that will own such Facility has accepted dedication of and/or title to the Facility. If the Director determines that a Facility is not ready for intended use under the first sentence of this paragraph, the Director shall so notify the Developer as soon as reasonably practicable in writing specifying the reason(s) therefor.

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

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

D. Retention. The City shall withhold in the Improvement Fund an amount equal to five percent (5%) of the Purchase Price of each Facility or Discrete Component to be paid hereunder. Any such retention will be released to the Developer upon final completion and acceptance of the related Facility and the expiration of a maintenance period consistent with applicable City policy thereafter (currently a one year warranty period for any landscaping, and upon receipt of a maintenance bond acceptable to the Director of Public Works to remain in effect for one year as to other Facilities).

Notwithstanding the foregoing, the Developer shall be entitled to payment of any such retention upon the completion and acceptance of a Facility or Discrete Component, -18-
if a maintenance or warranty bond is posted in lieu thereof in accordance with Section 6.06 hereof. Payment of any retention shall also be contingent upon the availability of monies in the Improvement Fund therefor. No retention shall apply if the Developer proves to the Director’s satisfaction that the Developer’s contracts for the Facilities (or Discrete Components) provide for the same retention as herein provided, so that the Purchase Price paid for the Facility or Discrete Component is at all times net of the required retention.

E. Frequency. Unless otherwise agreed to by the Director, no more than one Payment Request shall be submitted by the Developer in any calendar month.

Section 5.07. Use of Excess Funds in the Improvement Fund. If the construction by the Developer and acquisition by the City or other public entities of all the Facilities listed in Exhibit B have been completed and the Purchase Prices (including any retentions described in 5.06(D) above) with respect thereto have been paid from amounts in the Improvement Fund, and funds remain on deposit in the Improvement Fund, the City shall notify the Developer in writing of the amount of funds remaining in the Improvement Fund and shall allow the Developer thirty (30) calendar days to submit a proposed amendment to Exhibit B to this Acquisition Agreement to include Eligible Facilities not theretofore funded by the City. If such amendment is approved by the City Council, the City shall retain the excess funds in the Improvement Fund as necessary to pay the Purchase Prices of the Eligible Facilities so added to Exhibit B. If such proposed amendment is not so approved, or if the remaining funds are in excess of what is needed to pay the Budgeted Costs of such Eligible Facilities added to Exhibit B, such excess funds will be used to pay debt service on the Bonds as provided in the Fiscal Agent Agreement.

Section 5.08. Defective or Nonconforming Work. If any of the work done or materials furnished for a Facility or Discrete Component are found by the Director to be defective or not in accordance with the applicable Plans: (a) and such finding is made prior to payment for the Purchase Price of such Facility or Discrete Component hereunder, the City may withhold payment of the Purchase Price for such Facility or Discrete Component until such defect or nonconformance is corrected to the satisfaction of the Director, or (b) and such finding is made after payment of the Purchase Price of such Facility or Discrete Component, the City and the Developer shall act in accordance with the City’s standard for construction which incorporate those set forth in the Green Book, Standard Specifications for Public Works Construction (SSPWC), by Public Works Standards, Inc., as modified by any applicable City special provisions.

Section 5.09. Modification of Discrete Components. Upon written request of the Developer, the Director shall consider modification of the description of any Discrete Component.

Any such modification shall be subject to the written approval of the Director, and shall not diminish the overall Facilities to be provided by the Developer hereunder (in a material way such that the change invalidates any of the assumptions used in the appraisal conducted to sell the Bonds) or in any way increase the total Budgeted Costs identified in Exhibit B. It is expected that any such modification will be solely for purposes of dividing up the work included in any Discrete Component for purposes of acceptance and payment, for example: (a) separation of irrigation and landscaping from other components of a Discrete Component, (b) modifications to allow for -19-
payment for street improvements prior to completion of the final lift of paving, or (c) division of utility construction by utility work orders. In most instances, the Director will only approve modifications for payment purposes when there will be an unusual period of time between the completion and acceptance of such divided work or to better implement the phasing of the overall construction of the Facilities; but no such circumstances shall this Section in any way obligate the Director to approve such modification.
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ARTICLE VI

OWNERSHIP AND TRANSFER OF FACILITIES

Section 6.01. Facilities to be Owned by the City – Conveyance of Acceptable Title to City.

Acceptable Title to all property on, in or over which each Facility to be owned by the City will be located, shall be transferred to the City by way of bill of sale, or dedication of such property, or easement thereon, if such conveyance of interest is approved by the City as being a sufficient interest therein to permit the City to properly own, operate and maintain such Facility located therein, thereon or thereover, and to permit the Developer to perform its obligations as set forth in Section 6.06 of this Acquisition Agreement. The Developer agrees to assist the City in obtaining such documents as are required to obtain Acceptable Title. Completion of the transfer of title to land shall be accomplished prior to the payment of the Purchase Price for the final discrete component of a Facility, or of a Facility that has no Discrete Component, and shall be evidenced by recordation of the acceptance thereof by the City Council or the designee thereof. In the event that the Developer request payment for a Discrete Component of a Facility that is on land to be owned by the City prior to the transfer of title described above, the Payment Request for the Discrete Component shall include an irrevocable offer of dedication of the applicable land in a form acceptable to the Director.

Section 6.02. Facilities to be Owned by the City – Title Evidence. Upon the request of the City, the Developer shall furnish to the City a preliminary title report for land with respect to Facilities to be acquired by the City and not previously dedicated or otherwise conveyed to the City, for review and approval at least fifteen (15) calendar days prior to the transfer of Acceptable Title to a Facility to the City. The Director, upon consultation with the City Attorney, shall approve the preliminary title report unless it reveals a matter which, in the judgment of the City, could materially affect the City’s use and enjoyment of any part of the property or easement covered by the preliminary title report. In the event the City does not approve the preliminary title report, the City shall not be obligated to accept title to such Facility and the City shall not be obligated to pay the Purchase Price for such Facility until the Developer has cured such objections to title to the satisfaction of the City.

Section 6.03. Facilities Constructed on Private Lands. If any Facilities to be acquired are located on privately-owned land, the owner thereof shall retain title to the land and the completed Facilities until acquisition of the Facilities under Article V hereof. Pending the completion of such transfer, the Developer shall not be entitled to receive any payment for any such Facility or the last Discrete Component thereof. The Developer shall, however, be entitled to receive payment for Discrete Components (other than the last Discrete Component) upon making an irrevocable offer of dedication of such land in form and substance acceptable to the Director.

Notwithstanding the foregoing, upon written request of the Director before payment for any Discrete Component of such a Facility, the Developer shall convey or cause to be conveyed Acceptable Title thereto in the manner described in Sections 6.01 and 6.02 hereof.

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Section 6.04. Facilities Constructed on City Land. If the Facilities to be acquired are on land owned by, or the subject of an easement granted to, the City, upon request of the Developer the City will issue to the Developer a permit to enter upon such land for purposes related to the construction (and maintenance pending acquisition) of the Facilities. The provisions for inspection and acceptance of such Facilities otherwise provided herein shall apply.

Section 6.05. Facilities to be Acquired by Other Public Agencies. With respect to any Facility to be acquired by a public entity other than the City, the Developer shall comply with such entity’s rules and regulations regarding title and conveyance of property, and provide the Director with evidence of such compliance, prior to the payment of the Purchase Price for any such Facility (or the last Discrete Component thereof).

Section 6.06. Maintenance and Warranties. The Developer shall maintain each Facility (and any Discrete Components thereof) in good and safe condition until the Acceptance Date of the Facility. Prior to the Acceptance Date, the Developer shall be responsible for performing any required maintenance on any completed Facility (and any Discrete Components thereof). On or before the Acceptance Date of the Facility, the Developer shall assign to the City all of the Developer’s rights in any warranties, guarantees, maintenance obligations or other evidence of contingent obligations of third persons with respect to such Facility. Any warranties, guarantees or other evidences of contingent obligations of third persons with respect to the Facilities to be acquired by the City shall be delivered to the Director as part of the transfer of title.

The Developer shall maintain or cause to be maintained each Facility (including the repair or replacement thereof) for a period specified by applicable City policy from the Acceptance Date thereof, or, alternatively, shall provide a bond reasonably acceptable in form and substance to the Director for such period and for such purpose (current City policy provides for a one-year maintenance period for landscaping improvements, and for the posting of a faithful performance bond to remain in effect for one year as to other Facilities), to insure that defects, which appear within said period will be repaired, replaced, or corrected by the Developer, at its own cost and expense, to the satisfaction of the Director. The Developer shall commence to repair, replace or correct any such defects within thirty (30) days after written notice thereof by the Director to the Developer, and shall complete such repairs, replacement or correction as soon as practicable. For purposes of this paragraph, the terms “maintenance” and “maintain” do not include day to day maintenance that may be required for a Facility, such as the watering of landscaping or the sweeping of roadways.

After the period referred to in the first sentence of the preceding paragraph, the City shall be responsible for maintaining such Facility.
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ARTICLE VII

INSURANCE

Section 7.01. Insurance Requirements. The Developer, at its expense, shall maintain in effect at all times during the performance of work under this Acquisition Agreement not less than the following coverage and limits of insurance, which shall be maintained with insurers listed “A” or better in the Best’s Insurance Guide and authorized to do business in the State of California.

Proof of Insurance, as identified in Section 7.01, must be reviewed and approved by the City Attorney.

A. Workers’ Compensation and Employer’s Liability
- Workers’ Compensation – coverage as required by the State of California - Employer’s Liability
$1,000,000 each accident
$1,000,000 policy limit bodily injury
$1,000,000 each employee bodily injury by disease

B. Commercial General Liability
- $5,000,000 limit on a per occurrence basis
- $10,000,000 general aggregate limit

C. Commercial Automobile Liability
- $10,000,000 combined single limit including owned (if any), non-owned and hired automobile coverage

D. Pollution/Environmental Liability*
- $5,000,000 limit on a per occurrence basis

*When professional/environmental liability coverage is provided on a “claims made basis”, Developer will continue to renew the insurance for a period of five (5) years after this Acquisition Agreement expires or is terminated. Such insurance will have the same coverage and limits as the policy that was in effect during the term of this Agreement, and will cover Developer, or its officers, employees or agents during the time this Agreement was in effect.

All of the Developer’s insurance policies shall contain an endorsement providing that written notice shall be given to the Developer at least 30 calendar days prior to termination, cancellation, or reduction of coverage in the policy, or 10 calendar days if cancellation is due to the non-payment of premiums. The Developer shall provide the City with a copy of any such notice from the provider of any insurance policy required by this Section 7.01 within three Business Days of the receipt by the Developer of such notice.

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

A. An endorsement extending coverage to the City and its agents as an insured, in the same manner as the named insured as respects liabilities arising out of the -23-
performance of any work related to the Facilities. Such insurance shall be primary insurance as respects the interest of the City, and any other insurance maintained by the City shall be excess and not contributing insurance with the insurance required hereunder.

The certificate of insurance and endorsements shall state: The City of Palmdale, the Successor Agency of the Community Redevelopment Agency of the City of Palmdale, Palmdale Civic Authority, Industrial Development Authority of the City of Palmdale, Palmdale Airport Authority, their officers, agents, employees and volunteers are named as additional insureds.

B. Severability of Interest clause.

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

The Developer shall require any and all subcontractors working on its behalf to provide insurance coverages and limits that are based on the scope of work and nature of risk being performed by the subcontractor. Any and all subcontractors working on behalf of Developer shall be subject to all insurance requirements that are stated herein.

Any deviation in this requirement will be Developer’s sole risk. Developer’s insurance requirements in Section 7.01 will not be impacted and/or limited by such deviation.

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

Any policy or policies of insurance that the Developer or its contractors or subcontractors elect to carry as insurance (i) against loss or damage to their construction equipment and tools or other personal property used in fulfillment of this Acquisition Agreement or a contract related to the Facilities shall include a provision waiving the insurer’s right of subornation against the City, and (ii) in fulfillment of this Acquisition Agreement involving a dual obligee bond may contain a clause to the effect that: “provided that Principal and Surety shall not be liable to the Obligees or any of them unless the Obligees or any of them have performed the obligations to the Principal in accordance with the terms of said contract; and provided, further, that Principal and Surety shall not be liable to all Obligees in the aggregate in excess of the penal sum above stated.”

Section 7.02. Evidence of Insurance. The Developer shall furnish to the City, promptly following the execution and delivery by the City and the Developer of this Acquisition Agreement (but in any event prior to the submittal by the Developer of a Payment Request described in Section 5.03), copies of all certificates of insurance and endorsements required by Section 7.01 above. From time to time thereafter, upon request of the Director, the Developer shall provide to the City certificates of insurance and endorsements regarding each insurance policy required to be maintained by the Developer hereunder.
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Section 7.03. Termination for Failure to Maintain Insurance. Notwithstanding any other provision of this Agreement, City may terminate this Acquisition Agreement if, at any time the Developer following five Business Days notice from the City, fails to maintain the required insurance for any period of time or fails to comply with any of the insurance requirements listed above.
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ARTICLE VIII

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 8.01. Representations, Covenants and Warranties of the Developer. The Developer represents, covenants and warrants for the benefit of the City as follows:

A. Organization. The Developer represents and warrants that it is a Delaware limited liability company duly organized and validly existing under the laws of the State of Delaware, is qualified to do business in and is in compliance with all applicable laws of the State, and has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated in this Acquisition Agreement.

B. Authority. The Developer represents and warrants that it has the power and authority to enter into this Acquisition Agreement, and has taken all action necessary to cause this Acquisition Agreement to be executed and delivered, and this Acquisition Agreement has been duly and validly executed and delivered by the Developer.

C. Binding Obligation. Represents and warrants that this Acquisition Agreement is a legal, valid and binding obligation of the Developer, enforceable against the Developer in accordance with its terms, subject to bankruptcy and other equitable principles.

D. Compliance with Laws. The Developer shall not with knowledge commit, suffer or permit any act to be done in, upon or to the property in the CFD or the Facilities in material violation of any law, ordinance, rule, regulation or order of any governmental authority or any covenant, condition or restriction now or hereafter affecting the property in the CFD or the Facilities.

E. Requests for Payment. The Developer represents and warrants that (i) it will not request payment from the City for the acquisition of any improvements that are not part of the Facilities, and (ii) it will diligently follow all procedures set forth in this Acquisition Agreement with respect to the Payment Requests.

F. Financial Records. Until the final acceptance of the Facilities by the City, the Developer covenants to maintain proper books of record and account for the construction of the Facilities and all costs related thereto. Such accounting books related to the construction of the Facilities and the costs related thereto shall be maintained in accordance with generally accepted accounting principles or other accounting basis consistently applied, and such books of record and account related to the construction of the Facilities and the costs related thereto shall be available for inspection by the City or its agent at any reasonable time during regular business hours on reasonable notice.

G. Prevailing Wages. The Developer covenants that, with respect to any contracts or subcontracts for the construction of the Facilities and any Discrete Components thereof -26-
to be acquired from the Developer hereunder, it will assure complete compliance with Section 1770 et seq. of the California Labor Code, as required by Section 301 of the City Charter, and any other applicable law or regulation relating to the payment of prevailing wages. Such compliance also includes the duty of the Developer to investigate, and, if substantiated, cause to be corrected, any alleged violation of applicable prevailing wage rules, regulations of statutes, or if not corrected to cooperate with the City to identify and impose such penalties as allowed by applicable regulation.

H. Plans. The Developer represents that it has obtained or will obtain approval of the Plans for the Facilities listed in Exhibit B to be acquired from the Developer hereunder from all appropriate departments of the City and any applicable utilities and agencies. The Developer further agrees that the Facilities listed in Exhibit B to be acquired from the Developer hereunder have been or will be constructed in full compliance with such approved Plans and any supplemental agreements (change orders) thereto, as approved in the same manner.

I. Land Owners. The Developer agrees that in the event that it sells any interest in any land owned by it within the boundaries of the CFD, the Developer will (a) notify the purchaser in writing prior to the closing of any such sale of the existence of this Acquisition Agreement and the Developer’s rights and obligations hereunder with respect to the construction of and payment for the Facilities, (b) notify the purchaser in writing of the existence of the CFD and the special tax lien in connection therewith, and (c) otherwise comply with any applicable conditions of Section 53341.5 of the Act. In addition, the Developer shall notify the City in writing of any such sale, indicating the legal description (or County Assessor’s parcel numbers) of the property sold and the purchaser of the property.

J. Additional Information. The Developer agrees to cooperate with all reasonable written requests for nonproprietary information by the Original Purchasers (as defined in the Fiscal Agent Agreement) of the Bonds or the City related to the status of construction of improvements within the CFD, the anticipated completion dates for future improvements, and any other matter material to the investment quality of the Bonds.

K. Continuing Disclosure. The Developer agrees to comply with all of its obligations under any continuing disclosure agreement executed by it in connection with the offering and sale of any of the Bonds.

L. Ownership By Affiliates. The Developer agrees to provide to the City’s Finance Director on the date of issuance of the Bonds, on (or within five (5) business days of) July 1 of each year so long as the Bonds are outstanding, and on any other date upon three Business Days notice from the City’s Finance Director, a written list of all Affiliates of the Developer which own or control the ownership of land located within the CFD, or which have options on land within the CFD, indicating the parcels of land by County Assessor’s Parcel number of all such land so owned or optioned.
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M. Allocation of Sales Taxes to City. The Developer shall use reasonable efforts with respect to any construction contract for a contract price of $5,000,000 or more and related to any construction by or under the supervision of the Developer within the geographical boundaries of the City, to have the installing contractor obtain a sub-permit from the California Board of Equalization under the Bradley-Burns Uniform Local Sales and Use Tax law for the job site on which the work is to be performed.

Section 8.02. Indemnification and Hold Harmless. The Developer shall indemnify, defend and hold harmless the City, the CFD, members of the City Council of the City, their officers, officials, employees and agents and each of them, from and against all actions, damages, claims, losses or expense of every type and description to which they may be subjected or put, by reason of, or resulting from (a) the breach of any provision of this Acquisition Agreement by the Developer, (b) the Developer’s or any other entity’s negligent design, engineering and/or construction of any of the Facilities acquired from the Developer hereunder, (c) the Developer’s non-payment under contracts between the Developer and its consultants, engineer’s, advisors, contractors, subcontractors and suppliers in the provision of the Facilities, or (d) any claims of persons employed by the Developer or its agents to construct the Facilities. Notwithstanding the foregoing, no defense, indemnification or hold harmless shall be required hereunder for any action, damage, claim, loss or expense directly attributable to the intentional acts, willful or other actionable misconduct, or gross negligence of the City, or its officers, Councilmembers, employees or agents hereunder.

No provision of this Acquisition Agreement shall in any way limit the Developer’s responsibility for payment of damages resulting from the operations of the Developer, its agents, employees or its contractors.
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ARTICLE IX

TERMINATION

Section 9.01. No Bonds; Final Payments. If, for any reason, the City does not issue the first series of the Bonds for the CFD by December 31, 2024, this Acquisition Agreement shall terminate and be null and void and of no further effect. If not terminated pursuant to the preceding sentence, and unless otherwise agreed to in writing by the parties hereto, the provisions of Articles IV and V of this Acquisition Agreement shall terminate on December 31, 2030; and, from and after such date, the City shall have no further obligation to pay the Purchase Price of any Facilities or Discrete Components thereof hereunder.

Section 9.02. Mutual Consent. This Acquisition Agreement may be terminated by the mutual, written consent of the City and the Developer, in which event the City may let contracts for any remaining work related to the Facilities to be owned by the City not theretofore acquired from the Developer hereunder, and use all or any portion of the monies in the Improvement Fund to pay for same, and the Developer shall have no claim or right to any further payments for the Purchase Price of Facilities or Discrete Components hereunder, except as otherwise may be provided in such written consent.

Section 9.03. City Election for Cause. The following events shall constitute grounds for the City, at its option, to terminate this Acquisition Agreement, without the consent of the Developer:

(a) The Developer shall voluntarily file for reorganization or other relief under any Federal or State bankruptcy or insolvency law.

(b) The Developer shall have any involuntary bankruptcy or insolvency action filed against it, or shall suffer a trustee in bankruptcy or insolvency or receiver to take possession of the assets of Developer, or shall in any bankruptcy or insolvency proceeding suffer an attachment or levy of execution to be made against the property it owns within the CFD (if any) unless, in any of such cases, such circumstance shall have been terminated or released within ninety (90) days thereafter.

(c) The Developer shall abandon construction of the Facilities. Failure for a period of three consecutive months to undertake substantial work related to the construction of at least a portion of the Facilities being financed by the proceeds of an outstanding issue of Bonds, other than for a reason specified in Section 9.04 hereof, shall constitute an example of such abandonment.

(d) The Developer shall breach any material covenant or default in the performance of any material obligation hereunder.

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(e) The Developer shall transfer any of its rights or obligations under this Acquisition Agreement without the prior written consent of the City.

(f) The Developer shall have made any material misrepresentation or omission in any written materials furnished in connection with any preliminary official statement, official statement or bond purchase contract used in connection with the sale of any series of the Bonds or in any certificate attesting to the accuracy of sections in any such preliminary official statement or official statement.

(g) The Developer or any of its Affiliates shall at any time challenge the validity of the CFD or any of the Bonds, or the levy of Special Taxes within the CFD, other than on the grounds that such levy was not made in accordance with the terms of the Rate and Method of Apportionment of the Special Taxes for the CFD.

If any such event occurs, the City shall give written notice of its knowledge thereof to the Developer, and the Developer agrees to meet and confer with the Director and other appropriate City staff and consultants within ten (10) days of receipt of such notice as to options available to assure timely completion of the Facilities. Such options may include, but not be limited to the termination of this Acquisition Agreement by the City. If the City elects to terminate this Acquisition Agreement, the City shall first notify the Developer (and any mortgagee or trust deed beneficiary specified in writing by the Developer to the City to receive such notice) of the grounds for such termination and allow the Developer a minimum of thirty (30) days to eliminate or mitigate to the reasonable satisfaction of the Director the grounds for such termination. Such period may be extended if the Developer, to the reasonable satisfaction of the City, is proceeding with diligence to eliminate or mitigate such grounds for termination. If at the end of such period (and any extension thereof), as determined solely by the City, the Developer has not eliminated or completely mitigated such grounds, to the reasonable satisfaction of the City, the City may then terminate this Acquisition Agreement.

Notwithstanding the foregoing, so long as any event listed in any of clauses (a) through and including (g) above has occurred, notice of which has been given by the City to the Developer, and such event has not been cured or otherwise eliminated by the Developer, the City may in its discretion cease making payments for the Purchase Price of Facilities or Discrete Components under Article V hereof until such time as such event has been cured or otherwise eliminated to the satisfaction of the City.

In addition to the foregoing, the City shall have the right to terminate this Acquisition Agreement pursuant to Section 7.03, without the need to compliance with the provisions of the second preceding paragraph.

Section 9.04. Force Majeure. Whenever performance is required of a party hereunder, that party shall use all due diligence and take all necessary measures in good faith to perform, but if completion of performance is delayed by reasons of floods, earthquakes or other acts of God, war, terrorism, civil commotion, riots, strikes, picketing, or other labor disputes, damage to work -30-
in progress by casualty, material shortages, or by other cause beyond the reasonable control of the party (financial inability excepted), then the specified time for performance shall be extended by the amount of the delay actually so caused.
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ARTICLE X

MISCELLANEOUS

Section 10.01. Limited Liability. The Developer agrees that any and all obligations of the City arising out of or related to this Acquisition Agreement are special and limited obligations of the City and the City’s obligations to make any payments hereunder are restricted entirely to the moneys, if any, in the Improvement Fund and from no other source. No member of the City Council, or City staff member, employee or agent shall incur any liability hereunder to the Developer or any other party in their individual capacities by reason of their actions hereunder or execution hereof.

The City agrees that any and all obligations of the Developer arising out of or related to this Acquisition Agreement are obligations of the Developer and not of any director, officer or employee or agent of the Developer, and none of them shall incur any liability hereunder to the City or any other party in their individual capacities by reason of their actions hereunder or execution hereof.

Section 10.02. Excess Costs. The Developer agrees to pay all costs of the Facilities that it is obligated to construct pursuant to the Conditions of Approval that are in excess of the moneys available therefor in the Improvement Fund.

Section 10.03. Audit. The Director and/or the Director of Finance of the City shall have the right, at any reasonable time during regular business hours on reasonable notice provided to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer in to any of the Facilities (or any Discrete Components thereof), and any bids taken or received for the construction thereof or materials therefor.

Section 10.04. Attorney’s Fees. In the event that any action or suit is instituted by either party against the other arising out of this Acquisition Agreement, the party in whose favor final judgment shall be entered shall be entitled to recover from the other party all costs and expenses of suit, including reasonable attorneys’ fees.

Section 10.05. Notices. Any notice, payment or instrument required or permitted by this Acquisition Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered, or transmitted by telecopy or facsimile transmission, or three Business Days following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid, addressed as follows:

City or CFD: City of Palmdale
38250 Sierra Highway
Palmdale, CA 93550
Attention: Director of Public Works

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with a copy to: City of Palmdale
38300 Sierra Highway
Palmdale, CA 93550
Attention: City Attorney

Developer: RdR Development Holdings, LLC
c/o PHCC LLC
1717 Main Street, Suite 3900
Dallas, TX 75201
Attention: John Dinan, General Counsel

Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other parties.

Section 10.06. Severability. If any part of this Acquisition Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Acquisition Agreement shall be given effect to the fullest extent possible.

Section 10.07. Successors and Assigns. This Acquisition Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Acquisition Agreement shall not be assigned by the Developer without the prior written consent of the City, which consent shall not be unreasonably withheld or delayed. In connection with any such consent of the City, the City may condition its consent upon the acceptability of the financial condition of the proposed assignee, the assignee’s express assumption of all obligations of the Developer hereunder, and/or upon any other factor which the City deems relevant in the circumstances. In any event, any such assignment shall be in writing, shall clearly identify the scope of the rights and/or obligations assigned, and shall not be effective until approved in writing by the City. An assignment, if consented to by the City in writing, shall release the Developer from its obligations so assigned under this Acquisition Agreement.

Section 10.08. Other Agreements. The obligations of the Developer hereunder shall be those of a party hereto and not as an owner of property in the CFD. Nothing in this Acquisition Agreement (including but not limited to in Sections 3.03, 3.04, 4.02 and 10.02 hereof) shall be construed as affecting, and nothing in this Acquisition Agreement (including but not limited to in Sections 3.03, 3.04, 4.02 and 10.02 hereof) shall affect, the City’s or the Developer’s rights, or duties to perform their respective obligations, under other agreements, use regulations, subdivision requirements or the Conditions of Approval relating to the development of the lands in the CFD.

This Acquisition Agreement shall not confer any additional rights, or waive any rights given, by either party hereto under any development or other agreement to which either or both are a party.

Notwithstanding the foregoing or any other provision of this Acquisition Agreement to the contrary, in the event of a conflict between any specific provision of this Acquisition -33-
Agreement and the provisions of any of the Conditions of Approval, the provisions of the Conditions of Approval shall prevail.

Section 10.09. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Acquisition Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by the other party with the terms of this Acquisition Agreement thereafter.

Section 10.10. Merger. No other agreement, statement or promise made by any party or any employee, officer or agent of any party with respect to any matters covered hereby that is not in writing and signed by all the parties to this Acquisition Agreement shall be binding.

Section 10.11. Parties in Interest. Nothing in this Acquisition Agreement, expressed or implied, is intended to or shall be construed to confer upon or to give to any person or entity other than the City, the CFD and the Developer any rights, remedies or claims under or by reason of this Acquisition Agreement or any covenants, conditions or stipulations hereof; and all covenants, conditions, promises, and agreements in this Acquisition Agreement contained by or on behalf of the City, the CFD or the Developer shall be for the sole and exclusive benefit of the City, the CFD and the Developer.

Section 10.12. Amendment. This Acquisition Agreement may be amended, from time to time, by written Supplement hereto and executed by both the City and the Developer.

Section 10.13. Counterparts. This Acquisition Agreement may be executed in counterparts, each of which shall be deemed an original.

Section 10.14. Governing Law. The provisions of this Acquisition Agreement shall be governed by the laws of the State applicable to contracts made and performed in the State.

Section 10.15. Survival of Certain Provisions. The provisions of Sections 8.02 and 10.01 of this Acquisition Agreement shall survive the termination of this Acquisition Agreement, and the obligations of the Developer under said Sections shall remain in effect following any such termination.

S-1
IN WITNESS WHEREOF, the parties have executed this Acquisition Agreement as of the day and year first-above written.

RdR Development Holdings, LLC, a
Delaware limited liability company

By: Preston Hollow Capital, LLC,
its sole member

By:

Name:

Title:

City of Palmdale, California, for itself and on
behalf of the City of Palmdale Community
Facilities District No. 2022-3 (Ritter Ranch Phase
1 Public Facilities)

By:

Ronda Perez,
Interim City Manager
Approved as to form:

By:

Scott E. Porter,
Interim City Attorney

Recommended for approval:

By:

Lynn Glidden,
Acting Director of Public Works
16007.48:J18561
Exhibit A

ACQUISITION AGREEMENT

EXHIBIT A

DESCRIPTION OF FACILITIES ELIGIBLE FOR

FINANCING BY THE CFD

The CFD shall be eligible to finance all or a portion of the costs of the following:

• Domestic water facilities, including but not limited to construction and installation of water distribution, treatment and storage facilities, pumpstations, irrigation lines and related appurtenances.
• Street improvements, including but not limited to construction and installation of streets, curbs, gutters, medians, traffic signals, street signs, street lights, entry monuments and appurtenances.
• Sanitary sewer facilities, including but not limited to construction and installation of sewer lines and related appurtenances.
• Storm control facilities, including but not limited to pipes, basins and treatment facilities. • Installation of landscaping and related irrigation improvements in public rights of way, construction and development of parks, parkways and trails and installation of walls and fencing in public rights of way and related appurtenances. • Recreational facilities, including fixtures and equipment. • Water system improvements to be designated by the Los Angeles County Waterworks District No. 40 and the Antelope Valley – East Kern Water Agency otherwise to be financed with annexation and capital facilities fees and connection charges related to improvements to be constructed in the Ritter Ranch development. • Flood control facilities related to the downstream flood control project identified as the Amargosa Recharge Facility that otherwise would be financed with capital facilities fees, connection charges or other permit fees.
• Fire control and suppression facilities, including buildings and related facilities that otherwise would be financed with capital facilities fees, connection charges or other permit fees.
• Sanitation district facilities, including sewer treatment, collection, transmission and reclamation facilities, sewer collection lines, wastewater treatment facilities, reclaimed water facilities, treated wastewater facilities and related and appurtenant facilities, and land, rights-of-way and easements necessary for any of such facilities, which facilities otherwise would be financed with capital facilities fees, connection charges or other permit fees.

Exhibit A

The facilities eligible to be financed shall include the costs of design, engineering and planning, the costs of any environmental or other studies, surveys or reports, the cost of any required environmental mitigation, erosion control, grading, soils testing, permits, plan check and inspection fees, insurance, legal and related overhead costs, coordination and supervision, City of Palmdale staff and consultant costs, and any other costs or appurtenances related to any of the public improvements to be financed or any of the foregoing.

Exhibit B

ACQUISITION AGREEMENT

EXHIBIT B

DESCRIPTION OF FACILITIES, DISCRETE COMPONENTS AND BUDGETED COSTS

Facility Discrete Component
Discrete
Component
Budget
Sewer Facilities
Sanitary Sewer Facilities, including
but not limited to construction and
installation of sewer lines and related
appurtenances.

Ranch Center Drive from ELR to Westland Avenue Drive
Westland Avenue from Ranch Center Drive to Avenue S
City Ranch Road
Red Tail Drive from City Ranch Road
Park View Drive
50% Offsite Sewer in Ana Verde In Future Bridge Road within Anaverde - L=2,480 LF Avenue S from Westland Drive to 650 East
Avenue S from Westland Drive to 650 East
Intract 51604 - Street, KK,OO,LL,NNJJ,W,PP,X
Intract 51605- Streets W,T,R,P,X,QS,U,V,W
Intract 51606 - Streets L,M,N,O,K
Intract 51607 - Streets E,F,D,J,I,G,H
Intract 52116 - Streets UU,TT,SS,QQ,RR
Intract 52093 - Streets FF,DDCC,BB,AA,EE,II,HH,GG
$38,834
35,528
40,045
12,216
14,831
496,435
10,095
1,916,645
1,353,614
713,462
461,400
535,425
343,388
648,888
TOTAL, SEWER FACILITIES $6,620,805

Storm Drain Facilities
Storm Drain Facilities, including but
not limited to construction and
installation of pipes, inlets, basins
and treatment facilities.

Water Quality Basins Basins
Westland Avenue from Ranch Center Drive to Existing Outlet Structure Westland Avenue from Ranch Center Drive to Existing Outlet Structure Intract 51605- Streets W,T,R,P,X,QS,U,V,W
Intract 51606 - Streets L,M,N,O,K
Intract 51607 - Streets E,F,D,J,I,G,H
Intract 52116 - Streets UU,TT,SS,QQ,RR
Intract 52093 - Streets FF,DDCC,BB,AA,EE,II,HH,GG
$298,430
48,940
238,700
56,796
144,882
198,839
79,215
112,588
TOTAL, STORM DRAIN FACILITIES $1,178,391

Street Improvements
Street Improvements, including but
not limited to construction and
installation of streets, curbs, gutters,
medians, sidewalks, traffic signals,
street signs, street lights, entry
monuments and appurtenances.

Elizabeth Ranch Road
Redtail Drive, City Ranch Road, Ranch Center Drive
Parkview Drive & Westland Drive
Avenue S, (100% Completion North Half)
Traffic Signalization - Elizabeth Lake Road
Intract 51605- Streets W,T,R,P,X,QS,U,V,W
Intract 51606 - Streets L,M,N,O,K
Intract 51607 - Streets E,F,D,J,I,G,H
Intract 52116 - Streets UU,TT,SS,QQ,RR
Intract 52093 - Streets FF,DDCC,BB,AA,EE,II,HH,GG
$4,101,535
4,146,574
983,091
4,897,537
474,000
1,916,645
1,685,097
1,131,158
1,353,614
921,733
TOTAL, STREET IMPROVEMENTS $21,610,983

Landscape Within Right of Way
Installation of Landscaping and
related irrigation improvements in
public rights of way.

ELIZABETH RANCH ROAD - West to Joshua Ranch Entrance
RANCH CENTER DRIVE, From Westland to Elizabeth Ranch Road CITY RANCH ROAD, West Boundary to East Boundary
RED TAIL DRIVE, From Center Ranch Road to West Boundary WESTLUND NORTH DRIVE, From Ranch Center Drive to Phase 1B WESTLUND SOUTH DRIVE, Phase 1B to Avenue S
PARKVIEW NORTH DRIVE, From Westland to End of Phase 1A
PARKVIEW SOUTH DRIVE, From Phase 1A to Avenue S
$439,215
2,569,145
671,820
231,067
460,652
42,823
94,163
218,803
Exhibit B

Facility Discrete Component
Discrete
Component
Budget
TOTAL, STREETSCAPE $4,727,689

Public Parks
Construction and development of
parks, parkways and trails and related
appurtenances.

Community Park, Active - PA-5T - 1A
Community Park, Active - PA-5T - 1B
Neighborhood Park - Active - PA-5F - 1A
Neighborhood Park - Active - PA-5U - 1B
Trails
$2,768,512
3,486,787
2,706,547
2,038,153
551,918
TOTAL, PARKS AND TRAILS $11,551,918

Los Angeles County Water Facilities
Water Works District No. 40,
Antelope Valley
Domestic water facilities, including
but not limited to construction and
installation of water distribution,
treatment and storage facilities,
pump stations, irrigation lines and
related appurtenances.

Water Tank - 3,000,000 MG - Pressure Zone 3240
Water Pump Station - O-12 & 25th Street West
Water Transmission Main - 36" Transmission Main in 25th Street West from Avenue O14 to Rancho Vista Blvd
Domestic Water - 24" Water Main in Avenue S & Ranch Center Drive Domestic Water - Ranch Center Drive from ELR to Westland Avenue Domestic Water - Westland Avenue North - from Ranch Center Drive to 1B Domestic Water - Westland Avenue South - from 1A to Avenue S Domestic Water - City Ranch Road from Ranch Center Drive, West to End Domestic Water - City Ranch Road from Ranch Center Drive, East to End Domestic Water - Red Tail Drive from City Ranch Road
Domestic Water - Park View Drive from Westland Drive
Convert Raw Water Line in Ranch Center Drive to water district standards and connect to potable
Intract 51605- Streets W,T,R,P,X,QS,U,V,W
Intract 51606 - Streets L,M,N,O,K
Intract 51607 - Streets E,F,D,J,I,G,H
Intract 52116 - Streets UU,TT,SS,QQ,RR
Intract 52093 - Streets FF,DDCC,BB,AA,EE,II,HH,GG
$7,031,076
8,420,246
449,571

2,697,427
11,894
7,398
754,580
15,955
5,000
14,112
26,490
405,321

1,222,320
1,393,094
794,468
1,248,990
553,677
TOTAL, LACWWD FACILITIES $25,051,620

AVEK Water Facilities Pump Station
Domestic water facilities, including
but not limited to construction and
installation of water distribution,
treatment and storage facilities,
pump stations, irrigation lines and
related appurtenances.

WATER TURN OUT - O-12 & 25th Street West , Portion of Pump Station and 36" water Line in 25th West $3,703,928

Exhibit C

ACQUISITION AGREEMENT

EXHIBIT C

FORM OF PAYMENT REQUEST

PAYMENT REQUEST NO.

The undersigned (the “Developer”), hereby requests payment in the total amount of $__________ for the Facilities (as defined in the Acquisition Agreement, dated as of ____________, 2022, between the City of Palmdale, California (the “City”), for and on behalf of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), or Discrete Components thereof (as described in Exhibit B to that Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby represents and warrants to the City as follows:

1. He(she) is a duly authorized representative of the Developer, qualified to execute this Payment Request for payment on behalf of the Developer and is knowledgeable as to the matters set forth herein.

2. To the extent that this payment request is with respect to a completed Facility (as defined in the Acquisition Agreement referenced above), the Developer has submitted to the Public Works Director of the City as-built drawings or similar plans and specifications, in both printed format and in an electronic format approved by the Director, for the items to be paid for as listed in Attachment 1 hereto with respect to any such completed Facility, and such drawings or plans and specifications, as applicable, are true, correct and complete. To the extent that this payment request is for a Discrete Component (as defined in the Acquisition Agreement referenced above), the Developer has in its construction office a marked set of drawings or similar plans and specifications for the Discrete Components to be acquired as listed in Attachment 1 hereto, which drawings or plans and specifications, as applicable, are current and show all changes or modifications which have been made to date. The Developer will provide copies of all such drawings, plans and specifications to the City upon written request of the Director of Public Works of the City.

3. All costs of the Facilities or Discrete Components thereof for which payment is requested hereby are true and correct Actual Costs (as defined in the Acquisition Agreement referenced above) and have not been inflated in any respect. The items for which payment is requested have not been the subject of any prior payment request submitted to the City.

4. The Developer has submitted or submits herewith to the Public Works Director of the City invoices, receipts, worksheets and other evidence of costs to construct the Facilities or Discrete Components thereof for which payment is requested, which are in sufficient detail to allow the Public Works Director of the City to verify the Actual Cost thereof and, if any of such invoices, receipts, worksheets or other evidence of costs include costs for facilities other than such Facilities or Discrete Exhibit C

Components for which payment is requested, the Developer has submitted or submits herewith to the Public Works Director of the City a written description as to how the items and amounts in such invoices, receipts, worksheets and other evidence of costs have been allocated among such other facilities and the Facilities or Discrete Components for which payment is requested, together with evidence that such allocation is appropriate, correct and reasonable.

5. The Developer has submitted or submits herewith to the Public Works Director of the City evidence that each of the invoices, receipts, worksheets and other evidence of costs referred to in paragraph 4 above has been paid in full, which evidence is in the form of copies of cancelled checks, bank wire reports or such other form as the Public Works Director of the City has approved in writing.

6. There has not been filed with or served upon the Developer notice of any lien, right to lien or attachment upon, or claim affecting the right to receive, the payment of the Purchase Price of each Facility or Discrete Component for which payment is requested which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen’s or mechanics’ liens accruing by operation of law.

7. The Developer has submitted or submits herewith to the Public Works Director of the City copies of unconditional lien releases from all contractors, subcontractors and materialmen for all work with respect to each Facility or Discrete Component for which payment is requested.

8. The work in respect of each Facility or Discrete Component for which payment is requested is in compliance with all applicable governmental requirements, including but not limited to those in Section 1770 et seq. of the California Labor Code, pertaining to the payment of prevailing wages for the work to construct the Facilities or Discrete Components thereof for which payment is requested, and accurate payroll records have been maintained and all known governmental requests for certified payrolls have been satisfied.

9. The Facilities or Discrete Components thereof for which payment is requested were constructed (a) in accordance with all applicable City standards (or, with respect to Facilities to be owned by a public entity other than the City, the applicable standards of that public entity) (b) in accordance with the requirements of the Acquisition Agreement, and (c) in accordance with the as- built drawings or plans and specifications, as applicable, referenced in paragraph 2 above.

10. The Developer is in compliance with the terms and provisions of the Acquisition Agreement and no portion of the amount being requested to be paid was previously paid.

11. The Purchase Price for each Facility or Discrete Components thereof (a detailed calculation of which is shown in an Attachment 2 hereto for each such Facility or Discrete Components thereof), has been calculated in conformance with the terms of Section 5.06 of the Acquisition Agreement.

12. Neither the Developer nor any Affiliate (as defined in the Acquisition Agreement) is in default in the payment of ad valorem real property taxes or special taxes or special assessments levied in the CFD (as defined in the Acquisition Agreement), except as follows: ___________________.

Exhibit C

I hereby declare under penalty of perjury that the above representations and warranties are true and correct.

DEVELOPER:

RdR Development Holdings, LLC, a
Delaware limited liability company

By: Preston Hollow Capital, LLC,
its sole member

By:

Authorized Representative
of the Developer
Date:

CITY:

Payment Request Approved for
Submission to the City Finance Director

By:

Director of Public Works

Date:

Exhibit C-1

ATTACHMENT 1

EXHIBIT C

[list here all Facilities or Discrete Components for which payment is requested, and attach support documentation]

Exhibit C-2

ATTACHMENT 2

EXHIBIT C

CALCULATION OF PURCHASE PRICE

[Use a separate sheet for each Facility or Discrete Component for which payment is being requested]

1. Description (by reference to Exhibit B to the Acquisition Agreement) of the Facility or Discrete Component

2. Actual Cost (list here total of supporting invoices and/or other documentation supporting determination of Actual Cost): $

3. Holdback for Lien releases (see Section 5.06(B) of the Acquisition Agreement) $

4. Holdback for retention (see Section 5.06(D) of the Acquisition Agreement) $

5. Total amount requested in respect of Facility or Discrete Component (amount listed in 2 less amounts, if any, listed in 3 and 4) $

Exhibit D

EXHIBIT D

PUBLIC WORKS BID PROCEDURES

The City and the Developer hereby agree that the following procedure shall be followed prior to the award of construction contracts for Facilities and Discrete Components thereof that are subject to the Acquisition Agreement.

1. Pre-qualification of Contractors. The Developer will, after consultation with the Director, develop prequalification standards, and create a list of not less than five (5) (unless mutually agreed to by the Director and the Developer to have fewer bidders, but not in any event less than three (3)), and not more than eight (8), contractors that are prequalified to bid for each contract related to the construction of a Facility or any Discrete Component thereof. All entities that are prequalified shall have all licenses, equipment, experience (of both the prime contractor and any key subcontractors) and bonding capacity necessary for the performance of the applicable work. The Developer will solicit bids from those contractors who met the pre-qualification requirements. The Developer shall provide the bid packages to any such pre-qualified contractors requesting the same.

If bids are sought prior to pre-qualifying contractors, the Developer will include pre-qualification screening/criteria/application in the applicable bid package and require contractors to complete the pre-qualification application fully and accurately in order to be considered a responsive bidder.

2. Content of Bid Packages. The Developer shall submit proposed bid packages to the Director for review and comment not less than thirty (30) days prior to the dissemination of bid packages to prospective bidders, and shall address, to the satisfaction of the Director, any reasonable concerns or comments the Director has with respect to any bid package prior to its dissemination to prospective bidders. The Director shall promptly review all bid packages submitted to the Director, and shall work in good faith with the Developer to address any concerns or questions that the Director has with respect to the bid packages.

In order to expedite the bidding process, where appropriate the Developer shall provide any contractors that pre-qualify with a preliminary bid package for the purpose of preparing their bids while final bid documents are being completed, approved and signed. Bid packages shall contain any terms required by this Acquisition Agreement and applicable law. Final bid documents will be issued as an addendum to the preliminary bid documents.

3. Type of Contract Requested. Each bid package will require that the contracts will be bid on a unit price basis, with an estimate of bid quantities included on the applicable bid sheet. Upon written request of the Developer, the Director may agree, on a case-by-case basis, that bids may alternatively be made on the basis of all inclusive lump sum prices, with provisions for deductions based on unit prices and bid quantities that are less than originally estimated. Contracts shall provide that a five percent retention shall be held on contractors. The retention will be released upon acceptance of the related Facility and/or Discrete Component by the City as described in this Acquisition Agreement. While contractor suggested alternatives will be encouraged, any exclusions or exceptions to the base bid package will constitute a non-responsive bid that may be rejected.

Exhibit D

4. Receipt of Bids. The bids will be received by the Developer by the deadline set forth in the bid package. All bid information will be available for review by the Director.

5. Award of the Bid. The Developer shall award the construction contract to the lowest responsible bidder, except that upon mutual agreement of the Developer and the Director, the Developer may award the contract to a bidder that was not the low bidder. The Developer shall submit to the Director a report summarizing the bid process, the reasons for awarding to other than the low bidder, and the results thereof.

Quint & Thimmig LLP 9/29/22
16007.48:J18540

RECORDING REQUESTED BY AND
AFTER RECORDATION RETURN TO:

City Clerk
City of Palmdale
38300 North Sierra Highway
Palmdale, CA 93550

NOTICE OF SPECIAL TAX LIEN

CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)

Pursuant to the requirements of Section 3114.5 of the Streets and Highways Code of California and the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 and following of the California Government Code (the “Code”), the undersigned City Clerk of the City of Palmdale (the “City”), County of Los Angeles, State of California, hereby gives notice that a lien to secure payment of a special tax is hereby imposed by the City Council of the City, County of Los Angeles, State of California. The special tax secured by this lien is authorized to be levied for the purpose of paying the costs of certain public improvements as described on Exhibit A attached hereto and by this reference made a part hereof, paying the principal and interest on bonds the proceeds of which are to be used to pay costs of the public improvements and otherwise to pay the costs of administering the below-mentioned community facilities district.

The special tax is authorized to be levied within the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), which has now been officially formed and the lien of the special tax is a continuing lien which shall secure each annual levy of the special tax and which shall continue in force and effect until the special tax ceases to be levied and a notice of cessation of special tax is recorded in accordance with Section 53330.5 of the Code, as incorporated by reference into the Code.

The rate, method of apportionment, and manner of collection of the authorized special tax is as set forth in Exhibit B attached hereto and by this reference made a part hereof.

Conditions under which the obligation to pay the special tax may be prepaid and permanently satisfied and the lien of the special tax canceled are as described in Section I of Exhibit B attached hereto.

Notice is further given that upon the recording of this notice in the office of the County Recorder of the County of Los Angeles, the obligation to pay the special tax levy shall become a lien upon all nonexempt real property within the City of Palmdale Community Facilities District -2-
No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), in accordance with Section 3115.5 of the California Streets and Highways Code.

The name(s) of the owner(s) and the assessor’s tax parcel number(s) of the real property included within this community facilities district and not exempt from the special tax are as set forth in Exhibit C attached hereto and hereby made a part hereof. -3-

Reference is made to the boundary map of the community facilities district recorded on September 26, 2022 at 1:46 p.m. in Book 196 of Maps of Assessment and Community Facilities Districts at Page 37 (instrument no. 20220937555), in the office of the County Recorder for the County of Los Angeles, State of California, which map is the final boundary map of the community facilities district.

For further information concerning the current and estimated future tax liability of owners or purchasers of real property or interests therein subject to this special tax lien, interested persons should contact the Finance Director of the City of Palmdale, 38300 Sierra Highway, Palmdale, Suite D, California 93550, telephone number (661) 267-5440.

Dated: October __, 2022.

By:

City Clerk,
City of Palmdale

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EXHIBIT A

CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)

DESCRIPTION OF FACILITIES ELIGIBLE TO BE FINANCED BY THE DISTRICT

FACILITIES

The District shall be eligible to finance all or a portion of the costs of the following:

• Domestic water facilities, including but not limited to construction and installation of water distribution, treatment and storage facilities, pumpstations, irrigation lines and related appurtenances.

• Street improvements, including but not limited to construction and installation of streets, curbs, gutters, medians, traffic signals, street signs, street lights, entry monuments and appurtenances.

• Sanitary sewer facilities, including but not limited to construction and installation of sewer lines, sewer lift stations and related appurtenances.

• Installation of landscaping and related irrigation improvements in public rights of way, construction and development of parks, parkways and trails and installation of walls and fencing in public rights of way and related appurtenances.

• Recreational facilities, including fixtures and equipment.

• Water system improvements to be designated by the Los Angeles County Waterworks District No. 40 and the Antelope Valley – East Kern Water Agency otherwise to be financed with annexation and capital facilities fees and connection charges related to improvements to be constructed in the Ritter Ranch development.

The facilities eligible to be financed shall include the costs of design, engineering and planning, the costs of any environmental or other studies, surveys or reports, the cost of any required environmental mitigation, erosion control, grading, soils testing, permits, plan check and inspection fees, insurance, legal and related overhead costs, coordination and supervision, City of Palmdale staff and consultant costs, and any other costs or appurtenances related to any of the public improvements to be financed or any of the foregoing.

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OTHER

The District may also finance any of the following:

1. Bond related expenses, including underwriters discount, appraisal and absorption study costs, reserve fund, capitalized interest, financial advisor, special tax consultant, bond counsel and underwriters’ counsel fees and expenses, landowner counsel fees and expenses, official statement printing, and all other incidental expenses.

2. Administrative fees of the City and the Bond trustee or fiscal agent related to the District and the Bonds.

3. Reimbursement of costs related to the formation of the District advanced by the City, any landowner in the District, or any party related to any of the foregoing, as well as reimbursement of any costs advanced by the City, any landowner in the District or any party related to any of the foregoing, for facilities or other purposes or costs of the District.

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EXHIBIT B

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR CITY OF PALMDALE COMMUNITY FACILITIES DISTRICT NO. 2022-3 (RITTER RANCH PHASE 1 PUBLIC FACILITIES) A Special Tax, as hereinafter defined, shall be levied and collected in the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) (“CFD No. 2022-3”) each Fiscal Year commencing in Fiscal Year 2023/24, in an amount determined by the application of the procedures below. All Taxable Property, as hereinafter defined, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meaning: “Accessory Dwelling Unit” or “ADU” means all Assessor’s Parcels of Residential Property for which a building permit(s) has been issued for an “Accessory Dwelling Unit” as defined in California Government Code Section 65852.2(j)(1), as may be amended from time to time, that is accessory to a primary Unit. The ADU may be located on the same Assessor’s Parcel as the primary Unit that is the primary Unit or on a separate Assessor’s Parcel. For purposes of clarification, where an ADU and primary Unit are on the same Assessor’s Parcel, the ADU located on such Assessor’s Parcel is considered a separate Unit from the primary Unit on such Assessor’s Parcel for purposes of the Special Tax. Should an Assessor’s Parcel contain only an ADU, such Assessor’s Parcel will be taxed as an ADU Unit only. "Acre” or “Acreage" means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map. In the event that the Assessor’s Parcel Map shows no acreage, the Acreage for any Assessor’s Parcel may be determined by the CFD Administrator based upon, in the CFD Administrator’s discretion, the applicable condominium plan, final map, parcel map, Assessor’s Data or by using available spatial data and GIS. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1, Division 2 of Title 5 of the Government Code of the State. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2022-3 including, but not limited to, the following: the costs of any paying agents/fiscal agents/trustees related to CFD No. 2022-3 Bond payments (including the fees and expenses of related counsel); the costs of computing the Annual Special Tax Requirement, the Special Taxes and of preparing the collection schedules for the Special Taxes; the costs of collecting the Special Taxes, including any charges levied by the County Auditor’s Office, County Tax Collector’s Office or County Treasurer’s Office; the costs of the City or designee in complying with the disclosure requirements associated with applicable federal and state securities laws, or otherwise related to CFD No. 2022-3 or CFD No. 2022-3 Bonds; the City’s annual administration fees and third party expenses; costs of responding to public inquiries regarding the Special Taxes; the costs of the City or designee related to an appeal of the Special Tax or interpretation of this Rate and Method of Apportionment of Special Taxes; amounts needed to pay any required arbitrage rebate to the federal government related to CFD No. 2022-3 Bonds; the costs

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associated with the release of funds from any escrow account; and the costs of commencing and pursuing to completion any foreclosure action arising from delinquent Special Taxes in CFD No. 2022-3. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2022-3 for any other administrative purposes of CFD No. 2022-3. "Annual Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 2022-3 to (1) pay Debt Service on all Outstanding CFD No. 2022-3 Bonds due in the Debt Year that commences in such Fiscal Year; (2) pay debt service on bonds expected to be issued by CFD No. 2022-3 due in the Debt Year that commences in such Fiscal Year; (3) Administrative Expenses; (4) provide any amount required to establish or replenish a reserve fund in connection with any CFD No. 2022-3 Bonds; (5) provide an amount equal to reasonably anticipated Special Tax delinquencies based on the delinquency rate for Special Taxes levied in the previous Fiscal Year as determined by the CFD Administrator, as limited by the Act, and without duplicating any amounts described in clauses (3) or (4). The amounts referred to in clauses (1) through (5) of the preceding sentence may be reduced in any Fiscal Year (in the City's sole discretion) by (i) surplus balances in funds and accounts for CFD No. 2022-3 Bonds to the extent that such balances are available to apply against Debt Service pursuant to the Indenture, (ii) proceeds from the collection of penalties associated with delinquent Special Tax, and (iii) any other revenues available to pay Debt Service on the Outstanding CFD No. 2022-3 Bonds or other indebtedness as determined by the CFD Administrator. “Assessor’s Data” means the property characteristic data compiled and maintained by the County Assessor for each Assessor’s Parcel, including, but not limited to, Assessor’s Parcel Number, Acreage, Building Square Footage, Lot Square Footage and Units. "Assessor’s Parcel" or “Parcel” means a lot or parcel shown in an Assessor’s Parcel Map with an assigned Assessor’s Parcel Number. "Assessor’s Parcel Map" means an official map of the County Assessor designating parcels by Assessor’s Parcel Number. “Assessor’s Parcel Number” or “APN” means, with respect to an Assessor’s Parcel, that number assigned to such Assessor’s Parcel by the County for purposes of identification. “Assigned Special Tax” means the Assigned Special Tax determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property. "Backup Special Tax" means the Backup Special Tax applicable to each Assessor’s Parcel of Developed Property, as determined in accordance with the applicable subsection of Section C below. “Building Permit” means a permit issued by the City for new construction of a residential or non-residential building on an Assessor’s Parcel. “Building Square Feet” or “BSF” means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Building Square Feet shall be made by reference to the building permit(s) issued for such residential dwelling unit. In the event that the building permit does not show

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Building Square Feet, other records of the City or Assessor’s Data shall be used as determined by the CFD Administrator. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Annual Special Tax Requirement, and otherwise providing for the levy and collection of the Special Taxes. "CFD No. 2022-3" means City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), established by the City Council pursuant to the Act. “CFD No. 2022-3 Bonds” means bonds or other Debt (as defined in section 53317 of the Act), whether in one or more series, issued or assumed by or on behalf of the City for CFD No. 2022-3 under the Act, and secured by pledge of the Special Taxes. “City” means the City of Palmdale, California. “City Council” means the City Council of the City, acting as the legislative body of CFD No. 2022-3. "County" means the County of Los Angeles, California. “Debt Service” means for each Debt Year, the total amount of principal and interest due on any Outstanding CFD No. 2022-3 Bonds. “Debt Year” means the twelve (12) month period ending on the second debt service payment date of each calendar year. "Developed Property" means, in any Fiscal Year, all Taxable Property in CFD No. 2022-3 for which a Building Permit for new construction was issued by the City prior to March 1 of the preceding Fiscal Year. “Exempt Property” means all property located within the boundaries of CFD No. 2022-3 which is exempt from the Special Tax pursuant to Section E below. “Final Map Property” means, in any Fiscal Year, all Taxable Property, exclusive of Developed Property, Taxable Property Owner Association Property, and Taxable Public Property, for which a Final Subdivision Map has recorded prior to January 1 of the preceding Fiscal Year. "Final Subdivision Map" means a final subdivision map, parcel map or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 4285, that creates individual lots for which Building Permits may be issued without further subdivision of such property. "Fiscal Year" means the period starting July 1 and ending on the following June 30. “GIS” or “Geographic Information System” means a system designed to capture, store, manipulate, analyze, manage, and present spatial or geographic data. “Indenture” means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 2022-3 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Class” means any of the classes listed in Table 1. “Lot Square Feet” or “LSF” means, for any Assessor’s Parcel, the Acreage divided by 43,560.

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"Maximum Special Tax” means the Maximum Special Tax, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property. “Non-Residential Property” means, in any Fiscal Year all Assessor’s Parcels of Developed Property for which a building permit(s) was issued for a structure intended for non-residential use. “Open Space Property” means property within the boundaries of CFD No. 2022-3 which (i) has been designated with specific boundaries and Acreage on a final subdivision map as open space, (ii) has been irrevocably offered for dedication as open space to the federal government, the State, the County, the City, or any other public agency, or (iii) is encumbered by an easement or other restriction required by the City limiting the use of such property to open space. “Outstanding CFD No. 2022-3 Bonds” means all CFD No. 2022-3 Bonds which are outstanding under and in accordance with the provisions of the Indenture. “Property Owner’s Association” or “POA” means any duly constituted property owner’s association. As used in this definition, a Property Owner’s Association includes any home-owner’s association, condominium owner’s association, master or sub-association or non-residential owner’s association. “Property Owner’s Association Property” means any property within the boundaries of CFD No. 2022-3 which is (a) owned by a Property Owner’s Association or (b) designated with specific boundaries and acreage on a final subdivision map as Property Owner Association Property. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax or the Backup Special Tax is equal. For Final Map Property, “Proportionately” means that the ratio of the actual Special Tax Levy to the Assigned Special Tax or the Backup Special Tax is equal. For Undeveloped Property, “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal. “Public Property” means any property within the boundaries of CFD No. 2022-3 which (i) is owned by a public agency, (ii) has been irrevocably offered for dedication to a public agency, or (iii) is designated with specific boundaries and Acreage on a final subdivision map as property which will be owned by a public agency. For purposes of this definition, a public agency includes the federal government, the State, the County, the City, school districts, or any other governmental agency. “Rate and Method of Apportionment” means this Rate and Method of Apportionment of Special Taxes for CFD No. 2022-3. “Residential Property” means all Assessor’s Parcels of Developed Property for which a Building Permit has been issued for purposes of constructing one or more residential Units. “Ritter Ranch Specific Plan” means Specific Plan 89-02 approved by the City on March 3, 1992 by Ordinance No. 964, as amended on October 11, 1995 by Ordinance No. 1076 (Specific Plan Amendment 95-1-RR). “Single Family Residential Attached Property” means all Assessor’s Parcels of Residential Property for which a building permit(s) has been issued for (i) an attached residential structure or (ii) property with a

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single family attached designation according to the Ritter Ranch Specific Plan including detached and paired townhomes. “Single Family Residential Detached Property” means all Assessor’s Parcels of Residential Property for which a building permit(s) has been issued for a detached residential structure intended as a single primary Unit. "Special Tax(es)" means the special tax or special taxes to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property within CFD No. 2022-3 to fund the Annual Special Tax Requirement. "State" means the State of California. "Taxable Property" means all the Assessor’s Parcels within the boundaries of CFD No. 2022-3 that are not exempt from the Special Tax pursuant to law or Section E below. “Taxable Property Owner Association Property” means all Assessors Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. “Taxable Public Property” means all Assessors Parcels of Public Property that are not exempt pursuant to Section E herein. "Trustee" means the trustee or fiscal agent or paying agent acting as such under the applicable Indenture. “Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Map Property, Taxable Property Owner Association Property, or Taxable Public Property. “Unit” means (i) for Single Family Residential Attached Property, an individual single family attached residential unit or property with a single family attached designation according to the Ritter Ranch Specific Plan, (ii) for Single Family Residential Detached Property, an individual single family detached residential unit. The number of Units assigned to each Assessor’s Parcel may be determined by (i) referencing Assessor’s Data, (ii) site surveys and physical unit counts, and/or (iii) other research by the CFD Administrator. “Welfare Exempt Property” means, in any Fiscal Year, all Parcels within the boundaries of CFD No. 2022-3 that (a) have been granted a welfare exemption by the County under subdivision (g) of Section 214 of the Revenue and Taxation Code indicated in the Assessor’s Data finalized as of January 1 of the previous Fiscal Year, and (b) are exempt from the Special Tax pursuant to Section 53340(c) of the Act. Pursuant to Section 53340(c) of the Act, after the issuance of the first series of CFD No. 2022-3 Bonds, as applicable, any Assessor’s Parcels that received a welfare exemption under subdivision (g) of Section 214 of the Revenue and Taxation Code shall not be classified as Welfare Exempt Property and will be subject to the Special Tax. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, the CFD Administrator shall determine the Assessor’s Parcel Numbers for all Taxable Property within CFD No. 2022-3 for the then-current Fiscal Year. To the extent a Parcel or Parcels of Taxable Property are subdivided, consolidated, or otherwise reconfigured, the Maximum Special Tax shall be assigned to the new Assessor’s Parcels Numbers pursuant to Section C. The CFD Administrator shall also determine: (i) which Parcels are Developed Property, Final Map Property, Undeveloped Property,

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Taxable Property Owner Association Property and Taxable Public Property; (ii) the number of Units or Acreage each Parcel contains; (iii) the property type, i.e., Single Family Residential Attached Property, Single Family Residential Detached Property, Accessory Dwelling Unit, Non-Residential Property, etc.; and (iv) the Annual Special Tax Requirement for the Fiscal Year. The Assigned Special Tax for Single Family Residential Attached Property shall be based on the number of Units on such Assessor’s Parcel and the Building Square Feet of the Units located on such Assessor’s Parcel. The Assigned Special Tax for Single Family Detached Property shall be based on the number of Units on such Assessor’s Parcel, the Building Square Feet of the Units located on such Assessor’s Parcel, and the Lot Square Feet of such Assessor’s Parcel. The Assigned Special Tax for Non-Residential Property, Taxable Property Owner Association Property and Taxable Public Property shall be based on the Acreage of the Assessor’s Parcel. C. MAXIMUM SPECIAL TAX RATES 1. Developed Property The Maximum Special Tax for each Assessor’s Parcel of Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. a. Assigned Special Tax The Assigned Special Tax for each Assessor’s Parcel of Developed Property is shown in Table 1. TABLE 1 ASSIGNED SPECIAL TAX FOR DEVELOPED PROPERTY FISCAL YEAR 2023/24 Land Use Class Description Building Square Feet Lot Square Feet Assigned Special Tax 1-A Single Family Attached Property >= 1,900 BSF N/A $2,762 per Unit 2-A Single Family Attached Property < 1,900 BSF N/A $2,352 per Unit 1-B Single Family Detached Property > 2,600 BSF < 5,000 LSF $3,671 per Unit 2-B Single Family Detached Property 2,300 - 2,600 BSF < 5,000 LSF $3,398 per Unit 3-B Single Family Detached Property < 2,300 BSF < 5,000 LSF $3,125 per Unit 1-C Single Family Detached Property > 3,300 BSF 5,000 - 6,000 LSF $4,468 per Unit 2-C Single Family Detached Property 3,000 - 3,300 BSF 5,000 - 6,000 LSF $4,195 per Unit 3-C Single Family Detached Property < 3,000 BSF 5,000 - 6,000 LSF $3,922 per Unit 1-D Single Family Detached Property >= 3,300 BSF > 6,000 LSF $4,809 per Unit 2-D Single Family Detached Property < 3,300 BSF > 6,000 LSF $4,400 per Unit

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1-E Accessory Dwelling Unit N/A N/A See below 2-E Non-Residential Property N/A N/A $22,531 per Acre The Assigned Special Tax for an Accessory Dwelling Unit shall be calculated as a percentage of the Assigned Special Tax for the primary Unit the ADU is accessory to, based on Building Square Footage. For example, if a primary Unit in Land Use Class 1-A of 2,000 BSF has an ADU of 800 BSF, the Assigned Special Tax for the ADU shall be calculated by the following steps: 1. 800 BSF / 2,000 BSF = 0.40 or 40% 2. $2,762 Assigned Special Tax per Unit x 40% = $1,104.80 Assigned Special Tax for such ADU b. Backup Special Tax The Fiscal Year 2023-2024 aggregate Backup Special Tax attributable to property within a Final Subdivision Map will equal $22,531 multiplied by the Acreage of all Taxable Property located within such Final Subdivision Map, excluding Acreage associated with current or expected Taxable Public Property and Taxable Property Owner Association Property. The Backup Special Tax for each Assessor’s Parcel of Residential Property in a Final Subdivision Map shall be computed by dividing the aggregate Backup Special Tax attributable to all Assessor’s Parcels of Taxable Property for which building permits for residential construction have or may be issued, as determined in the preceding paragraph, by the number of such Assessor’s Parcels (i.e., the number of residential lots). Notwithstanding the foregoing, if all or any portion of a Final Subdivision Map is subsequently changed or modified, then the Backup Special Tax for each Assessor’s Parcel of Residential Property in such Final Subdivision Map, or the portion thereof that is changed or modified, shall be a rate per Acre calculated as follows: 1. Determine the total Backup Special Taxes anticipated to apply to the changed or modified portion of the Final Subdivision Map prior to the change or modification. 2. Divide the amount determined pursuant to paragraph 1 above by the total Acreage of Residential Property excluding Taxable Public Property and Taxable Property Owner Association Property which is ultimately expected to exist in such changed or modified Final Subdivision Map area, as reasonably determined by the CFD Administrator. The result is the Backup Special Tax per Acre which shall be applicable to all Assessor's Parcels of Residential Property in such changed or modified Final Subdivision Map. c. Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2024 and ending on 2038/39, the Assigned Special Tax and the Backup Special Tax for Developed Property and Final Map Property shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.

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d. Multiple Land Use Classes In some instances, an Assessor’s Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor’s Parcel shall be the sum of the Special Tax for all Land Use Classes located on that Assessor’s Parcel. 2. Final Map Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property a. Maximum Special Tax The Maximum Special Tax for each Assessor’s Parcel of Final Map Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $22,531 per Acre in Fiscal Year 2023/24. b. Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2024 and ending on 2038/39, the Maximum Special Tax for Final Map Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAXES Commencing with Fiscal Year 2023/24 and for each following Fiscal Year, the CFD Administrator shall determine the Annual Special Tax Requirement and shall levy the Special Tax until the amount of the Special Tax levied equals the Annual Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Annual Special Tax Requirement. Second: If additional monies are needed to satisfy the Annual Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Final Map Property at a rate up to 100% of the Maximum Special Tax for Final Map Property to satisfy the Annual Special Tax Requirement. Third: If additional monies are needed to satisfy the Annual Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property at a rate up to 100% of the Maximum Special Tax for Undeveloped Property to satisfy the Annual Special Tax Requirement. Fourth: If additional monies are needed to satisfy the Annual Special Tax Requirement after the first three steps have been completed, then the levy of the Special Tax on each Assessor’s Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the applicable Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor’s Parcel to satisfy the Annual Special Tax Requirement. Fifth: If additional monies are needed to satisfy the Annual Special Tax Requirement after the first four

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steps have been completed, the Special Tax shall be levied on each Assessor’s Parcel of Taxable Property Owner Association Property at a rate up to 100% of the Maximum Special Tax for Taxable Property Owner Association Property to satisfy the Annual Special Tax Requirement. Sixth: If additional monies are needed to satisfy the Annual Special Tax Requirement after the first five steps have been completed, then the Special Tax shall be levied Proportionately on all Taxable Public Property at a rate up to 100% of the Maximum Special Tax for Taxable Public Property to satisfy the Annual Special Tax Requirement. E. EXEMPTIONS 1. No Special Tax shall be levied on up to 35.20 Acres of Property Owner Association Property, and up to 120.70 Acres of Public Property. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Property, or Public Property. 2. Property Owner Association Property, that is not exempt from the Special Tax under this section, or pursuant to the Act, shall be classified as Taxable Property Owner Association Property. Taxable Property Owner Association Property shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fifth step in Section D above, at up to 100% of the applicable Maximum Special Tax for Taxable Property Owner Association Property. 3. Public Property, that is not exempt from the Special Tax under this section, or pursuant to the Act, shall be classified as Taxable Public Property. Taxable Public Property shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the sixth step in Section D above, at up to 100% of the applicable Maximum Special Tax for Taxable Public Property. 4. No Special Tax shall be levied on any Assessor’s Parcel in any Fiscal Year in which such Assessor’s Parcel is classified as Welfare Exempt Property. F. APPEAL OF SPECIAL TAX LEVY Any property owner may file a written appeal of the Special Tax with the CFD Administrator claiming that the amount or application of the Special Tax is not correct with respect to one or more specific Assessor’s Parcels. The appeal must be filed not later than one calendar year after having paid the Special Tax that is disputed, and the appellant must be current in all payments of the Special Taxes theretofore levied on the Assessor’s Parcel(s). In addition, during the term of the appeal process, all Special Tax levied must be paid for the subject Assessor’s Parcel(s) prior to delinquency. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the property owner disagrees with the CFD Administrator’s decision relative to the appeal, the owner may then file a written appeal with the City Council whose subsequent decision shall be final and binding on all interested parties. If the decision of the CFD Administrator or subsequent decision by the City requires the Special Tax to be modified or changed in favor of the property owner, then an adjustment shall be made to credit future Special Taxes.

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This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to filing any legal action by such owner. G. INTERPRETATION OF RATE AND METHOD OF APPORTIONMENT The City may, by resolution or ordinance, interpret, clarify and/or revise this Rate and Method of Apportionment to correct any inconsistency, vagueness, or ambiguity as it relates to the Special Taxes, method of apportionment, classification of Assessor’s Parcels, or any definition used herein, as long as once CFD No. 2022-3 Bonds have been issued such correction does not materially adversely affect the levy and collection of Special Taxes on any Assessor’s Parcel needed to repay the CFD No. 2022-3 Bonds. In addition, the interpretation and application of any section of this document shall be at the CFD Administrator’s discretion. H. MANNER OF COLLECTION The Special Taxes shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, that the CFD Administrator may directly bill the Special Tax, may collect the Special Tax at a different time or in a different manner if needed to meet the financial obligations of CFD No. 2022-3. The City may covenant to foreclose and may actually foreclose or cause an action for foreclosure to be prosecuted in respect of Assessor's Parcels of Taxable Property that are delinquent in the payment of the Special Tax. I. PREPAYMENT OF SPECIAL TAX The following definitions apply to this Section I: “Authorized Facilities” means the public facilities authorized to be financed, in whole or in part, by CFD No. 2022-3. “Buildout” means the state of maximum development of CFD No. 2022-3 and any property annexed thereto, based on plans and anticipated development. "CFD Public Facilities Cost" means $66.1 million for CFD No. 2022-3, expressed in 2022 dollars, which shall increase by the annual percentage change in the Construction Inflation Index on July 1, 2023 and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide the public facilities to be provided by CFD No. 2022-3 under the authorized bonding program for CFD No. 2022-3, or (ii) shall be determined by the City Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. "Construction Inflation Index" means the annual percentage change in the Engineering News-Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year, but not less than zero percent. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the City that is reasonably comparable to the Engineering News-Record Building Cost Index for the City of Los Angeles.

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"Future Facilities Costs" means, as of the date of prepayment, the CFD Public Facilities Costs minus the proceeds of any Previously Issued CFD No. 2022-3 Bonds which were, at the time of issuance, available to the City for Authorized Facilities. "Previously Issued CFD No. 2022-3 Bonds" means all Outstanding CFD No. 2022-3 Bonds that have been issued by CFD No. 2022-3 prior to the date of prepayment. 1. Prepayment in Full The Special Tax obligation of an Assessor's Parcel of Developed Property, Taxable Public Property, Final Map Property, or Undeveloped Property for which a Building Permit has been issued, may be prepaid and permanently satisfied as described herein; provided that there are no delinquent installments of the Special Tax with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 45 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor's Parcel. Prepayment must be made not less than 75 days prior to the next occurring date that notice of redemption of Outstanding CFD No. 2022-3 Bonds, if any. Proceeds of such prepayment may be given to the Trustee pursuant to the Indenture. If a prepayment is made prior to the issuance of CFD No. 2022-3 Bonds, the Redemption Premium, Interest Amount, Reserve Fund Credit and Capitalized Interest Credit as calculated below, shall be zero. The CFD Administrator may charge the property owner requesting a prepayment calculation a fee for providing this service. The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount Plus Future Facilities Amount plus Redemption Premium plus Interest Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Special Tax Prepayment Amount As of the proposed date of prepayment, the Special Tax Prepayment Amount (defined below) shall be calculated by the CFD Administrator as follows: Step Number: 1. Confirm that no Special Tax delinquency apply to such Assessor’s Parcel, and if delinquencies are applicable compute all amounts due, including interest and penalties. 2. For Assessor’s Parcels of Developed Property and Taxable Public Property compute the Assigned Special Tax and Backup Special Tax. For Assessor’s Parcels of Final Map Property, and Undeveloped Property to be prepaid, compute the Assigned Special Tax and Backup Special Tax

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for that Assessor’s Parcel as though it was already designated as Developed Property, based upon the building permits issued for that Assessor’s Parcel. 3. a. Divide the Assigned Special Tax computed pursuant to Step 2 by the total estimated Assigned Special Tax for CFD No. 2022-3 based on the Developed Property Special Tax which could be charged in the current Fiscal Year on all expected development through Buildout of CFD No. 2022- b. Divide the Backup Special Tax computed pursuant to Step 2 by the total estimated Backup Special Tax for CFD No. 2022-3 based on the Developed Property Special Tax which could be charged in the current Fiscal Year on all expected development through Buildout of CFD No. 2022- c. Determine which quotient computed pursuant to Step 3.a or 3.b is larger (the “Maximum Special Tax Percentage”). 4. Multiply the Maximum Special Tax Percentage by the Outstanding CFD No. 2022-3 Bonds to compute the principal amount of Outstanding CFD No. 2022-3 Bonds to be redeemed (the “Bond Redemption Amount”). 5. Compute the Future Facilities Costs. 6. Multiply the Maximum Special Tax Percentage by the total Future Facilities Costs to compute the Future Facilities amount to be prepaid (the “Future Facilities Amount”). 7. Multiply the Bond Redemption Amount computed pursuant to Step 4 by the applicable redemption premium, if any, on the Outstanding CFD No. 2022-3 Bonds to be redeemed (the "Redemption Premium") determined by reference to the Indenture. 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding CFD No. 2022-3 Bonds (the “Interest Amount”). 9. Verify the administrative fees and expenses, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming the Outstanding CFD No. 2022-3 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the “Administrative Fees and Expenses”). 10. If reserve funds for the Outstanding CFD No. 2022-3 Bonds held under the Indenture, if any, are at or above 100% of the then reserve requirement (as required by the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve requirement for the Outstanding CFD No. 2022-3 Bonds to be redeemed pursuant to the prepayment (the "Reserve Fund Credit"). No Reserve Fund Credit shall be granted if reserve funds are below 100% of the applicable reserve requirement on the prepayment date or if the Reserve Fund is satisfied by a credit instrument rather than cash funded. 11. If any capitalized interest for the Outstanding CFD No. 2022-3 Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the Maximum Special Tax Percentage by the expected balance in the capitalized interest fund after such first interest and/or principal

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payment (the "Capitalized Interest Credit"). 12. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Steps 4, 6, 7, 8 and 9 less the amount computed pursuant to Steps 10 and 11 (the " Prepayment Amount"). 13. From the Prepayment Amount, the amounts computed pursuant to Step 6 shall be used by the City to pay for Future Facilities Costs. The amounts computed pursuant to Steps 4, 6, 7 and 8 shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding CFD No. 2022-3 Bonds or make Debt Service payments. The amount computed pursuant to Step 9 shall be retained by the City for the payment of Administrative Fees and Expenses. The Special Tax Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Outstanding CFD No. 2022-3 Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of Outstanding CFD No. 2022-3 Bonds or to make Debt Service payments. Current year Special Taxes that are not yet paid will remain outstanding and will be collected in the manner billed. With respect to any Assessor's Parcel that is prepaid, the CFD Administrator shall cause a suitable notice to be recorded in compliance with the Act to indicate the prepayment of the Special Tax and the obligation of such Assessor's Parcel satisfied. Notwithstanding the foregoing, no prepayment will be allowed unless the Maximum Special Tax that may be levied on Taxable Property both prior to and after the proposed prepayment is at least 1.1 times the maximum annual Debt Service on all Outstanding CFD No. 2022-3 Bonds plus annual Administrative Expenses, as reasonably estimated by the CFD Administrator. 2. Prepayment in Part The Special Tax may be partially prepaid, provided that a partial prepayment may be made only after all authorized CFD No. 2022-3 Bonds have been issued and only for Assessor’s Parcels of Developed Property, Final Map Property, Taxable Public Property and Undeveloped Property for which a Building Permit has been issued and only if there are no delinquent Annual Special Taxes with respect to such Assessor's Parcel at the time of partial prepayment. The amount of the prepayment shall be calculated as in Section I.1; except that a partial prepayment shall be calculated by the CFD Administrator according to the following formula: PP = PE x F. These terms have the following meaning: PP = the partial prepayment PE = the Special Tax Prepayment Amount calculated according to Section I.1 F = the Maximum Special Tax Percentage The Special Tax partial prepayment amount must be sufficient to redeem at least a $5,000 increment of Bonds.

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The owner of any Assessor’s Parcel who desires such partial prepayment shall notify the CFD Administrator of such owner’s intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor’s Parcel within 45 days of the request and may charge a fee for providing this service. With respect to any Assessor’s Parcel that is partially prepaid, the CFD Administrator shall (i) distribute the prepayment funds remitted according to Section I.1, and (ii) indicate in the records of CFD No. 2022-3 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor’s Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor’s Parcel pursuant to Section D. J. SPECIAL TAX REDUCTION The following definitions apply to this Section J: "Issuance Date” means the date a bond purchase contract related to the sale of the CFD No. 2022-3 Bonds is entered into between the purchaser of the CFD No. 2022-3 Bonds and CFD No. 2022-3. “Plan Type” means a discrete residential plan type (generally consisting of residential dwelling units that share a common product type (e.g., detached, condominium) and that have nearly identical amounts of living area) that is constructed or expected to be constructed within CFD No. 2022-3 as identified in the Price Point Study. “Price Point Consultant” means any consultant or firm of such consultants selected by the City that (a) has substantial experience in performing price point studies for residential units within community facilities districts or otherwise estimating or confirming pricing for residential units in community facilities districts, (b) has recognized expertise in analyzing economic and real estate data that relates to the pricing of residential units in community facilities districts, (c) is in fact independent and not under the control of CFD No. 2022-3 or the City, (d) does not have any substantial interest, direct or indirect, with or in (i) CFD 2022-3, (ii) the City, (iii) any owner of real property in CFD No. 2022-3, or (iv) any real property in CFD No. 2022-3, and (e) is not connected with CFD No. 2022-3 or the City as an officer or employee thereof, but who may be regularly retained to make reports to CFD No. 2022-3 or the City. “Price Point Study” means a price point study or a letter updating a previous price point study prepared by the Price Point Consultant which (a) sets forth the Plan Types constructed or expected to be constructed within CFD No. 2022-3, (b) sets forth the estimated number of constructed and expected residential dwelling units for each Plan Type, (c) sets forth such Price Point Consultant’s estimate of the Price Point for each Plan Type and (d) uses a date for establishing such Price Points that is no earlier than 30 days and no later than 180 days prior to the date the Price Point Study is delivered to the CFD Administrator pursuant to Section C herein. "Total Effective Tax Rate” means, for a Plan Type, the quotient of (a) the Total Tax Burden for such Plan Type divided by (b) the Price Point for such Plan Type, converted to a percentage. “Total Tax Burden” means, for any Unit of Single Family Residential Property, the sum of the Assigned

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Special Tax, together with ad valorem property taxes, special assessments, special taxes for any overlapping community facilities district, and any other taxes, fees and charges, and excluding services charges such as sewer and trash, which are collected by the County via property tax bills and which are payable from and secured by the property, assuming such Unit of Single Family Residential Property has been completed, sold and subject to such levies and impositions. Special Tax Reduction Calculation Prior to the issuance of the first series of CFD No. 2022-3 Bonds, the following steps shall be taken for each Land Use Class of Residential Property in CFD No. 2022-3: 1. At least 30 days prior to the expected Issuance Date of the first series of CFD No. 2022-3 Bonds, CFD No. 2022-3 shall cause a Price Point Study to be delivered to the CFD Administrator. 2. As soon as practicable after receipt of the Price Point Study, the CFD Administrator shall calculate the Total Tax Burden and Total Effective Tax Rate for each Plan Type. 3. Separately, for each Land Use Class of Residential Property, the CFD Administrator shall determine whether or not the Total Effective Tax Rate for all Plan Types in a Land Use Class is less than or equal to 2.00%. a. If the Total Effective Tax Rate for all Plan Types in a Lands Use Class is less than or equal to 2.00%, then there shall be no change in the Assigned Special Tax for such Land Use Class. b. If the Total Effective Tax Rate for any Plan Type in a Land Use Class is greater than 2.00%, the CFD Administrator shall calculate a revised Assigned Special Tax for such Land Use Class which revised Assigned Special Tax shall be the highest amount (rounded to the nearest whole dollar) that will not cause the Total Effective Tax Rate for any Plan Type in such Land Use Class to exceed 2.00%. c. For each Land Use Class group (i.e., A, B, C or D) as shown in Table 1, if the revised Assigned Special Tax amounts result in a situation in which the Assigned Special Tax for a particular Land Use Class of Residential Property would be less than the Assigned Special Tax for the numerical Land Use Class of Residential Property directly above it for such Land Use Class (e.g., the Assigned Special Tax for Land Use Class 1-B is less than the Assigned Special Tax for Land Use Class 2-B), then the Assigned Special Tax for the higher numbered Land Use Class shall be revised to be equal to the Assigned Special Tax for the lower numbered Land Use Class (i.e., the Assigned Special Tax for Land Use Class 2-B shall be revised to be equal to the updated Assigned Special Tax for Land Use Class 1-B). 4. If the Assigned Special Tax for any Land Use Class is revised pursuant to step 3.b. or 3.c. above, the CFD Administrator shall calculate a revised Backup Special Tax for all property. The revised Backup Special Tax per Acre shall be an amount (rounded to the nearest whole dollar) equal to the Backup Special Tax per Acre as set forth in Section C above, reduced by a percentage equal to the weighted average percentage reduction in the Assigned Special Taxes for all Land Use Classes of Residential Property resulting from the calculations in steps 3.a. through 3.c. above. The weighted average percentage will be calculated by taking the sum of the products of the number of units constructed or expected to be constructed in each Land Use Class multiplied by the percentage change in the Assigned Special Tax (pursuant to step 3.b. or 3.c. above) for each Land

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Use Class (or 0 for Land Use Classes that are not changing). This amount is then divided by the total number of units constructed or expected to be constructed and converted to a percentage. 5. If the Assigned Special Tax for any Land Use Class is revised pursuant to step 3.b. or 3.c. above, the CFD Administrator shall prepare and execute a Certificate of Reduction in Special Taxes substantially in the form of Attachment A hereto and shall deliver such Certificate of Reduction in Special Taxes to CFD No. 2022-3. The Certificate of Reduction in Special Taxes shall be completed for all Land Use Classes and shall set forth, as applicable, either (i) the reduced Assigned Special Tax for a Land Use Class as calculated pursuant to step 3.b. or 3.c., or (ii) the Assigned Special Tax as identified in Table 1 in Section C for a Land Use Class that was not revised as determined pursuant to step 3.a.; as well as either (i) the revised Backup Special Tax as calculated pursuant to step 4, or (ii) the Backup Special Tax as identified in in Section C.1.(b) that was not revised as determined pursuant to step 4. 6. If the Issuance Date of the first series of CFD No. 2022-3 Bonds is within 120 days of the date of receipt of the Price Point Study by the CFD Administrator, CFD No. 2022-3 shall execute the acknowledgement on such Certificate of Reduction in Special Taxes, dated as of the closing date of such Bonds, and upon the closing of such first series of Bonds, the Assigned Special Tax for each Land Use Class and the Backup Special Tax shall be, for all purposes, as set forth in such Certificate of Reduction in Special Taxes. If the Issuance Date of the first series of Bonds is not within 120 days of the date of receipt of the Price Point Study by the CFD Administrator, such Certificate of Reduction in Special Taxes shall not be acknowledged by CFD No. 2022-3 and shall, as of such date, be void and of no further force and effect. In such case, if subsequently a first series of CFD No. 2022-3 Bonds is expected to be issued, at least 30 days prior to the expected Issuance Date of such first series of CFD No. 2022-3 Bonds, the CFD Administrator shall cause a new Price Point Study to be delivered to the CFD Administrator and, following such delivery, steps 2 through 5 of this section shall be performed based on such new Price Point Study. 7. As soon as practicable after the execution by CFD No. 2022-3 of the acknowledgement on the Certificate of Reduction in Special Taxes, CFD No. 2022-3 shall cause to be recorded in the records of the County Recorder an Amended Notice of Special Tax Lien for CFD No. 2022-3 reflecting the Assigned Special Taxes and the Backup Special Tax set forth in such Certificate of Reduction in Special Taxes. 8. If the Assigned Special Tax is not required to be changed for any Land Use Class based on the calculations performed under step 3 above, there shall be no reduction in the Maximum Special Tax, and no Certificate of Reduction in Special Taxes shall be required. However, the CFD Administrator shall prepare and deliver to CFD No. 2022-3 a Certificate of No Reduction in Special Taxes substantially in the form of Attachment B hereto dated as of the closing date of the first series of Bonds that states that the calculations required pursuant to this Section J have been made and that no changes to the Maximum Special Tax are necessary. CFD No. 2022-3 and the CFD Administrator shall take no further actions under this Section J upon the earlier to occur of the following: (i) the execution of the acknowledgement by CFD No. 2022-3 on a Certificate of

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Reduction in Special Taxes pursuant to step 6; or (ii) the delivery by the CFD Administrator of a Certificate of No Reduction in Special Taxes pursuant to step 8. K. TERM The Special Tax shall be levied and collected as needed to fund the Annual Special Tax Requirement for up to 60 years from the initial levy of the Special Tax. In any event no Special Tax shall be levied for CFD. No. 2022-3 after the 2083/84 Fiscal Year.

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ATTACHMENT A CERTIFICATE OF REDUCTION IN SPECIAL TAXES COMMUNITY FACILITIES DISTRICT NO. 2022-3 1. Pursuant to Section J of the Rate and Method of Apportionment of Special Taxes attached to the Notice of Special Tax Lien recorded in the Official Records of the County of Los Angeles as Document No. on the day of , 20__, the CFD Administrator hereby reduces the Maximum Special Tax for Developed Property for [certain or all] Land Use Classes within CFD No. 2022-3. 2. The calculations made pursuant to Section J were based upon a Price Point Study that was received by the CFD Administrator on _________________. 3 . Table A-1 below shows the Assigned Special Tax for each Land Use Class after such reduction: Table A-1 Reduced Assigned Special Taxes for Developed Property Fiscal Year _____________ Land Use Class Description Building Square Feet Lot Square Feet Assigned Special Tax 1-A Single Family Attached Property >= 1,900 BSF N/A $____ per unit 2-A Single Family Attached Property < 1,900 BSF N/A $____ per unit 1-B Single Family Detached Property > 2,600 BSF < 5,000 LSF $____ per unit 2-B Single Family Detached Property 2,300 - 2,600 BSF < 5,000 LSF $____ per unit 3-B Single Family Detached Property < 2,300 BSF < 5,000 LSF $____ per unit 1-C Single Family Detached Property > 3,300 BSF 5,000 - 6,000 LSF $____ per unit 2-C Single Family Detached Property 3,000 - 3,300 BSF 5,000 - 6,000 LSF $____ per unit 3-C Single Family Detached Property < 3,000 BSF 5,000 - 6,000 LSF $____ per unit 1-D Single Family Detached Property >= 3,300 BSF > 6,000 LSF $____ per unit 2-D Single Family Detached Property < 3,300 BSF > 6,000 LSF $____ per unit 1-E Accessory Dwelling Unit N/A N/A See Below 2-E Non-Residential Property N/A N/A $____ per Acre The Assigned Special Tax for an Accessory Dwelling Unit shall be calculated as a percentage of the Assigned Special Tax for the primary Unit the ADU is accessory to, based on Building Square Footage. For example, if a primary Unit in Land Use Class 1-A of 2,000 BSF has an ADU of 800 BSF,

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the Assigned Special Tax for the ADU shall be calculated by the following steps: a. 800 BSF / 2,000 BSF = 0.40 or 40% b. $_______ Assigned Special Tax per Unit x 40% = $________ Assigned Special Tax for such ADU 4. The Backup Special Tax for each Assessor’s Parcel of Developed Property in CFD No. 2022-3 shall be equal to $______ after such reduction. 5. The Maximum Special Tax for each Assessor’s Parcel of Final Map Property and Undeveloped Property in CFD No. 2022-3 shall be $ per Acre. 6. Upon execution of the certificate by the City, the CFD Administrator shall cause an amended notice of special tax lien for CFD No. 2022-3 to be recorded reflecting the modifications set forth herein. 7. By execution hereof, the undersigned acknowledges, on behalf of the City and CFD No. 2022-3, receipt of this certificate and modification of the Rate and Method of Apportionment of Special Taxes as set forth in this certificate. Submitted CFD ADMINISTRATOR By: Date: ___________________ Community Facilities District No. 2022-3 of the City of Palmdale By: Date as of : ----------------------------------- ----- [closing date of Bonds]

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ATTACHMENT B CERTIFICATE OF NO REDUCTION IN SPECIAL TAXES COMMUNITY FACILITIES DISTRICT NO. 2022-3 1. All calculations required pursuant to Section J of the Rate and Method of Apportionment have been made based upon a Price Point Study that was received by the CFD Administrator on _________________. 2. Total Effective Tax Rate for all Plan Types in all Land Use Classes in all Zones is less than or equal to 2.00%. 3. The Maximum Special Tax for Developed Property within CFD No. 2022-3, including the Assigned Special Taxes set forth in Sections C.1.(a) and the Backup Special Tax set forth in Section C.1.(b) of the Rate and Method of Apportionment, shall remain in effect and not be reduced. Submitted CFD ADMINISTRATOR By: Date as of: _______ [closing date of Bonds]

C-1

EXHIBIT C

ASSESSOR’S PARCEL NUMBERS AND OWNER OF LAND WITHIN

CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)

Names of Property Owner
Los Angeles County
Assessor’s Parcel Nos.

RdR Development Holdings, LLC
1717 Main Street, Suite 3900
Dallas, Texas 75201
3206-020-017
3206-026-005
3206-026-007
3206-027-002
3206-027-004
3206-027-005
3206-027-006
3206-027-007
3206-027-008
3206-027-009
3206-027-010
3206-027-012

CITY OF PALMDALE

COUNTY OF LOS ANGELES, CALIFORNIA
RESOLUTION NO. CC 2022-109

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE OF FORMATION OF THE CITY OF PALMDALE COMMUNITY FACILITIES DISTRICT NO. 2022-3 (RITTER RANCH PHASE 1 PUBLIC FACILITIES), AUTHORIZING THE LEVY

OF A SPECIAL TAX WITHIN THE DISTRICT, PRELIMINARILY ESTABLISHING AN

APPROPRIATIONS LIMIT FOR THE DISTRICT, AND APPROVING ACQUISITION

AGREEMENT
WHEREAS, on September 21, 2022, this City Council adopted Resolution No. CC 2022-100 entitled “A Resolution of the City Council of the City of Palmdale Declaring Its Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes Therein – Ritter Ranch Phase 1 Public Facilities” (the “Resolution of Intention”), stating its intention to form the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) (the “District”), pursuant to the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 and following of the California Government Code (the “Code”); and
WHEREAS, the Resolution of Intention, incorporating by reference a map of the proposed boundaries of the District and describing the types of facilities eligible to be financed by the District (the “Facilities”), the rate and method of apportionment of the special tax to be levied within the District (the “Rate and Method”) to pay costs of the Facilities and the principal and interest on bonds proposed to be issued for the District to finance costs of the Facilities, is on file with the City Clerk of the City of Palmdale (the “City”) and the provisions thereof are incorporated herein by this reference as if fully set forth herein; and
WHEREAS, on this date, this City Council held a noticed public hearing as required by the Code and the Resolution of Intention relative to the proposed formation of the District; and
WHEREAS, at the hearing all interested persons desiring to be heard on all matters pertaining to the formation of the District and the Facilities eligible to be funded by the District, and the levy of said special tax, were heard and a full and fair hearing was held; and
WHEREAS, at the hearing evidence was presented to this City Council on the matters before it, including a report by the Acting Director of Public Works of the City (the “Report”) as to the costs of the Facilities to be funded by the District, a copy of which Report is on file with the City Clerk, and this City Council at the conclusion of the hearing was fully advised regarding the District; and
WHEREAS, written protests with respect to the formation of the District, the Facilities to be funded by the District and the Rate and Method have not been filed with Resolution No. CC 2022-109
October 24, 2022

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the City Clerk by fifty percent (50%) or more of the registered voters residing within the territory of the District or the owners of one-half (1/2) or more of the area of land within the District and not exempt from the levy of the special tax; WHEREAS, the special tax proposed to be levied in the District, as set forth in the Rate and Method, has not been eliminated by protest by fifty percent (50%) or more of the registered voters residing within the territory of the District or the owners of one-half (1/2) or more of the area of land within the District and not exempt from the special tax; and
WHEREAS, there has been prepared and presented to this City Council an Acquisition Agreement (the “Acquisition Agreement”) to be entered into by the City for the District, and RdR Development Holdings, LLC, the entity that is expected to be constructing the Facilities described therein, and this City Council now desires to approve the execution and delivery of the Acquisition Agreement.

NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE CITY COUNCIL OF THE CITY OF PALMDALE AS FOLLOWS:

SECTION 1. The foregoing recitals are true and correct.

SECTION 2. The proposed special tax to be levied within the District has not been precluded by majority protest pursuant to Section 53324 of the Code.

SECTION 3. All prior proceedings taken by this City Council in connection with the formation of the District and the levy of the special tax on property in the District have been duly considered and are hereby found and determined to be valid and in conformity with the requirements of the Code.

SECTION 4 . The community facilities district designated “City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities)” is hereby established pursuant to the Code.

SECTION 5. The boundaries of the District as set forth in the map of the District recorded on September 26, 2022, in Book 196 at page 37 of Maps of Assessment and Community Facilities Districts in the office of the County Recorder for the County of Los Angeles (instrument no. 20220937555), are hereby finally approved, are incorporated herein by this reference and shall be the boundaries of the District.

SECTION 6. The types of Facilities to be funded by the District are as described in Exhibit A to the Resolution of Intention, which Exhibit is by this reference incorporated herein.

SECTION 7. Except to the extent that funds are otherwise available to the District to pay for the costs of the Facilities and/or to pay the principal and interest as it becomes Resolution No. CC 2022-109
October 24, 2022

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due on bonds of the District issued to finance the Facilities, a special tax sufficient to pay such costs, secured by recordation of a continuing lien against all non-exempt real property in the District, will be levied annually on property located within the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council or its designee shall determine, including direct billing of the affected property owners. The proposed Rate and Method, in sufficient detail to allow each landowner within the District to estimate the maximum amount such owner will have to pay, is set forth in Exhibit B attached to the Resolution of Intention, which Exhibit is by this reference incorporated herein. Notwithstanding the foregoing, under no circumstances may the special tax on a Parcel of Developed Property that is in private residential use be increased in any Fiscal Year (as such capitalized terms are used in the Rate and Method) as a consequence of delinquency or default in payment of the special tax levied on another Parcel or Parcels by more than ten percent (10%) above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults.

This City Council hereby finds that the basis for the levy and apportionment of the special tax, as set forth in said Rate and Method, is reasonable.

This City Council hereby further finds that the provisions of Sections 53313.6, 53313.7 and 53313.9 of the Code (relating to adjustments to ad valorem property taxes and schools financed by a community facilities district), are inapplicable to the District.

SECTION 8. The Finance Director of the City of Palmdale, 38300 Sierra Highway, Suite D, Palmdale, California 93550, telephone number (661) 267-5440 is the officer of the City that will be responsible for preparing annually a current roll of special tax levy obligations by assessor’s parcel number and which will be responsible for estimating future special tax levies pursuant to Section 53340.2 of the Code.

SECTION 9. Upon recordation of a notice of special tax lien pursuant to Section 3114.5 of the California Streets and Highways Code, a continuing lien to secure each levy of the special tax shall attach to all nonexempt real property in the District and this lien shall continue in force and effect until the special tax obligation is prepaid and permanently satisfied and the lien canceled in accordance with law or until collection of the tax by the City ceases.

SECTION 10 . In accordance with Section 53325.7 of the Code, the annual appropriations limit, as defined by subdivision (h) of Section 8 of Article XIII B of the California Constitution, of the District is hereby preliminarily established at $75,000,000 and said appropriations limit shall be submitted to the qualified electors of the District as hereafter provided. The proposition establishing said annual appropriations limit shall become effective if approved by the qualified electors voting thereon and shall be adjusted in accordance with the applicable provisions of Section 53325.7 of the Code.

Resolution No. CC 2022-109
October 24, 2022