CC09 — Rancho Mirage City Council, May 2, 2024 (part 2 of 3)

S TATE OF CALIF ORNIA

REFE RENCE IS MADE TO THAT B OUNDARY MAP OF THE CO MMUNITY FACILITIES DISTRICT NO . 5 (SECTION 31) OF T HE Car OF RANCHO MIRAGE RECORDED WITH THE RI VERSIDE COUN TY RE CORDER'S OFFICE ON NOVEMBER 18, 2021 IN BOOK 87 OF MAPS OF ASSE SSME NT AND C OMMUNITY FACILITIES DISTRICTS, PAGE 91 AS INSTRUMENT NO .2221-0888340

THE LINES AND DIMENSIONS OF EACH LOT OR PARCEL SHOWN ON THIS DIAGRA M SHALL BE THOSE LINES AND DIMENSIONS AS SHOWN ON TH5 RI VERSIDE COUNTY ASSESSOR'S MAPS FOR THOSE PARCELS LISTED.

THE RIVERSIDE COU NTY ASSESSOR'S MAPS SHALL GOVERN FOR ALL DETAILS CONCERNING THE LINES AND DIMENSIONS OF SUCH LOTS OR PARCELS.

MAP REFERENCE ASSESSOR'S PARCEL

NUMBER NU MBER
1 685-220-011
2 685-220-012
Portion of 685-220-013 and -025
685-220-014
685-220-015 and Portion of -017
6 685-220-016
7 Porti on of 685-220-017
8 Portion of 685-220-025 and -013
9 685-220-026
10 695-220-027
1 685-220-028
2 685-220-029
13 j 685-220-030
14 674-430-017
1IW I LLDAN
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Deta il "A"

A MENDED M AP OF BOUND ARIES OF
CO MMUNITY FACILITIES DISTRICT NO. 5 (SECTION 31)

CITY OF RANCHO MIRA GE

COUNTY OF RIVERSIDE

STATE OF CALIFORNIA
For additi on al detail on the lots and dimension of parcels shown, ref erence is mad e to Tract Map No. 38291 rec orded on July 12, 2023 as document number 2023-0202826. Additional refer ence is made to Lot Line Adjustme nt No. 22-03 rec ord ed as docum ent number 2023-0073712 on March 14, 2023 and Lot Line Adjustment No . 23-01 r ecorded as docum ent number 2023- 0131666 on May 8,2023 .

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Improvement Area N o. 1 to Impr ov ementAr ea N o.4
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Improvem ent Area No. 1 to NAP
NAP. to Improveme ntArea N o. 1
Remains in Improvement Ar ea No. 1
//'. Remains in Improvement Ar ea No. 4
Original Lot Line
Detail "B"

W'WI LLDAN
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4160-0370-8238.9

Grading has been completed for all of the land within Improvement Area No. 1, as well as the grading for the Development's primary amenity areas. Within Improvement Area No. 1, a sales center has been completed and is open to the public. Further, construction of Improvement Area No. 1's largest park has been completed and the main gate/entry house has also been completed. Landscaping of the perimeter of Improvement Area No. 1 and internal landscaping are under construction.

In addition, offsite water and sewer improvements have been completed to serve Phase 1A and satisfy residential permit and closing requirements. In -tract subdivision improvements for Phase 1A are complete or nearing completion, with storm drain system, sanitary sewer system, water distributions system, and non -potable water lines and pumping systems completed, except for turnover to the applicable authority. Offsite and onsite power, which is a requirement for receipt of certificate of occupancy, as well as offsite street and signal improvements have commenced with anticipated completion by August 2024.

A well supporting construction operations as well as initial landscape irrigation has been installed with a second well anticipated to be completed in July 2024. The backbone infrastructure necessary to serve Phase 1A, including the offsite sewer connection and offsite water tie ins have been substantially completed. As of May 1, 2024, the remaining onsite infrastructure to complete the development within Phase lA consists of street improvements, street capping, landscaping and onsite power. The Landowner expects to complete the remaining infrastructure in Phase 1A in mid -2024 and the in -tract improvements for Phase 1B in mid to late 2024. The private club is expected to be complete in early to mid -2025. The Master Developer does not expect the timing of completion of such remaining infrastructure to impact the ability of the Merchant Builders or any additional merchant builders to construct homes within Improvement Area No. 1.

Land Use and Plans for Residential Development
The following table summarizes the plans for residential development in Improvement Area No. 1.

Summary of Lot Categories
Land Use
Conventional Lot
Conventional Lot
Conventional Lot
Large Lot
Large Lot
Large Lot
Condos
Description
50's
60's
70's
90's
120's
135's
Type
Age -Qualified & Multi -Generational
Age -Qualified & Multi -Generational
Age -Qualified & Multi -Generational
Multi -Generational
Multi -Generational
Multi -Generational
Lot
Approx. Size No. of
Dimensions (SF) Lots Builder
50 x 110 5,500 184 Shea
60 x 120 7,200 100 Shea
70 x 130 9,100 120 Davidson
90 x 140 12,600 43 Woodbridge
120 x 150 18,000 33 TBDt1
135 x 200 27,000 22 Davidson
2,000 150 TBDt2>
652
(1) Improvement Area No. 1 includes large lots with base dimensions that range from 12,600 to 27,000 square feet and conventional lots with base dimensions that range from 5,500 to 9,100 square feet. The sizes of the lots are typically greater than their base dimensions as a result of the shape of the lots and street planning that lead to large size lots by design. (2) [As of May 1, 2024, the Landowner was negotiating a purchase and sale agreement with a fourth merchant builder. The Landowner expects the takedown of lots to happen in the same fashion as sales to Davidson Communities and Woodbridge Pacific as further described below. There is no guarantee that the fourth merchant builder will enter into the purchase and sale agreement as planned.] (3) As of May 1, 2024, the condominium parcels were in the planning stage and the Landowner was actively engaged in discussions with potential condominium developers regarding condominium development options. The Landowner expects to enter into one or more agreements with one or more condominium developers later in 2024. There is no guarantee that one or more condominium developers will enter into any such sale agreement as planned.
37 4160-0370-8238.9

Sources: Landowner.

The master plan for Improvement Area No. 1 was developed to create visually interesting streetscapes and routing, to provide access to the main Development amenities and to accommodate parks and attractive landscaping. As a result, the lot shapes in Improvement Area No. 1 by design are not perfectly rectangular, and on average they contain [25]% more land square footage than the base dimensions of the lot. For example, a lot that is called a 60's lot (60 feet by 120 feet base dimensions) implies a base lot size of 7,200 square feet). In Improvement Area No. 1, many of the 60's lots exceed [7,200] square feet of land, with the largest of the 60's at [XX] square feet of land. This "excess" land can allow for significant options and upgrades such as a casita or pool house, which can increase the base square footage of the home. For example, a typical casita may add approximately 500 square feet to the home. Further, certain parts of Improvement Area No.1 allow for two story homes. Builders can take advantage of this by offering an option for a "second story pop up" or bonus room on the second floor, which can also increase the base square footage of the home.] Improvement Area No. 1 will also include approximately 150 condominium units within two or three neighborhoods, many of which will have lagoon frontage.

As of March 6, 2024, Shea Homes was the only builder actively selling homes at the project.

Davidson Communities and Woodbridge Pacific are expected to commence sales in May 2024. As of March 6, 2024, ten sales were pending. Davidson Communities plans to enter into initial lot sale and home construction contracts with homebuyers in approximately May 2024 and close escrow on the first lots to individual homebuyers in June or July 2024. Model home construction is expected to start by July 2024 and Davidson Communities will own such model homes.

The following page contains an aerial photo of the area included within the boundaries of Improvement Area No. 1.
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Market Absorption
In order to determine the projected absorption of the residential property planned for completion within Improvement Area No. 1, the City, on behalf of the Community Facilities District, engaged the Market Absorption Analyst to perform a comprehensive analysis of the product mix characteristics as well as the macroeconomic and microeconomic factors that are expected to influence the absorption of the current and forthcoming residential products within Improvement Area No. 1. In connection therewith, the Market Absorption Analyst delivered the Market Absorption Study, attached hereto as APPENDIX C — "MARKET ABSORPTION STUDY."
In the Market Absorption Study, the Market Absorption Analyst concluded, based on statistical comparison of recent and currently active projects in the Coachella Valley to the current and forthcoming residential projects in Improvement Area No. 1, that the market is currently under -supplied relative to historical levels and can support new projects such as the Development coming to market, and that the absorption prospects for future closings of the 502 for -sale homes in Improvement Area No. 1 are generally favorable. The Market Absorption Analyst also reports that the amenity package, including the lagoon, and Disney's involvement and branding in the community are both expected to contribute to significant pricing and absorption premiums relative to other master planned communities in the Coachella Valley. According to the Market Absorption Study, the pricing premium associated with the Disney brand is expected to be approximately 25% as compared to non -Disney branded communities, and an additional 6-14% premium for the contemplated lagoon of the size envisioned for the Development, as compared to communities with no lagoon and fewer amenities. To forecast premiums associated Disney branding, the Market Absorption Study analyzed home sales within the Celebration by Disney community in Orlando (homes constructed between 1996 and 2017) with two nearby non -branded residential communities (homes constructed between 1992 and 2023). The market study found branding premiums of approximately 25% at Celebration after adjusting for other factors, such as lot size and amenities.

The Market Absorption Study identified the target buyer for residences in Improvement Area No. 1 as primarily second home buyers from coastal Southern California including Los Angeles County, Orange County, and San Diego County. Additional buyers will come from outside of the region, including the Northern California Bay Area, Midwest, Pacific Northwest, and Canada. These buyers will be mostly middle -age and mature. Some primary home buyers, consisting mostly of mature households, were also considered, and the assumed class included both primary and second home buyers. Household income levels are included in the analysis.

With respect to the 502 detached homes to be offered in Improvement Area No. 1, the Market Absorption Analyst projects estimated total annual home sales from 2024 through 2027 in the 99 — 223 range, averaging 157. The year 2025 is projected to be the peak year for absorption, with 8 single-family neighborhoods selling for at least three quarters of the year. Estimated annual sales drop notably after 2025 as single-family neighborhoods sell out, as currently projected for the second quarter of 2027. Given the number of product offerings and the uniqueness of the community, the Market Absorption Analyst advised that average annual sales of 157 in peak years is reasonable.

Improvement Area No. 1 is also currently planned for three condominium sites totaling approximately 13 acres. Specifications for the condominiums had not yet been determined at the time of completion of the Market Absorption Analysis. For home pricing purposes, the Market Absorption Analyst, based on information provided by the Landowner, has determined parameters for the potential condominium products on three sites, including lagoon frontage (for two of the sites) and non -lagoon frontage (for one site), and has projected absorption of these two potential condominium products to commence in the third quarter of 2026 and to conclude in the second quarter of 2028 (assuming their sales to commence in the third quarter of 2026).
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The Market Absorption Analyst's projected absorption schedule represents home sales, not closings, and assumes a steady supply of lots are made available to support the sales pace. These projections do not account for potential seasonality of sales within a given year, but the annualized pace remains the same regardless of seasonality. It is possible that unforeseen market forces could impact sales, either up or down, as described in the Market Absorption Study. Sales have already begun for the first Shea Homes neighborhoods; however, their model homes are not yet open. Woodbridge Pacific and Davidson Communities likewise plan to begin sales without completed model homes. It could take 6 to 12 months for models in the first neighborhoods to be completed. New home communities often experience an increase in sales volumes after the opening of model homes, but sometimes earlier sales efforts receive a boost in sales from working off of extensive interest lists. In addition, crystal lagoon communities typically see a boost in sales following the completion and opening of the lagoon. Although this likely will happen when the lagoon opens as an intangible benefit to Improvement Area No. 1 as well, the Market Absorption Analyst has otherwise assumed steady sales over the sales life of each neighborhood.

As noted in the Market Absorption Study, the peak construction of new homes in the Coachella Valley was in the mid -2000s, when there were three times as many active projects as there are today, and new home sales topped 5,000/year for three straight years. Due to a combination of factors, the market has not returned to those levels since. One of the biggest reasons that total sales are lower now than at the peak is lack of supply, both on a total project count basis and on the number of large master plans offering multiple product lines of homes. In the mid -2000s, there were more than a dozen large-scale communities selling. Today, there are just a handful, including the Development, and the Development is expected to benefit from this supply -demand dynamic. The Market Absorption Analyst expects that sales figures could be higher in the Coachella Valley if more large-scale communities were open and selling.

Appraised Value
In connection with the offering and sale of the Series 2024 Bonds, an MAI appraisal (the "Appraisal") of the land and existing improvements within Improvement Area No. 1 was prepared by Integra Realty Resources, Newport Beach, California (the "Appraiser"). The Appraisal is dated April 11, 2024, and entitled "Market Value Appraisal City of Rancho Mirage CFD No. 5 (Section 31) — Improvement Area No. 1." A complete copy of the Appraisal is attached hereto as APPENDIX B — "APPRAISAL REPORT." See "IMPROVEMENT AREA NO. 1 — Appraised Value." The Appraisal considered the Market Absorption Study, prepared for the City of Rancho Mirage by Clarity Real Estate Advisors, in its analysis. As noted in the Appraisal, Shea Homes recently commenced sales of the Cottage and Grand product lines and has 10 homes in -contract as of March 6, 2024 and, based on the pace of sales data at competitive properties, the data presented in the Market Absorption Study, and the influence of Disney on the marketing process in Improvement Area No. 1, the Appraiser has concluded absorption as follows:
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Appraiser's Summary of Representative Homes by Lot Type Estimated
Concluded Estimated Sales per 6
Typical Typical Lot Base Price per Sales per Month
Lot Type Home SF SF Pricing SF Month Period
50's Cottage Collection 2,470 5,000 $1,740,000 $704 4 24 60's Grand Collection 3,200 7,200 $2,250,000 $703 3 18
70's Grand Collection 3,420 9,100 $2,650,000 $775 2 to 3 16 90's Estate Collection 3,900 12,600 $3,160,000 $810 2 12 120's Estate Collection 4,160 18,000 $3,850,000 $925 2 12 135's Estate Collection 5,730 29,700 $5,400,000 $942 1 to 2 8 Condo —No Lagoon Frontage 1,900 Attached $1,390,000 $732 3 to 4 21 Condo —Lagoon Frontage 2,100 Attached $1,860,000 $886 3 to 4 21 In concurrence with the Market Absorption Analyst, the Appraiser estimates buildout of the 502 homes to occur over the next approximately three years (by the second quarter of 2027), and has determined parameters for the potential condominium products on three sites, including lagoon frontage (for two of the sites) and non -lagoon frontage (for one site), and has projected absorption of these two potential condominium products to commence in the third quarter of 2026 and to conclude in the second quarter of 2028. The Appraiser notes that absorption at certain previously presented active and recently sold out projects described in the Appraisal ranged from 0.50 to 15.0 sales per month, with an average of 2.9 sales per month.

According to the Appraisal Report, the projected absorption schedule represents home sales, not closings, and assumes a steady supply of lots are made available to support the sales pace. These projections do not account for potential seasonality of sales within a given year, but the annualized pace remains the same regardless of seasonality. It is possible that unforeseen market forces could impact sales, either up or down, as described in the Appraisal Report. Sales have already begun for the first Shea Homes neighborhoods; however, their model homes are not yet open. Woodbridge Pacific and Davidson Communities likewise plan to begin sales without completed model homes. It could take 6 to 12 months for models in the first neighborhoods to be completed. New home communities often experience an increase in sales volumes after the opening of model homes, but sometimes earlier sales efforts receive a boost in sales from working off of extensive interest lists. In addition, as noted in Market Absorption Study, and referenced in the Appraisal Report, crystal lagoon communities typically see a boost in sales following the completion and opening of the lagoon. Although this likely will happen when the lagoon opens as an intangible benefit to Improvement Area No. 1 as well, the Appraisal Report has otherwise assumed steady sales over the sales life of each neighborhood.

The Appraisal also provides an estimate of the market value of the property in Improvement Area No. 1, subject to a hypothetical condition. The stated hypothetical condition is that proceeds from the Series 2024 Bonds are available to finance certain public improvements and impact fees.

According to the Appraisal, as of the Date of Value, the aggregate value of the residential property subject to the Special Tax in Improvement Area No. 1, was $304,903,000, which represented property owned by the Landowner and Shea Homes in its current condition (with the estimate for the Landowner based upon a discounted cash flow analysis and for Shea Homes based upon the land residual analysis), and assuming its availability of proceeds from the Series 2024 Bonds are available to finance certain public improvements and impact fees. The Appraisal contains various assumptions and conditions and should be read in its entirety by those interested in an investment in the Series 2024 Bonds.

As noted in the Appraisal, the Development reflects the first -ever Storyliving by Disney' branded community. As such, there are no directly comparable communities available to define the impact of the 42 4160-0370-8238.9

Disney branding, but noting in its evaluation, however, that the land in Improvement Area No. 1 in its current state will benefit from Disney's visibility, reputation, community theming, and skillful placemaking. In addition, a premium was considered allocable to the Crystal Lagoon feature and other amenities. Further, the concluded value set forth in the Appraisal includes premiums for the lagoon and for Disney's involvement, such premiums being speculative as first time developments and features, not directly comparable in the Coachella Valley (or anywhere nearby). See APPENDIX B — "APPRAISAL REPORT."
The Appraisal is based upon a variety of assumptions and limiting conditions that are described in the Appraisal. None of the Community Facilities District, the City, the Municipal Advisor, or the Underwriters make any representation as to the accuracy of the Appraisal. There is no assurance that property within Improvement Area No. 1 can be sold for the prices set forth in the Appraisal or that any parcel can be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by the owner thereof. See "THE COMMUNITY FACILITIES DISTRICT," "SPECIAL RISK FACTORS — Land Values" and APPENDIX B — "APPRAISAL REPORT" herein.

Remaining costs to completion are a significant part of the Appraiser's analysis of the market value of the [substantially undeveloped land]. Costs are evaluated as follows.

Per Unit Amounts
50's — 90's 120's / 135's Condos
Units 447 55
CVWD Fees $10,895 $14,371
CVWD Credits (6,505) (6,505)
DIF 7,338 7,363
Average School Fees 10,955 22,935
Total $22,682 $38,164
150
$10,895
(6,505)
7,335
9,580
Total
Fees
652
$ 7,294,720
(4,241,260)
4,785,195
7,595,068
$21,305 $15,433,722
CFD
Eligible
$7,294,720
1,999,684
$9,294,404
The Appraisal assumes that the Series 2024 Bonds have been sized to generate $40 million in net proceeds to acquire eligible facilities or to construct public facilities. The Landowner has represented that, as of the date of value, it had approximately $45 million of remaining costs to complete infrastructure improvements serving Improvement Area No. 1. Of these, $12.8 million may be part of the amounts that are paid by the Series 2024 Bonds or a future series of parity bonds. The balance of the eligible costs of Facilities are part of a reported $ million that as of the date of value had been expended by the Landowner Affiliated Entities on improvements supporting development of the property in Improvement Area No. 1.
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Remaining Costs to Complete
City CFD
Direct Construction Total Costs Funding Net Costs Eligible Net of CFD Water and Sewer Improvements $10,512,695 $1,500,000 $ 9,012,695 $ 9,012,695 -- Street Improvements 8,968,864 8,968,864 $ 8,968,864
Perimeter Wall 2,126,333 2,126,333 2,126,333
Dry Utilities 3,171,040 -- 3,171,040 2,000,000 1,171,040 Offsite Wire Undergrounding 3,130,554 2,000,000 1,130,554 1,130,554 Landscaping 13,725,450 -- 13,725,450 -- 13,725,450
Erosion Control/Temp Power/Fencing/Other 1,416,200 -- 1,416,200 -- 1,416,200 Total $43,041,134 $3,500,000 $39,551,134 $12,143,248 $27,407,886 Indirect Construction 1,948,866 1,948,866 632,778 1,316,088 TOTAL $45,000,000 $3,500,000 $41,500,000 $12,776,027 $28,723,973 The Appraisal notes that the Development will have a Homeowner's Association (HOA) that will be responsible for common area maintenance, landscaping, and the extensive amenities. The Landowner estimates that dues will be approximately $448 per home, per month, for detached homes with an additional approximately $71 per month for age qualified homes. HOA dues for the condominiums are estimated at $650 per month. Each of these amounts as subject to change. The Appraiser's estimate of value presumes that future homeowners will have limited HOA fees and costs and may elect to incur certain membership fees in order to have full access to the amenities. The assumption is that the private club and the commercial development will contribute funds to offset the costs of operations and maintenance of the principal amenities and HOA costs not attributable to homeowners. [Higher than expected HOA fees may materially impact future homebuyers and property valuation.]
[As further described in the Appraisal, the Landowner has existing sale and builder agreements with Merchant Builders. According to the agreement with Shea Homes, the Merchant Builder acquires each lot from the Landowner as purchase agreements with homebuyers are executed. The homebuyer then closes escrow with Shea Homes upon completion of home construction. The agreements with Davidson Communities and Woodbridge Pacific stipulate the homebuyer closes escrow on the lot from the Merchant Builder simultaneously with the Merchant Builder acquiring the lot from the Landowner prior to commencement of home construction. These in -place arrangements with the Builders have unique provisions relative to most market transactions and fundamentally represent an ongoing business relationship between the Master Developer and the Merchant Builders. The Appraiser notes that its valuation is based on the widely supported market model of outright transfers from the Landowner to merchant builders on a fee simple transfer of title.]
A complete copy of the Appraisal is attached hereto as APPENDIX B — "APPRAISAL REPORT." See "IMPROVEMENT AREA NO. 1 — Appraised Value" for various tables indicating value -to -lien ratios by development status and product type of the homes permitted and expected to be constructed in the Community Facilities District.

Rate and Method of Apportionment of Special Tax
General' The amount of Special Tax that the Community Facilities District may levy in any year is strictly limited by the Maximum Special Taxes set forth in the Rate and Method. Special Taxes will be levied on each parcel in the Community Facilities District subject to such Special Taxes as set forth in the Rate and Method. Special Taxes include Special Tax, levied annually, and the Backup Special Tax, levied only under specified circumstances set forth in the Rate and Method. See "— Backup Special Tax" below, 44 4160-0370-8238.9

and APPENDIX A — "AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
As provided in the Rate and Method, each Assessor's Parcel within Improvement Area No. 1 will be classified as Taxable Property or Exempt Property. In addition, all Taxable Property will further be classified as Developed Property, Approved Property, Undeveloped Property or Provisional Property, and all such Taxable Property shall be subject to the levy of Special Taxes in accordance with the Rate and Method. Furthermore, each Assessor's Parcel of Developed Property shall be classified according to its applicable Land Use Class based on its Building Square Footage.

As provided in the Rate and Method, for each Fiscal Year, the CFD Administrator shall levy the Special Tax on all Taxable Property in accordance with the following steps:

Step 1: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax as needed to satisfy the Special Tax Requirement.

Step 2: If additional monies are needed to satisfy the Special Tax Requirement after Step 1 has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Approved Property in an amount up to 100% of the Maximum Special Tax for Approved Property as needed to satisfy the Special Tax Requirement.

Step 3: If additional monies are needed to satisfy the Special Tax Requirement after Step 2 has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property in an amount up to 100% of the Maximum Special Tax for Undeveloped Property as needed to satisfy the Special Tax Requirement.

Step 4: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax amount determined in Step 1 shall be increased in equal percentages for each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined by application of the Backup Special Tax up to an amount equal to 100% of the Maximum Special Tax as needed to satisfy the Special Tax Requirement.

Step 5: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Provisional Property in an amount up to 100% of the Maximum Special Tax for Provisional Property as needed to satisfy the Special Tax Requirement.

Notwithstanding the above, under no circumstances will the Special Tax levied in any Fiscal Year against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased as a result of a delinquency or default in the payment of the Special Tax applicable to any other Assessor's Parcel within Improvement Area No. 1 by more than ten percent (10%) above what would have been levied in the absence of such delinquencies or defaults.

The Maximum Special Tax for Developed Property shall be the greater of the Assigned Special Tax for Developed Property or the Backup Special Tax for Developed Property. The Assigned Special Tax applicable to an Assessor's Parcel classified as Developed Property commencing in Fiscal Year 2022-23 shall be determined pursuant to Table 1 of the Rate and Method and based upon the assumed square footage homes described in this Official Statement ranges from $4,053 to $11,383 per Residential Unit of single - 45 4160-0370-8238.9

family detached property and ranges from $2,601 to $4,131 for a condominium unit. The Assigned Special Tax is subject to annual increases of 2% effective each July 1, until July 1, 2032, as described below.

In some instances, an Assessor's Parcel may contain both Undeveloped Property and Developed Property. Furthermore, Developed Property may contain more than one Land Use Class based on a Building's square footage. In such cases, the Acreage of the Assessor's Parcel will be allocated between Developed Property and Undeveloped Property based on the portion of the Assessor's Parcel for which Building Permits had been issued prior to May 1st of the prior Fiscal Year and the portion of the Assessor's Parcel for which Building Permits had not been issued prior to May 1st of the prior Fiscal Year. The Acreage that is considered Developed Property will be allocated between Residential Property and Non - Residential Property based on the site plan or similar document or exhibit as reasonably determined by the CFD Administrator. The Maximum Special Tax that can be levied on such Assessor's Parcel will be the sum of the Maximum Special Tax that can be levied on each type of property located on that Assessor's Parcel.

The Maximum Special Tax for Provisional Property, Approved Property, and Undeveloped Property shall be determined pursuant to Table 3 of the Rate and Method (shown in Fiscal Year 2022-23 amounts) by amount per Acre for each Zone (1, 2, or 3), at $17,460 per Acre in Zone 1, $20,449 per Acre in Zone 2, and $51,201 per Acre in Zone 3. These Maximum Special Tax per Acre amounts are subject to annual increases effective each July 1, until July 1, 2032, as described below.

The Backup Special Tax for Developed Property shall be determined pursuant to Table 2 of the Rate and Method (shown in Fiscal Year 2022-23 amounts) by amount per Acre for each Zone (1, 2, or 3), at $17,460 per Acre in Zone 1, $20,449 per Acre in Zone 2, and $51,201 per Acre in Zone 3. For the purpose of calculating the Backup Special Tax, the Acreage applicable to Assessor's Parcels of Single Family Property created by recordation of a condominium plan shall be computed from the Acreage of the Lot on which the Residential Unit is located, with the Acreage for such Lot allocated equally among all of the Residential Units located or to be located on such Lot. The Backup Tax is subject to annual increases effective each July 1, until July 1, 2032, as described below.

The CFD Administrator shall classify as Exempt Property (i) Assessor's Parcels of Public Property, (ii) Assessor's Parcels of Property Owner Association Property, or (iii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, if any, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, and (v) Assessor's Parcels classified as Club Property as determined reasonably by the CFD Administrator, subject however to the minimum taxable acreages set forth in Table 4 of the Rate and Method.

The foregoing defined terms have the meaning set forth in the Rate and Method and for reference are reproduced below.
"Approved Property" means all Assessor's Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) for which a Building Permit has not been issued on or prior to the May 1st preceding the Fiscal Year in which the Special Tax is being levied. 46 4160-0370-8238.9

"Assigned Special Tax" means the Special Tax of that name described in Section 3.A of the Rate and Method.
"Backup Special Tax" means the Special Tax of that name described in Section 3.B of the Rate and Method.
"Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Provisional Property, for which a Building Permit was issued prior to May 1st of the previous Fiscal Year and as more particularly provided in the Rate and Method.
"Maximum Special Tax" means for each Assessor's Parcel, the maximum Special Tax, determined in accordance with Sections 3.0 and 3.D of the Rate and Method, which may be levied in a given Fiscal Year on such Assessor's Parcel of Taxable Property.
"Provisional Property" means all Assessor's Parcels of Public Property, Property Owner Association Property, Club Property or property that would otherwise be classified as Exempt Property pursuant to the provisions of Section 8 of the Rate and Method, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum Acreage as set forth in Section 8.
"Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued for the purpose of constructing one or more Residential Units. "Residential Unit" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental, separate from adjacent residential dwelling units. "Special Tax Requirement" means that amount required in any Fiscal Year to: (i) pay regularly scheduled Debt Service on all Outstanding Bonds; (ii) pay periodic costs on the Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on the Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) accumulate funds to pay directly for acquisition or construction of facilities, provided that the inclusion of such amount does not cause an increase in the Special Tax to be levied on Approved Property, Undeveloped Property, or Provisional Property, until the date that all Bonds have been issued; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. "Taxable Property" means all of the Assessor's Parcels within the boundaries of Improvement Area No. 1, which are not exempt from the levy of the Special Tax pursuant to law or Section 8 of the Rate and Method.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Approved Property or Provisional Property.

The Special Tax shall be levied as long as necessary to meet the Special Tax Requirement, provided that the Special Tax shall not be levied after Fiscal Year 2064-65. The Special Tax will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined that all required interest and principal payments on Outstanding Bonds have been paid.
47 4160-0370-8238.9

Property owners may prepay and permanently satisfy the Special Tax Obligation by a cash settlement with the City as permitted under Government Code Section 53344 and in accordance with the Rate and Method.

The levy of the Special Tax will commence in Fiscal Year 2024-25.

The Facilities
Under the provisions of the Resolution of Formation and the Acquisition and Funding Agreement, dated as of April 1, 2021, as amended (the "Acquisition and Funding Agreement"), by and among the City, ECRM Holdings LP, and the then landowners within the Communities Facilities District including the Landowner, ECRM Commercial, Limited Partnership, and ECRM Resort, Limited Partnership (herein, collectively, the "Landowner Affiliated Entities" and, individually, a "Landowner Affiliated Entity"), the Facilities that may be financed with bonds secured by Special Taxes consist of street improvements, storm drains, access ramps, roadways, sidewalk, curbs and gutters, striping, lighting, traffic signalization, signage, and rights -of -way and appurtenant facilities, including fees to finance such facilities; dry utility facilities, including, but not limited to, electrical lines, undergrounding, pole relocation, incidental expenses, and appurtenant facilities, including fees to finance such facilities; City public benefit fees, including but not limited to, traffic signals fees, bus shelter fees, fire fees, park fees, and other required capital facilities' fees. CVWD facilities and fees are also authorized to be funded by Improvement Area No. 1. [In addition, certain private facilities, to be owned by the Mutual Water Company (as defined below) or a property owners association necessary for the development of the Community Facilities District will be financed and eligible for acquisition with net proceeds of the Series 2024B Bonds.] The expected total cost of the Facilities eligible to be financed with the proceeds of the Series 2024 Bonds and Additional Bonds, based on the current estimated cost of the Facilities, is approximately $[50] million, subject to change.

The construction and acquisition of the Facilities to be owned by CVWD are governed by the terms of a Joint Community Facilities Agreement, dated as of December 1, 2021 (the "CVWD JCFA"), by and among CVWD, the City, and the Landowner Affiliated Entities, under which the applicable Landowner Affiliated Entity is required to pay the CVWD Fees as a condition of receiving water and sewer service to the Development and to construct and transfer to CVWD certain facilities required by CVWD for domestic water and sanitation service. The applicable Landowner Affiliated Entity is required to ensure operating permit compliance and meet other criteria before the CVWD will assume responsibility for operation and maintenance of the facilities.

In addition to the Facilities to be constructed by the Landowner Affiliated Entities, under the Acquisition and Funding Agreement, the Series 2024 Bond proceeds may be used to finance the costs of certain public facilities to be constructed by the City or another public agency for which the Landowner Affiliated Entities will receive a credit for certain improvement fees, development impact fees, and/or water and sewer connection fees or be reimbursed for improvement fees, development impact fees, and/or water and sewer connection fees previously paid by the Landowner Affiliated Entities. [The Landowner Affiliated Entities have completed sufficient infrastructure improvements for the first 327 residential lots such that the Merchant Builders [and any additional merchant builders] can purchase finished lots and obtain building permits to begin construction of the homes. The backbone infrastructure necessary to serve Phase 1A, including the offsite sewer connection and offsite water tie ins have been substantially completed. As of May 1, 2024, the remaining onsite infrastructure to complete development within Phase 1A consists of street improvements, street capping, amenity construction and landscaping. [The Landowner and the Master Developer expect to complete the majority of such remaining 48 4160-0370-8238.9

infrastructure including the in -tract improvements for Phase 1B in 2024 and the amenities in early -to -mid 2025]. The Landowner and the Master Developer do not expect the timing of completion of such remaining infrastructure to impact the ability of the Merchant Builders [and any additional merchant builders] to construct homes within Improvement Area No. 1.

Offsite backbone infrastructure consisting of final connection of underground power lines and removal of poles, street improvements and traffic signals and offsite utility connections to the town center remain to be completed. Completion of this infrastructure is not required to achieve residential construction within Improvement Area No. 1.]
Services
Utility and other services for Improvement Area No. 1 are provided by the following:
• Water service for both potable and reclaimed water is provided by CVWD, which will also provide sanitation service through its wastewater treatment facilities. • Electric service is provided by Southern California Edison (SCE) and the Rancho Mirage Energy Authority (RMEA). RMEA is a not -for-profit power program, created by the City, as a power provider available exclusively to residents and businesses within the City that are currently served by SCE. The City's community choice program was approved by the California Public Utilities Commission in January 2018 and commenced in May 2018. • Natural gas service is provided by the Southern California Gas Company. • The Palm Springs Unified School District serves Improvement Area No. 1 and the Community Facilities District.
• CRM Mutual Water Company, California nonprofit corporation (the "Mutual Water Company") created for the benefit of the Development provides certain stormwater management, water reclamation, recycled water, and irrigation services.

Property Ownership and Obligation to Pay Special Taxes
Three Merchant Builders have entered into purchase contracts and have certain rights to acquire substantially all (but for [55][22]) of the single-family residential lots in Improvement Area No. 1: Shea Homes, Davidson Communities, and Woodbridge Pacific. As of the date of this Official Statement, builders for the thirty-three (33) 120's Estate Collection lots and the condominiums have not yet been selected. The Landowner is negotiating a purchase and sale agreement with a fourth merchant builder for the construction of homes within the 120's Estate Collection. The Landowner expects to enter into a purchase contract with such builder by June 2024. There is no guarantee that the fourth merchant builder will enter into the purchase and sale agreement as planned. With respect to the condominiums, during 2024, the Landowner expects to enter into one or more agreements with one or more condominium developers for the sale, partnership or similar agreement in order to develop the condominium parcels. The condominiums will then need to be planned, engineered and constructed. See `PROPERTY OWNERSHIP AND THE DEVELOPMENT — The Merchant Builders." As described herein, In the case of Shea Homes, ownership transfers from the Landowner to Shea Homes. As described herein, SBD will be the exclusive sales and marketing agent for the residential units. The Merchant Builder purchase contracts do not provide the ability for Merchant Builders sell homes.
49 4160-0370-8238.9

Undeveloped Property Ownership and Obligation to Pay Special Taxes The purchase contracts with Merchant Builders specify that individual lots are conveyed from the Landowner to the respective Merchant Builder at such time as an individual homebuyer enters into a contract to purchase such lot. In the case of Shea Homes, the lot transfers from the Landowner to Shea Homes, which then builds the specified home, before transferring to the homebuyer upon completion. In the case of Woodbridge Pacific and Davidson Communities, the lot transfers from the Landowner to such Merchant Builder and then immediately to the homebuyer, who enters into a construction agreement with the designated Merchant Builder. The price at which the Merchant Builder purchases the lot from the Landowner is, in part, a function of the price at which the homebuyer is acquiring the home. While this structure aligns incentives between the Landowner and Merchant Builders, the ownership of the lots — and therefore the responsibility for paying the Special Tax on Undeveloped Property is likely to remain concentrated in a single party, the Landowner, for a longer amount of time versus a lot acquisition structure where the builder acquires finished lots in scheduled takedowns or substantially all at one time earlier in the build cycle of a development. The table below sets forth an estimated allocation of the Fiscal Year 2024-25 Special Tax, based on property ownership as of [May 1], 2024.

Table 1
Improvement Area No. 1 of City of Rancho Mirage Community Facilities District No. 5 (Section 31) Estimated Allocation of Fiscal Year 2024-25 Special Tax Owner
Percentage of
Estimated Estimated
No. of 2024-25 Maximum 2024-25 Maximum
Units Special Tax Special Tax
ECRM Residential, Limited Partnership 642 $3,654,926
Shea Homes 12 70,088
Source: Willdan Financial Services.

Direct and Overlapping Indebtedness

98.12%

1.88 652 $3,725,014 100.00%
The ability of an owner of land within Improvement Area No. 1 to pay the Special Taxes could be affected by the existence of other taxes and assessments imposed upon the property. In addition, other public agencies whose boundaries overlap those of Improvement Area No. 1 could, without the consent of the Community Facilities District, and in certain cases without the consent of the owners of the land within Improvement Area No. 1, impose additional taxes or assessment liens on the property within Improvement Area No. 1 in order to finance public improvements to be located inside of or outside of Improvement Area No. 1 or the Community Facilities District. The lien created on the property within Improvement Area No. 1 through the levy of such additional taxes or assessments may be on a parity with the lien of the Special Taxes. The Community Facilities District cannot predict the amount of additional debt or authorized but unissued bonds that will ultimately be issued by such local agencies, nor can it predict when such debt would be issued or the debt service payments thereon.

Table 2 below sets forth the direct and overlapping debt on the property in Improvement Area No. 1 as of March 1, 2024, as reported by the Special Tax Consultant, and assumes the issuance of the Series 2024 Bonds.
50 4160-0370-8238.9

Table 2
Improvement Area No. 1 of City of Rancho Mirage Community Facilities District No. 5 (Section 31) Direct and Overlapping Debt
Appraised Value as of March 6, 2024: $304,903,000
% Applicable Debt 03/01/24
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:

Desert Community College District General Obligation Bonds Palm Springs Unified School District General Obligation Bonds City of Rancho Mirage Community Facilities District No. 5

TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT

GROSS COMBINED TOTAL DEBT

COMBINED TOTAL DEBT
Ratios to 03/06/24 Local Secured Appraised Valuation:

Direct Debt ($45,440,000) 14.90%
Total Direct and Overlapping Tax and Assessment Debt 15.05% Combined Total Debt 15.05%

0.0270% $176,324

0.069% $258,455
100.000% $45,440,000(1)
$45,874,779
$45,874,779(2)
$45,874,779(2)
6) Principal amount of the Series 2024 Bonds to be issued (preliminary, subject to change). All other indebtedness above is as of March 1, 2024. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations.

Source: Willdan Financial Services.

Projected Special Tax Allocation at Build -Out
Estimated Allocation of Special Tax at Build -Out. The following table estimates the Special Taxes in Improvement Area No. 1, and the expected ratio of the value of taxable parcels to the allocable portion of bonded indebtedness (referred to as "lien" in the table) by product line at estimated build -out, each based upon the expected product mix and allocation of Special Tax by product line, shown as the appraised values of Taxable Property reflected in the Appraisal and the allocable principal amount of Series 2024 Bonds and overlapping indebtedness on those parcels. See "IMPROVEMENT AREA NO. 1 — Land Use and Plans for Residential Development" and "PROPERTY OWNERSHIP AND THE DEVELOPMENT — The Development" for additional detail.
51 4160-0370-8238.9

T able 3
Impro vement Area No . 1 of City of R ancho Mirage C ommunity Facilities District No . 5 (Section 31) Estimated Alloc ati on of Speci al T ax by Lot Type at Hypothetic al Build -Out Lot Type
Fiscal Year
2024-25 Perce ntage
Maxim um Allocable to Allocable
Special Tax Pri ncipal Principal
at Amou nt of Amo unt of
Typical Home N umber of Hypothetical Series 2024 Series 2024 SF Units B uildout(l) Bo nds(�)* Bo nds *
50's Cottage Collection 2,470 184 $ 841,477 22.59% $ 10,264,846 60's G ran d Collection 3,200 100 599,623 16 .10 7,314,570 70's Gran d Collection 3,420 120 798,656 21 .44 9,742,492 90's Estate Collection 3,900 43 320,824 8 .61 3,913,607 120's Estate Collection 4,160 33 282,563 7 .59 3,446,880 135's Estate Collection 5,730 22 259,270 6 .96 3,162,731 Con do — No Lagoon Fron tage 1,900 75 300,259 8 .06 3,662,749 Condo — Lagoon Fron tage 2,100 75 322,342 8 .65 3,932,124 Total(3) 652 $3,725,014 100.00% $45,440,000
(1) Based on projected product mix, home sizes and premiums at build -out using Fiscal Year 2024-25 Special Ta x Rates. (2) Ex cludes overlapping debt. See "Direct and Overlapping Indebtedness" above and "— Estimated Sample Tax Bills" below. (3) Totals may not add due to roundin g.
* Preliminary, subject to chan ge.

Source: Except where otherwise in dicated, Willdan Financial Services, except the prin cipal amount of the Series 2024 Bonds debt service, which was provided by the Un derwriters.
52 4160-0370-8238.9

Estimated Debt Service Coverage. [The Series 2024 Bonds have been sized to generate $[40,000,000] to reimburse the Landowner for the costs of improvements constituting Facilities and to pay directly for the construction and acquisition by the Community Facilities District and CVWD of such Facilities [so that the levy of the Maximum Special Tax to be levied, net of Priority Administrative Expenses, will be sufficient to provide for a debt service coverage ratio of not less than %.] [Table 4 below sets forth the estimated debt service coverage for the Series 2024 Bonds.] Pursuant to the Rate and Method, and subject to the Maximum Special Tax prescribed therein and permitted by the Act, the Community Facilities District will only levy Special Taxes in Improvement Area No. 1 in an amount sufficient to fund the annual Special Tax Requirement (as defined in the Rate and Method). See "SECURITY FOR THE BONDS — Pledge of Net Special Tax Revenues" for other information regarding the Special Taxes.
53 4160-0370-8238.9

Table 4
Improvement Area No. 1 of City of Rancho Mirage Comm unity Facilities District No. 5 (Sectio n 31) Maxim um Special Ta x a nd Estimated Series 2024 Bond Debt Service Coverage Pri ncipal of Priority Total Debt
Period Ending Series 2024 A nnual Debt Admi nistratio n Special Tax Maximum Revenue U nused Ser vice September 1, B onds Service Expe nse Oblig atio n Special Taxltl Constraints(1) Reven ues Coverage 2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
(1) [Discuss][Developed Property represents % of the ex pected Special Tax levy for Fiscal Year 2024-25.1.

Source: Willda n Finan cial Ser vices; except Series 2024 Bon ds Debt Service, which wa s prov ided by the Underwriters. 54 4160-0370-8238.9

Estimated Sample Tax Bills. Set forth in Table 5 below are estimated, sample property tax bills for Fiscal Year 2023-24 that would be received by individual homeowners in Improvement Area No. 1 if their respective property was classified for such Fiscal Year as Developed Property under the Rate and Method. See "IMPROVEMENT AREA NO. 1 — Direct and Overlapping Indebtedness" for a table that describes the overlapping indebtedness for which taxes would be levied on the parcels in Improvement Area No. 1 as shown in the table below.
55 4160-0370-8238.9

Table 5
Improvement Area N o. 1 of City of R ancho Mirage Comm unity Facilities District No . 5 (Secti on 31) Based on Fisc al Year 2023-24 Estimated Sample T ax Bill for a Developed Property a nd Assumed Product Lines at B uild - Out 50's 60's 70's 90's 120's 135's
Cottage Grand Grand Estate Estate Estate
Estimated Va lu es by Collectio n(') Collectio n Collection Collection Collectio n Collection Collectio n Estimated H ome Price $1,740,000 $2,250,000 $2,650,000 $3,160,000 $3,850,000 $5,400,000 Homeowner's Ex emption 7,000 7,000 7,000 7,000 7,000 7,000 Equals: N et Taxable Assessed Val ue 1,733,000 2,243,000 2,643,000 3,153,000 3,843,000 5,393,000 Fiscal Year 2023-24 Tax Distribu tion T ax Rate Amo unt Am ou nt Amount Amou nt Amo unt Amo unt Ad V alorem Taxes(2)
G en era l Property Tax Lev y 1 .0000% 17,330.00 22,430 .00 26,430 .00 31,530 .00 38,430 .00 53,930 .00 Desert Commun ity College District General Obligation Bonds 0.0395 684.54 885.99 1,043 .99 1,245 .44 1,517 .99 2,130 .24 Palm Springs Unified School District General Obligatio n Bo nds 0 .1449 2,511 .64 3,250 .78 3,830 .50 4,569 .64 5,569 .66 7,816 .07 Coachella V alley Water D istrict State Water Project 0 .1100 1,906.30 2,467 .30 2,907.30 3,468 .30 4,227 .30 5,932 .30 Total on Ad V alorem Tax es 1.2944% 22,432.47 29,034.06 34,211.78 40,813.38 49,744.94 69,808 .61 Fixed Rate Lev ies
CVWD Sewer Service Charge
City of R ancho Mirage Fire Pro tection
CSA 152 -Ran cho Mirage Stormwater
Ran cho Mirage CFD No. 1(3)
Coachella V alley Mosqu ito & R IFA
Rancho Mirage Fire Ex cise Tax
Rancho Mirage Citywide Park Tax
Rancho Mirage Citywide Lan dscape
Ran cho Mirage Improv ement A rea No. 1
Total Fix ed R ate Lev ies
Projected Total Property Taxes
To tal Effectiv e Tax R ate (As % of Net Tax able Assessed Valu e) 345 .48 345 .48 345 .48 345 .48 345 .48 345 .48
60 .00 60 .00 60 .00 60 .00 60 .00 60 .00
4 .68 4 .68 4 .68 4 .68 4.68 4 .68
584 .17 584 .17 584 .17 584 .17 584 .17 584 .17
1 .78 1 .78 1 .78 1 .78 1 .78 1 .78
6 .82 6 .82 6 .82 6 .82 6 .82 6 .82
18 .92 18 .92 18 .92 18 .92 18 .92 18 .92

13.20 13 .20 13 .20 13 .20 13 .20 13.20
4,134.06 5,679 .36 6,025.14 7,249 .14 8,080.44 11,298 .54 5,169. 11 6,714.41 7,060 .19 8,284 .19 9,115.49 12,333 .59 27,601. 58 35,748.47 41,271 .97 49,097.57 58,860.43 82,142.20

1. 59% 1. 59% 1.56% 1 .55% 1 .53% 1 .52%
(1) Based on A ppraisal with a Date of Value of March 6, 2024. (2) Estimate based on actual Fiscal Year 2023-24 ad valorem rates. 0) Represents the maximum special tax rate for Rancho Mirage CFD No. 1 special tax for fun din g police an d fire services. (4) [Fiscal Year 2023-24 [Assigned] Special Tax as authorized in the Rate an d Method but not levied for su ch tax year.] Sou rce : Willdan Finan cial Ser vices.
56 4160-0370-8238.9

PROPERTY OWNERSHIP AND THE DEVELOPMENT
The following information regarding ownership and planned development of Improvement Area No. 1 has been provided by, or on behalf of, the Landowner, Master Developer, and Merchant Builders.

None of the Community Facilities District, the City, the Municipal Advisor, or the Underwriters make any representation as to the accuracy or adequacy of such information or the absence of any material change after the date of this Official Statement. The information provided in this section has been included because it may be considered relevant to an informed evaluation and analysis of the Series 2024 Bonds and Improvement Area No. 1 and has not been independently confirmed or verified by the Community Facilities District or the Underwriters. No assurance can be given that the proposed development of the property within Improvement Area No. 1 will occur in a timely manner or in the configuration or to the density described herein, or that the Landowner or Merchant Builders, or any of their owners or affiliates, has the resources or the ability to complete development as described in this Official Statement. There may be material adverse changes in this information after the date of this Official Statement. See "SPECIAL RISK FACTORS."
Neither the Series 2024 Bonds nor the Special Tax are personal obligations of any current or subsequent property owners within Improvement Area No. 1 and, in the event that any property owner defaults in the payment of its Special Tax, the Community Facilities District may proceed with judicial foreclosure but has no direct recourse to the assets of any property owner or any affiliate thereof As a result, other than as provided in this Official Statement, no financial statements or information is or will be provided about the Landowner, Master Developer or Merchant Builders, or any other current or subsequent property owners. The Series 2024 Bonds are secured solely by the Net Special Tax Revenues and amounts on deposit in certain of the funds and accounts maintained by the Trustee under the Indenture. See "SECURITY FOR THE BONDS" and "SPECIAL RISK FACTORS" for a discussion of certain of the risk factors that should be considered in evaluating the investment quality of the Series 2024 Bonds.

The Development
The Development is being developed as a master -planned community known as "CotinoTM, a Storyliving by DisneyTM Community," which is Disney's first Storyliving by DisneyTM community. Upon completion, the Development is expected to feature a mix of residential homes, a private club, mixed -use and commercial space, resort areas and a public beach —all surrounding a crystal clear, swimmable, 24 - acre lagoon. The Development is expected to include 1,932 dwelling units, up to 175,000 square feet of retail, food and beverage space within a town center, and up to 400 hotel rooms.

The Development is situated in a unique, infill location in the heart Rancho Mirage located within the Coachella Valley, surrounded by the vistas of numerous mountain ranges, with Palm Springs International Airport, Downtown Palm Springs and Indian Wells/La Quinta within a 15 -minute drive. The Coachella Valley is known for a high quality of life, warm climate, extensive recreation opportunities, access to transportation and cultural amenities.

Principal among the Development's amenities is the centrally -located lagoon (located outside of Improvement Area No. 1). This man-made water features Crystal Lagoons® technology and a private club that will sit on its shores. The lagoon and private club are currently under construction and expected to be completed in early to mid -2025. The lagoon is expected to provide opportunities for many recreational activities, such as swimming, kayaking, paddle boarding, and various other water -based activities.

Encircling the lagoon is a planned bike/pedestrian promenade meandering close to and away from the 57 4160-0370-8238.9

shoreline. The promenade trail will offer opportunities for viewing the lagoon and surrounding areas, exercising and comfortable settings with shade and seating for socializing. The private club is intended to serve as a unique social and recreational center for club members and their guests, replete with dining, fitness, sporting and leisure offerings. Membership in the private club is voluntary upon payment of an annual fee and residents are not required to join.

Pursuant to agreements between the Landowner and its affiliates and SBD and its affiliates, SBD is providing for the branding, operation, and sales and marketing of the Development. This includes, among other things, SBD's agreement to fund certain costs of the Development, own and operate the private club, lagoon, public beach and the first phase of the town center retail, operate the community associations, and be the exclusive sales and marketing agent for the residential units. Under certain conditions, the SBD brand and select intellectual property may be used in sales and marketing activities, community activities and programing and community operations. Within Improvement Area No. 1, SBD ground leases the private club land, which converts to fee simple ownership of the private club and land upon completion of the improvements thereon. Adjacent to Improvement Area No. 1, SBD ground leases the lagoon land, which converts to fee simple ownership of the lagoon and land upon completion of the improvements thereon.

Other than its town center funding obligations and potential cost overrun obligations with respect to the lagoon, private club and certain landscaping and amenities work, SBD has completed its construction funding obligations, and the Landowner is responsible for the remaining costs to complete the improvements in Improvement Area No. 1.

The Lagoon Technology. The lagoon makes use of Crystal Lagoons® technology to create a clear, clean, low -evaporation and swimmable amenity. According to the purveyor of the Crystal Lagoons® technology, the lagoon utilizes a patented solution consisting of the application of controlled pulses of small amounts of oxidants/microbicides, such as chlorine, into the water in very specific patterns and cycles to maintain water quality. The application cycles are determined by the system's algorithms according to the growth cycles of algae and bacteria as well as ambient conditions and the weather. This avoids the need for maintaining a significant residual chemical level in the water. The application of additives is coordinated remotely by sensors and injectors/nozzles strategically located throughout the lagoon. The applied additives comply with NSF 60 Standards for drinking water treatment. This pulse -based disinfection uses up to 100 times less chemicals than those used in conventional swimming pools, as conventional pool technology requires maintaining permanent and high levels of residual chlorine or other disinfectants in the water to achieve consistent quality and avoid water contamination from external agents, such as swimmers.

Additionally, the Crystal Lagoons® technology includes an efficient filtration system, where filtration is achieved by the addition of natural compounds. When the compounds are activated by ultrasonic waves directed into the water, they cause particles to agglomerate into larger bodies that settle to the bottom of the lagoon. Afterwards, the bottom water flow is vacuumed using a patented bottom cleaning device and sent to a filtration system, where bottom water flow is filtered and then reintroduced into the lagoon. Only the portion of water containing the settled particles needs to be filtered, thus greatly decreasing required pumps, filter sizes, and electricity consumption compared to conventional swimming pool technology.

Once filled, the lagoon will feature low water consumption, with the use of evaporation control additives that reduce evaporation rates from the lagoon. The additives create a non -visible layer over the water surface by avoiding direct contact between the water surface and the surrounding air. A typical lagoon powered by Crystal Lagoons® technology uses 30% less acre feet of water than required for a golf course.
58 4160-0370-8238.9

[As discussed in the Appraisal, there are currently 71 operational Crystal Lagoons worldwide. At 24 -acres, the Crystal Lagoon to be located in the Development is expected by the Landowner to be the largest in the United States.]
Status of Infrastructure Improvements. Development of the land in Improvement Area No. 1 is occurring in two planning phases, Phase 1A for lots on recorded Tract Map No. 37856, as amended, and Phase 1B for lots on recorded Tract Map No. 38291, as approved by the City. Grading has been completed for all of Improvement Area No. 1, as well as the grading for the Development's primary amenity areas. In addition, offsite water and sewer improvements have been completed to serve Phase 1 A and satisfy residential permit and closing requirements. Offsite and onsite power, which is a requirement for receipt of certificate of occupancy, as well as offsite street and signal improvements have commenced with anticipated completion by August 2024. A water well supporting construction operations as well as initial landscape irrigation has been installed with a second well anticipated to be completed in July 2024. [These wells will, in part, support lagoon operations.] In -tract subdivision improvements for Phase 1A are in process, with storm drain system, sanitary sewer system, water distributions system, and non -potable water lines and pumping systems approximately completed, except for turnover to the applicable authority. The remaining improvements, including but not limited to, street improvements, curb and gutter, and in -tract landscaping, for Phase l A are expected to be completed in mid -2024. [In addition, certain private facilities, to be owned by the Mutual Water Company or a property owners association necessary for the development of the Community Facilities District will be financed and eligible for acquisition with net proceeds of the Series 2024B Bonds.

The City's conditions of approval for Improvement Area No. 1 require completion of water and street improvements for building permits to be issued to merchant builders, which has been satisfied for Phase 1A and is expected to be satisfied for Phase 1B in mid -2024. The completion of all in -tract infrastructure is required prior to the closing of homes to third party homebuyers, and such condition is expected to be satisfied prior to the completion of homes. The Landowner and Master Developer are not aware of any material additional discretionary entitlements required to finalize development of the property in Improvement Area No. 1 and the primary amenities of the Development.

Environmental Review. The Development has received completed environmental review and an Environmental Impact Report was certified on December 5, 2019. The Landowner and Master Developer believe that all environmental approvals from regulatory agencies required to complete development within Improvement Area No. 1 have been obtained and that all appeal periods with respect to such approvals have expired.

Utilities. Water and sewer service to the Development is provided by the Coachella Valley Water District (CVWD). Electricity is supplied by Southern California Edison, natural gas is supplied by Southern California Natural Gas, police services are provided by Riverside County Sheriff's Department, fire services are provided by Riverside County Fire Department, and internet services are provided by either Frontier Communications or Spectrum Pacific West.

Master Entitlements for the Development. The maps creating the first 502 single-family residential lots have been recorded in the public records of the Riverside County Recorder. Key entitlement related achievements to -date include the Specific Plan accepted by the City on December 5, 2019, the Environmental Impact Report also certified on December 5, 2019, the Development Agreement, executed on January 18, 2020, between the City and ECRM Holdings LP, and agreements with CVWD for water and sewer services.
[As provided in the Development Agreement, any Mortgagee (as defined therein) shall have the right, but not the obligation, to cure any failure or default by Landowner during the cure period allowed 59 4160-0370-8238.9

Landowner under the Development Agreement, plus an additional 60 days if, in order to cure such failure or default, it is necessary for the Mortgagee to obtain possession of the mortgaged property in Improvement Area No. 1 such as by seeking the appointment of a receiver or other legal process. Any Mortgagee that undertakes to cure or attempt to cure any such failure or default shall provide written notice to City that it is undertaking efforts of such a nature; provided that no initiation of any such efforts by a Mortgagee shall obligate such Mortgagee to complete or succeed in any such curative efforts.

Subject to the foregoing, any Mortgagee, including the successful bidder at a foreclosure sale, who comes into possession of the Project or the mortgaged property in Improvement Area No. 1 or any part thereof pursuant to foreclosure, eviction or otherwise, shall take such property subject to the rights and obligations of the Development Agreement, and in no event shall any such property be released from any obligations associated with its use and development under the provisions of the Development Agreement.

The City shall not be prevented from exercising any remedy it may have for a default under the Development Agreement; provided, however, that in no event shall such Mortgagee personally be liable for any defaults or monetary obligations of Landowner arising prior to acquisition or possession of such property by such Mortgagee.]
Improvement Area No. 1
Final tract maps authorizing the subdivision of the land within Improvement Area No. 1 have been recorded. Tract No. 37856 including 327 single-family residential lots was recorded in 2021, and Tract No. 38291 including 175 single-family residential lots and several large lots planned for condominiums was recorded in 2023.

Improvement Area No. 1 is the first phase of the Development. The residential portion of Improvement Area No. 1, which is subject to the Special Tax, consists of 502 lots for single-family detached residential homes and condominium parcels expected to contain approximately 150 attached condominium units. The Specific Plan for the Development authorizes development of up to 30 condominium units per acre at those locations on parcels of approximately 13 gross acres.

Within Improvement Area No. 1 [251 ] of the 502 single-family residential lots are expected to be within an age qualified (55+) section. The age -qualified section of Improvement Area No. 1 includes a park and pavilion area specific to the age -qualified residents. Other than having exclusive use of a neighborhood park and pavilion area, including amenities such as bocce ball courts, restroom facilities and meeting space, the age - qualified area is not gated or otherwise separated from the surrounding Development. Construction of the park and pavilion was completed in April 2024. Also located within Improvement Area No. 1 are various neighborhood parks and recreation areas, and associated landscaping, along with a dog park known as Apple Cactus Ranch in the initial phase of construction.

The primary amenity located within Improvement Area No. 1 is the centrally -located private club, which is expected to include recreation lawns, sports courts, beach areas, a pool, food and beverage facilities, and a fitness facility. The private club has commenced construction and is expected to be completed in early to mid -2025. The number of memberships in the private club will be limited, with membership being offered to each initial homebuyer with their initiation fee waived if they join within 90 days after close of escrow on their home.

Additional amenities that are expected to serve the Development, although not located within Improvement No. 1, include the swimmable lagoon and beach open to the public, the first phase of the town center and certain parks. Construction of the lagoon is underway and expected to be substantially complete in early 2025.
60 4160-0370-8238.9

Single -Family Homes. The Landowner plans to sell and convey the 502 single-family residential lots within Improvement Area No. 1 to three or more merchant builders, [including as of the date of this Official Statement], Shea Homes, Woodbridge Pacific and Davidson Communities, referred to herein collectively as Merchant Builders and individually as a Merchant Builder.

As of May 1, 2024, [447][480] of the 502 single-family residential lots in Improvement Area No. 1 were either under contract, subject to purchase or negotiation rights or have been conveyed to the Merchant Builders. The remaining [55] [22] single-family residential lots in Improvement Area No. 1 are either under negotiation or being held back by the Landowner pending satisfactory performance on the absorption, pricing and quality of the first set of homes sold and constructed by the applicable Merchant Builders. As of May 1, 2024, Shea Homes has acquired [12] lots from the Landowner and commenced construction of [seven] homes, including three model homes and [four] production homes. The models are expected to be completed in July 2024. Conveyance of finished lots for home construction by the other two Merchant Builders is expected to commence in approximately June 2024.

SBD's involvement in the Development was announced in February 2022 and since then has conducted sales and marketing activities to generate visibility and interest from potential homebuyers. The names of the Merchant Builders were announced in November 2023 and at that time, the onsite sales center opened to the public. Significant interest from potential homebuyers has been generated through SBD's sales and marketing activities. Sales of homes to be built by Shea Homes commenced in February 2024.

Sales of homes to be built by Davidson Communities and Woodbridge Pacific are expected to commence by June 2024. Initially, a limited number of homes is being released for sale to the public until the Improvement Area No. 1 amenities are completed. As of May 1, 2024, homebuyers had executed [nine] purchase agreements to purchase homes in the Development.

The Landowner
As previously defined in this Official Statement, the Landowner is ECRM Residential, Limited Partnership, a Delaware limited partnership. The Landowner does not expect to construct homes in the Development, and instead will develop and sell the residential portions of the Development in finished lot condition, or super pad condition in the case of the parcels planned for the condominium units. No assurance can be given that the Landowner's or the respective Merchant Builder's [or any additional merchant builders'] construction and sale plans will not change after the date of this Official Statement.

The general partner of the Landowner is EC Rancho Mirage Holdings GP Corp., a Delaware corporation ("ECRM GP"). ECRM GP [has and] is controlled by [two members for the corporation]: (1) Clarity Real Estate ("Clarity"), (unrelated to Clarity Real Estate Advisors serving as Market Absorption Analyst), and (2) Epta Development Corporation ("EDC"). The limited partners of the Landowner include two private institutional investors.

Clarity is a real estate private equity platform whose principals have completed over $3 billion in commercial real estate acquisitions, primarily in the southern and western United States. Clarity's principals operate value -add private equity funds, a New York Stock Exchange listed office REIT and a separate account platform. The principals of Clarity real estate have extensive real estate investment experience, including investment in a large-scale residential land site northwest of the Development, which was annexed into the City and subsequently developed into [XX] homes by Pulte Homes. EDC is a real estate development and investment firm headquartered in Vancouver, Canada. EDC has built and sold residential condominium and rental buildings, owned and divested of commercial buildings, operated a significant agriculture production, and assembled land for future development throughout the various communities of metropolitan Vancouver.
61 4160-0370-8238.9

The Landowner has engaged DMB to carry out day-to-day development activities and act as master developer of both the residential and commercial phases of the Development.

Land Ownership. All of the land within Improvement Area No. 1 that has not been conveyed to the Merchant Builders is owned by the Landowner. As of May 1, 2024, of the residential property in Improvement Area No. 1 subject to the Special Tax, the Landowner owned [490] of the 502 single-family residential lots and the three parcels planned for approximately 150 condominium units. As of May 1, 2024, [ 12] single-family residential lots had been conveyed to Shea Homes (as defined below). As home sales recently commenced for Shea Homes and sales for Davidson Communities and Woodbridge Pacific are expected to commence shortly, the Landowner expects a significant increase in the number of residential lots owned by Merchant Builders or homebuyers throughout 2024.

Sales to Merchant Builders. On August 2, 2023, the Landowner and Shea Homes entered into two lot purchase and sale agreements pursuant to which Shea Homes agreed to acquire 116 lots within Improvement Area No. 1, consisting of 48 "50's" (50' -wide lots) and 68 "60's" (60' -wide lots), a portion of which are located in the age -qualified (55+) section of Improvement Area No. 1. Pursuant to the terms of the lot purchase contracts, Shea Homes is required to acquire from Landowner each lot once a purchase contract has been executed with a homebuyer for such lot. The homebuyer then closes escrow with Shea Homes upon completion of the home by Shea Homes. In addition to the 116 lots, Shea Homes has certain rights to acquire the 136 remaining 50's lots and the 32 remaining 60's lots within Improvement Area No.

1. Under the terms of the lot purchase and sale agreements, Shea Homes has funded a cash deposit, has committed to build a minimum of three model homes and is responsible for financing all hard and soft construction costs of the homes to be constructed. The sale of homes to individual homebuyers commenced in February 2024. As of May 1, 2024, Shea Homes has entered into [nine] contracts with homebuyers and commenced construction of [seven] homes, including three model homes. There is no guarantee that Shea Homes will acquire the remaining lots under contract as planned.

On September 22, 2023, the Landowner and Davidson Communities entered into two lot purchase and sale agreements pursuant to which Davidson Communities agreed to acquire 60 lots within Improvement Area No. 1 from the Landowner, consisting of consisting of 49 "70's" (70' -wide lots) and 11 "135's" (135' -wide lots). Pursuant to the terms of the lot purchase contracts, Davidson Communities is required to acquire each lot from the Landowner once a purchase contract has been executed with a homebuyer for such lot. Under the Davidson Communities structure, the homebuyer closes escrow on the lot from Davidson Communities simultaneously with Davidson Communities acquiring the lot from the Landowner and prior to the commencement of home construction thereon. The homebuyer enters into a construction contract with the builder at that time. The homebuyer then uses either cash or construction financing to finance the construction of the home on the lot by Davidson Communities. This structure is typically referred to as a "one-time close" or "construction -to -permanent financing." Under the terms of the purchase and sale agreements, Davidson Communities has funded a cash deposit, has committed to build and capitalize a minimum of three model homes and is responsible for financing its architectural and soft costs. As of May 1, 2024, Davidson Communities had not acquired any lots from the Landowner as sales for Davidson Communities are expected to commence in June 2024. Model home construction is expected to start by July 2024 and Davidson Communities will own such model homes. In addition to the 60 lots in the initial purchase, Davidson Communities has certain rights to acquire the 64 of the 71 remaining 70's lots within Improvement Area No. 1. There is no guarantee that Davidson Communities will acquire the lots under contract as planned.

On September 18, 2023, the Landowner and Woodbridge Pacific entered into a lot purchase and sale agreement pursuant to which Woodbridge Pacific agreed to acquire 39 lots within Improvement Area No. 1 from the Landowner, consisting of the "90's" (90' -wide lots). The other four 90's lots in Improvement Area No. 1 are being used for the sales center and will be developed at such time as the sales center is 62 4160-0370-8238.9

moved or no longer needed. Pursuant to the terms of the lot purchase contract, Woodbridge Pacific is required to acquire each lot once a purchase contract has been executed with a homebuyer for such lot.

Under the Woodbridge Pacific structure, the homebuyer closes escrow on the lot from Woodbridge Pacific simultaneously with Woodbridge Pacific acquiring the lot from the Landowner and prior to the commencement of home construction thereon. The homebuyer enters into a construction contract with the builder at that time. The homebuyer then uses either cash or construction financing to finance the construction of the home on the lot by Woodbridge Pacific. This structure is typically referred to as a "one- time close" or "construction -to -permanent financing." Under the terms of the purchase and sale agreement, Woodbridge Pacific has funded a cash deposit, has committed to build and capitalize a model home and is responsible for financing its architectural and soft costs. As of May 1, 2024, Woodbridge Pacific had not acquired any lots from the Landowner as sales for Woodbridge Pacific homes are expected to commence in May 2024. Model home construction is expected to start in by July 2024 and Woodbridge Pacific will own such model homes. There is no guarantee that Woodbridge Pacific will acquire the lots under contract as planned.

The remaining [55] [22] single-family residential lots in Improvement Area No. 1 that are not either under contract or subject to certain purchase or negotiation rights of the Merchant Builders are either under negotiation or being held back by the Landowner pending satisfactory performance on the absorption, pricing and quality of the first set of homes sold and constructed by the applicable Merchant Builders.

The Master Developer
As previously defined in this Official Statement, the Master Developer is DMB Development, LLC, a Delaware limited liability company (the Master Developer as defined herein). [ECRM GP], on behalf of the Landowner, has entered into a management services agreement (the "Management Services Agreement") with the Master Developer pursuant to which the Master Developer will carry out day-to-day development activities and act as master developer of both the residential and commercial phases of the Development. The Management Services Agreement provides that the Master Developer will be responsible for project planning and operating activities, including, project visioning, master planning, managing horizontal and amenity construction, and working alongside the Landowner in builder sales negotiation and contracting. The Master Developer is not a landowner within the Community Facilities District, including Improvement Area No. 1, and does not have a partnership interest in the Landowner.

However, the Master Developer has a contractual financial interest in the property owned by the Landowner, entitling the Master Developer to certain distributions, in addition to receiving fees for services.

The key executives of the Master Developer responsible for the Development are Brent Herrington (CEO), Mary Alexander (Executive Vice President and General Counsel), Andy Beams (CFO) and Eric Brown (DMB General Manager — Cotino).

The Master Developer is an Arizona -based privately -held, diversified real estate investment and development firm with an almost 40 -year legacy of real estate holdings through affiliated companies that include residential communities and commercial developments located in California, Arizona and Hawaii.

The Master Developer's initial company was formed in 1984 by Drew Brown, Mark Sklar and Bennett Dorrance. Early activities focused on commercial development, including the 1.2 million square -foot Centerpoint project in Tempe, Arizona. In the late 1980s and early 1990s, the Master Developer focused on acquisition of both commercial properties and forming joint ventures to develop master planned communities.

Since its inception, the Master Developer has pursued large-scale real estate development throughout the United States.
63 4160-0370-8238.9

The principals of Master Developer have provided extensive development services including delivery of public improvements for a number of nationally recognized master planned communities, including:

Verrado (Buckeye, Arizona): An 8,816 -acre planned community in the City of Buckeye, Arizona providing for approximately 14,080 residential dwelling units and over 4 million square feet of gross floor area of commercial/mixed use development. The community includes an active -adult district called Victory and features a pedestrian -friendly Main Street, intimate neighborhoods with tree -shaded sidewalks, abundant educational facilities, and vast recreational amenities. The project is in the active development and sales phase.

Eastmark (Mesa, Arizona): A 3,200 -acre property in Mesa, Arizona near the Phoenix -Mesa Gateway Airport and ASU Polytechnic campus approved for up to 15,000 residential dwelling units, a private community recreation center for residents and a total of 20 million square feet of non-residential development such as commercial, educational, retail, civic, office, resort, retail and flex/industrial space.

The project is in the active development and sales phase.

DC Ranch/Silverleaf (Scottsdale, Arizona): A 3,700 -acre planned community located in the western foothills of Scottsdale, Arizona's McDowell Mountains providing for approximately 3,100 home sites and two 18 -hole championship golf courses, a community school complex, comprehensive path and trail system, and recreational amenities. DMB developed this property in a joint venture with the ranching family that owned the land for several decades. Sales for this project have been completed.

Kukui'ula (Koloa, Hawaii): A 1,000 -acre planned community located in the south shore of the island of Kauai, Hawaii, providing for up to 1,500 home sites, a 18 -hole championship golf courses, a 20,000 square foot clubhouse and private club, comprehensive path and trail system, and recreational amenities. This property was developed in a joint venture with Alexander and Baldwin, once a thriving owner/operator of sugar cane plantations and now the largest shopping center owner/operator in Hawaii.

This project is in the active development and sales phase.

Marley Park (Surprise, Arizona): A 956 -acre master planned development in Surprise, Arizona, providing for 3,071 residential units. Amenities include a centrally located 45 -acre public -use education and recreation parks complex that includes a park, an elementary school, and a clubhouse, among other amenities. This community is in the close-out phase.

Delta Coves (Bethel Island, California): A 310 -acre water -based community located on Bethel Island, California providing for 494 single-family detached homes and 66 townhome or cottage units.

Amenities include a large saltwater lagoon available for use by the public to swim, engage in water sports, and fish; private docks for all single-family residential units; and an approximately 4,500 square foot Island Camp amenity that includes a pool area, fire pit, restrooms, picnic area, parking lot, and 230 private boat slips with access to the Sacramento -San Joaquin Delta. This community is in the active development and sales phase.

AsteriaTM, a Storyliving by DisneyTM Community (Pittsboro, North Carolina): Slated to become the second Storyliving by DisneyTM development, this project encompasses a 1,442 -acre master -planned community located in Pittsboro, North Carolina, within the booming Research Triangle area of Central North Carolina, within easy driving distance to Raleigh, Durham, and Chapel Hill. This area is home to three major universities, North Carolina State, Duke, and UNC, Chapel Hill. The community will offer a wide variety of home types, sizes and price -points providing for approximately 4,380 homes. Amenities include a main clubhouse, dog parks, neighborhood parks, trail head access, and an extensive path and trail 64 4160-0370-8238.9

system that will interconnect with the nearby forested state park and river. This community is in the initial development phase.

Storyliving by Disney at RNI, LLC
Storyliving by Disney at RM, LLC, a Delaware limited liability company (SBD as defined herein), is involved in the sales and marketing, placemaking and programing, and community operations of the Development. SBD is not an owner or under contract to purchase land within the Community Facilities District or Improvement Area No. 1, however, SBD is a ground lessee of the private club land and upon completion of construction of the private club, the ground lease interest of SBD converts to fee simple ownership of the private club and land. Further, adjacent to Improvement Area No. 1, SBD ground leases the lagoon land, which converts to fee simple ownership of the lagoon and land upon completion of the improvements thereon. ECRM GP and its affiliates, including the Landowner, entered into agreements with SBD related to the funding, construction, operation, branding and sales and marketing of the Development.

Pursuant to the agreements, SBD agreed to, among other things, brand the Development, own and operate the private club, lagoon, public beach and first phase of the town center retail, operate the community associations, and be the exclusive sales and marketing agent for the residential units. Other than potential cost overrun obligations with respect to the lagoon, private club and certain landscaping and amenities work, SBD has completed its construction funding obligations, and the Landowner is responsible for the remaining costs to complete the IA -1 Improvements, as described below.

Neither SBD nor The Walt Disney Company has assumed any obligation to purchase land within Improvement Area No. 1, other than as described above with respect to the private club [and lagoon], nor any obligation to pay any portion of the Special Tax to be levied on parcels within the Community Facilities District or Improvement Area No. 1. The private club is classified as Club Property under the Rate and Method and is exempt from the Special Tax.

Landowner Financing Plan
Estimated Cost of the Improvements. As of April 15, 2024, the Landowner and SBD have expended approximately $[165] million on land acquisition and entitlements, infrastructure, amenity and landscaping improvements directly related to Improvement Area No. 1 and expect to incur an additional approximately $[96] million to complete its development within Improvement Area No. 1. The infrastructure, amenity, and landscaping related to Improvement Area No. 1 (including the lagoon, which is not located in Improvement Area No. 1) is referred to herein as the "IA -1 Improvements." Costs related to the town center are not included in the IA -1 Improvements, as the town center is not directly related to residential buildout or ownership in Improvement Area No. 1.

Of the remaining approximately $[96] million estimated to be expended to complete the IA -1 Improvements, the Landowner estimates that approximately $[51] million relates to infrastructure needed for the full buildout of residential units in Improvement Area No. 1 and the remaining approximately $[45] million relates to amenity improvements that are either not located in Improvement Area No. 1 or not required for the full buildout of the residential units in Improvement Area No. 1. For clarity, as described herein, sufficient IA -1 Improvements have been completed to date to allow homebuilders to commence construction of 327 single-family detached homes within Phase 1A. As of May 1, 2024, the IA -1 Improvements required to commence construction of the 175 single-family detached homes in Phase 1B were under construction.

The following table details the status of the IA -1 Improvements to be constructed and the estimated costs associated with such IA -1 Improvements.
65 4160-0370-8238.9

Improvements Costs — Improvement Area No. 1
Improvement
Needed for Full Buildout of Improvement Area No. 1
Land Acquisition / Initial Costs and Entitlements(i)
Infrastructure — Indirect Costs
Infrastructure — Direct Costs
Landscaping
General Overhead and Interest(2)
Subtotal(3)
Amenities
Lagoon(4)
Private Club(4)
Other Amenities
Subtotal(3)
Total(3)
(1)
(2)
(3)
(4)
Source: Landowner.

Estimated
Total Cost
$ 40,271,541
16,829134
87979522
15000000
19090810
$179,171,008
[1
[1
[1
[1
[1
Costs Spent Percent Remaining
as of 3/1/24 Completed Costs
$ 40,271,541
14,745,911
57,911,919
2,043,419
12,905,914
$127,878,704
[1
[1
[]
[1
100.00%

87.6 $ 2,083,223

65.8 30,067,603

13.6 12,956,581

67.6 6,184,896

71.4% $51,292,304
[] [1
[1 [1
[1 [1
[1 []
[1 [1
[1
Represents an estimated pro rata share for Improvement Area No. 1 (based on acreage) of initial unentitled raw land acquisition (in 2018 by Landowner) and initial costs including master entitlements.

Represents an estimated pro rata share for Improvement Area No. 1 (based on acreage).

Subtotals and totals may not add due to rounding.

Costs represent entire estimated amount to complete these amenities, and not a limited pro rata share for Improvement Area No. 1.

Funding Sources. To date, funds needed for costs related to land acquisition and the IA -1 Improvements have come from the Landowner, SBD and draws under the Landowner's Construction Loan.

As of March 1, 2024, SBD had completed its construction funding obligations for its share of the costs related to the Development, other than its town center funding obligations and potential cost overrun obligations with respect to the lagoon, private club and certain landscaping and amenities work. The Landowner intends to use the following sources of funds to finance the costs to complete the IA -1 Improvements following the issuance of the Series 2024 Bonds:
• Draws on the existing Construction Loan (described below) or a future construction loan (see "— Construction Loan" below), [which loan is expected to be repaid primarily with the net proceeds of sales of lots by the Landowner].
[. Sales of lots in Improvement Area No. 1 and related repayment of the Construction Loan.] • Proceeds of the Series 2024 Bonds (secured by land within Improvement Area No. 1). • Future funds provided by the City pursuant to the Development Agreement, in the amount of approximately $3,500,000 ("Development Agreement Funds").

In addition, while there is no legal obligation for additional funding from the following sources, the Landowner may be compelled to request funding from the following sources:
• If applicable, future funding from SBD for potential cost overrun obligations with respect to the lagoon, private club and certain landscaping and amenities work. • As needed, future funding from ECRM GP or its affiliates. 66 4160-0370-8238.9

As described below, while SBD and its affiliates have made certain advances for costs in March and April 2024, SBD is under no obligation to make any additional advances. Likewise, while ECRM GP and its affiliates have made certain advances for costs from time to time, none of ECRM GP or its affiliates is under any obligation to make any additional advances. See "— The Landowner," and "— SBD" above, for more information about these entities).

Between March 1, 2024 and the receipt of net proceeds of the Series 2024 Bonds, the Construction Loan is available to fund infrastructure costs and general overhead as well as a portion of the costs related to amenities and landscaping. The portion of the costs related to amenities and landscaping that are not able to be funded by the Construction Loan in March 2024 and April 2024 were funded by SBD in the amount of approximately $6 million (the "SBD Advances"). Since the SBD Advances exceeded SBD's construction funding obligation, which had been fulfilled, the SBD Advances were treated as a loan secured by a second deed of trust (behind the Construction Loan) in favor of SBD on all of the property in the Development.

Commencing in May 2024 and continuing until receipt of net proceeds of the Series 2024 Bonds, at which time the Construction Loan is expected to fund all costs related to the IA -1 Improvements, the Landowner is obligated to fund the portion of the amenity and landscaping costs which the Construction Loan is not able to fund. Notwithstanding the foregoing, there can be no assurance of the Landowner's willingness or ability to do so. Additionally, while SBD had made SBD Advances for such costs in March and April 2024, SBD is under no obligation to make any additional advances.

Construction Loan. The Landowner has an existing construction loan (the "Construction Loan") with Romspen California Mortgage Limited Partnership, an Ontario limited partnership (referred to as Romspen herein). Romspen's parent company oversees one of Canada's largest private mortgage funds.

The Construction Loan is for infrastructure and amenity funding with a maximum principal balance of $144 million. As of May 1, 2024, approximately $[77] million remains undrawn, with future draws subject to certain conditions as described below. The Construction Loan is secured by all of the land within the Development and is expected to be repaid primarily with the net proceeds of sales of lots by the Landowner.

As previously mentioned, the Landowner expects to use proceeds of the Series 2024 Bonds, as well as draws on the Construction Loan and Development Agreement Funds to fund the costs to complete the IA -1 Improvements. However, until the [receipt of net proceeds of the Series 2024 Bonds] and Development Agreement Funds, the proceeds from the Construction Loan alone are not sufficient to fully fund the costs of the IA -1 Improvements by approximately $[30] million as of May 1, 2024 (this is contemplated and described in the loan agreement as the sources of funds being "out of balance" with the uses of funds and is not an event of default). During such shortfall of funds period, the Construction Loan is available to fund infrastructure costs and general overhead costs, as well as a portion of the amenity and landscaping costs, leaving the remaining amenity and landscaping costs to be funded by other sources such as the Landowner and/or SBD, though neither the Landowner nor SBD is under any obligation to fund such costs. The Landowner expects that proceeds from the issuance of the Series 2024 Bonds to be received on or about [June _ 2024 and not later than September _, 2024] will be sufficient to bring the loan "in balance" and at such time the Construction Loan is expected to be available to fund the remaining costs to complete the IA -1 Improvements.

The Landowner exercised its first extension option on the Construction Loan in March 2024, which extended the loan's final maturity from April 1, 2024 to October 1, 2024. The Construction Loan contains four additional six-month extension options which, if all exercised, can extend the Construction Loan through October 1, 2026, assuming it has not been repaid. As a condition of future extensions, the Construction Loan must be "in balance" and the Landowner expects that this condition will be met for future loan extensions with the sources of funds described above. 67 4160-0370-8238.9

Notwithstanding the belief of the Landowner that the sources above will be sufficient to complete the planned development of Improvement Area No. 1, no assurance can be given that sources of financing available will be sufficient to complete such development as currently anticipated. If the sources of funds are not available for the IA -1 Improvements, the timing of the delivery of the IA -1 Improvements, including the amenities, may be delayed. Neither the Landowner nor any of its affiliates have any legal obligation of any kind to make any such funds available or to obtain loans or lines of credit.

If and to the extent that internal financing, loan proceeds, lines of credit, or bond proceeds are inadequate to pay the costs to complete the Landowner's planned development in Improvement Area No. 1, and other financing by the Landowner is not put into place, there could be a shortfall in the funds required to complete the proposed development by the Landowner or for the Landowner to pay ad valorem property taxes or the Special Taxes related to the Landowner's property in Improvement Area No. 1, and the remaining portions of such development might not be completed. Further there can be no guarantees that Landowner will be successful in bringing the loan "in balance" and thus being able to extend the maturity of the loan past October 1, 2024. Many factors beyond the Landowner's control, or a decision by the Landowner to alter its current plans, may cause the actual sources and uses to differ from the projections.

Further, while SBD and its affiliates have made certain advances for costs in March and April 2024 as described above, SBD is under no obligation to make any additional advances. Likewise, while ECRM GP and its affiliates have made certain advances for costs from time to time, none of ECRM GP or its affiliates is under any obligation to make any additional advances. See "— The Landowner," and "— SBD" above, for more information about these entities).

The Merchant Builders
The Landowner has sold and expects to continue to sell land in Improvement Area No. 1 to individual merchant builders for the construction of the residential units. The Merchant Builders have certain rights to acquire substantially all (but for [55][22]) of the single-family residential lots in Improvement Area No. 1.

Shea Homes. Shea Homes is an indirect wholly -owned subsidiary of Shea Homes Limited Partnership, a California limited partnership ("SHLP"). SHLP is headquartered in Walnut, California, near Los Angeles, and has been in the business of developing residential real estate communities in California since 1968. SHLP is a privately held company with multiple home building divisions. SHLP operates in many states throughout the U.S., including California, Colorado, Nevada, Arizona, Washington, Virginia, North Carolina, Florida, and Texas.

Copies of SHLP's Annual Report and related consolidated financial statements, prepared in accordance with generally accepted accounting standards, are available from Shea Homes' website at www.sheahomes.com . This internet address is included for reference only, and the information on this internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on this internet site.

Shea Homes Ownership and Development Plan. On August 2, 2023, the Landowner and Shea Homes entered into two lot purchase and sale agreements pursuant to which Shea Homes agreed to acquire 116 lots within Improvement Area No. 1, consisting of 48 "50's" (50' -wide lots) and 68 "60's" ( 60' -wide lots), a portion of which are located in the age -qualified (55+) section of Improvement Area No. 1. Pursuant to the terms of the lot purchase contracts, Shea Homes is required to acquire from the Landowner each lot once a purchase contract has been executed with a homebuyer for such lot. The homebuyer then closes escrow with Shea Homes upon completion of the home by Shea Homes. As of May 1, 2024, Shea Homes 68 4160-0370-8238.9

had acquired ten lots from the Landowner. In addition to the 116 lots, Shea Homes has certain rights to the remaining 50's and 60's within Improvement Area No. 1. There is no guarantee that Shea Homes will acquire the remaining lots under contract as planned.

Shea Homes has 3 floor plans for the 50's lot type, with the base home square footage ranging from [2,282] square feet to [2,821] square feet. The one and two-story floor plans typically include 2 to 3 bedrooms with 2'/2 baths and 2 car garages. As of May 1, 2024 current base pricing for homes on the 50's lot type ranged from approximately $[XXX] to $[YYY]. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered.

Shea Homes has 4 floor plans for the 60's lot type, with the base home square footage ranging from [2,782] square feet to [3,741] square feet. The one and two-story floor plans typically include 2 to 3 bedrooms with 2'/2 baths and 2 car garages and offer an optional casita which may increase the home's base square footage. As of May 1, 2024 current base pricing for homes on the 60's lot type ranged from approximately $[XXX] to $[YYY]. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered.

Shea Homes commenced construction of three model homes in February 2024 and commenced construction of the first production home in April 2024. Initial home closings to individual homebuyers are expected to occur in late 2024. As of May 1, 2024, Shea Homes has entered into [nine] sales contracts with homebuyers and had obtained building permits, including the three permits for model homes.

Additional summary information regarding the Landowner's current plans for the proposed development of the 50's Cottage Collection and 60's Grand Collection (including the age -qualified and multi -generational units) is included in the Appraisal under the heading "Property Analysis — Proposed Improvements Description." See APPENDIX B — "APPRAISAL REPORT." Shea Homes ' development expectations described above are based on Shea Homes ' current plans.

These plans may change due to changes in economic and market conditions or other factors. No assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement. Shea Homes reserves the right to change its development plans at any time without notice. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation by the homebuyer. See "SPECIAL RISK FACTORS — Risks of Real Estate Secured Investments Generally — [Declines in ValueJ" and "— Failure to Develop Properties; Government Approvals."
Shea Homes Financing Plan. Shea Homes expects to fund its development within Improvement Area No. 1 through internal sources, which may include homes sales revenue and funding from its ultimate parent company SHLP.

Notwithstanding the belief of Shea Homes that it will have sufficient funds to complete its planned development in Improvement Area No. 1, no assurance can be given that sources offinancing available to Shea Homes will be sufficient to complete its property development and home construction as currently anticipated. While SHLP has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Shea Homes nor any of its affiliates has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of SHLP to provide internal financing in the past, Shea Homes has not represented in any way that it will do so in the future. 69 4160-0370-8238.9

If and to the extent that internal financing and home sales revenues are inadequate to pay the costs to complete Shea Homes' planned development in Improvement Area No. 1 and other financing by Shea Homes is not put into place, there could be a shortfall in the funds required to complete the proposed development by Shea Homes, or to pay ad valorem property taxes or Special Taxes related to Shea Homes' property in Improvement Area No. 1 if so owned and taxed, and the remaining portions of Shea Homes' project in Improvement Area No. 1 may not be completed. Many factors beyond Shea Homes ' control, or a decision by Shea Homes to alter its current plans, may cause the actual sources and uses to dyer from the projections. See "SPECIAL RISK FACTORS" herein for a discussion of risk factors.

Davidson Communities. Davidson Rancho Mirage 262, LLC, a Delaware limited liability company (previously defined as "Davidson Communities"), is an affiliate of Davidson Communities, LLC (the "Davidson Communities Company").

Over the past four decades, Davidson Communities Company through its subsidiaries and affiliates has built more than 6,000 homes for a segment of the market that appreciates a high-level of originality, quality, design, and detail. Since 1978, Davidson Communities Company has flourished as one of the nation's most acclaimed independent, entrepreneurial homebuilders with a reverence for architecture and a sensibility for the aspirations of California homeowners. The ability to create a fresh approach on traditional, nostalgic elements of a home has earned Davidson Communities Company a chair in the national Builder Magazine Hall of Fame for Design Excellence, and the distinction as California Builder Magazine's Builder of the Year. The company has been honored with more than 150 national, regional and local residential design and marketing awards, including three projects that were selected as best in the nation. More information can be found at https://www.davidsoncommunities.com/ . This internet address is included for reference only, and the information on this internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on this internet site.

Davidson Communities Ownership and Development Plan. On September 22, 2023, the Landowner and Davidson Communities entered into two lot purchase and sale agreements pursuant to which Davidson Communities agreed to acquire 60 lots within Improvement Area No. 1 from the Landowner, consisting of consisting of 49 "70's" lots and 11 "135's" lots. Pursuant to the terms of the lot purchase contracts, Davidson Communities is required to acquire each lot from the Landowner once a purchase contract has been executed with a homebuyer for such lot. Under the Davidson Communities structure, the homebuyer closes escrow on the lot from Davidson Communities simultaneously with Davidson Communities acquiring the lot from the Landowner and prior to the commencement of home construction thereon. The homebuyer enters into a construction contract with the builder at that time. The homebuyer then uses either cash or construction financing to finance the construction of the home on the lot by Davidson Communities. This structure is typically referred to as a "one-time close" or "construction - to -permanent financing." As of May 1, 2024, Davidson Communities had not acquired any lots from the Landowner as sales for Davidson Communities are expected to commence in June 2024. Model home construction is expected to start in June 2024 and Davidson Communities will own such model homes. In addition to the 60 lots in the initial purchase, Davidson Communities has certain rights to acquire the 64 of the 71 remaining 70's lots within Improvement Area No. 1. There is no guarantee that Davidson Communities will acquire the lots under contract as planned. Davidson Communities plans to enter into initial lot sale and home construction contracts with homebuyers in approximately May 2024 and close escrow on the first lots to individual homebuyers in June 2024. Model home construction is expected to start in June 2024 and Davidson Communities will own such model homes.

Davidson Communities has 6 floor plans for the 70's lot type, with the base home square footage ranging from [3,003] square feet to [3,470] square feet. Certain options are available, such as a casita or second -story pop-up guest suite, which may increase the home's base square footage. The floor plans 70 4160-0370-8238.9

typically include 3 to 4 bedrooms and 4 baths and 2 car garages. As of May 1, 2024 base home pricing for Davidson Communities had not been released. The Appraisal, which may vary from actual pricing, estimated average pricing of approximately $2,650,000.

Davidson Communities has 2 base floor plans for the 135' lot type, with the base home square footage ranging from [5,710] square feet to [7,115] square feet. Many optional additions are available such as casitas and basements which may increase the home's base square footage significantly. The floor plans typically include 5 to 6 bedrooms with 3 to 4 car garages. As of May 1, 2024 base home pricing for Davidson Communities had not been released. The Appraisal, which may vary from actual pricing, estimated average pricing of approximately $5,400,000.

Additional summary information regarding the Landowner's current plans for the proposed development of the 70's Grand Collection and 135's Estate Collection is included in the Appraisal under the heading "Property Analysis — Proposed Improvements Description." See APPENDIX B — "APPRAISAL REPORT."
Davidson Communities' development expectations described above are based on Davidson Communities' current plans. These plans may change due to changes in economic and market conditions or other factors. No assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans set forth above will not change after the date of this Official Statement. Davidson Communities' reserves the right to change its development plans at any time without notice. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation by the homebuyer. See "SPECIAL RISK FACTORS — Risks of Real Estate Secured Investments Generally — [Declines in ValueJ" and "— Failure to Develop Properties; Government Approvals." Davidson Communities Financing Plan. The structure of the transaction between Davidson Communities and homebuyer reduces capital required for Davidson Communities to construct homes.

Under the structure, homebuyers use either cash or financing to purchase the lot up front and for the construction costs of the home. Since the homebuyer's funds are used to purchase the lot and to construct the homes, Davidson Communities' capital requirement is reduced. Of the funding responsibilities that Davidson Communities does have, which includes a cash deposit, construction of a two model homes for the 70's and one model home for the 135's and certain planning, engineering and architectural costs, Davidson Communities expects to fund through internal sources, which may include homes sales revenue and funding from its parent, and external sources, which may include debt financing.

Notwithstanding the belief of Davidson Communities that it will have sufficient funds to complete its planned development in Improvement Area No. 1, no assurance can be given that sources of financing available to Davidson Communities will be sufficient to complete its property development and home construction as currently anticipated While Davidson Communities Company has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Davidson Communities nor any of its affiliates has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of Davidson Communities Company to provide internal financing in the past, Davidson Communities has not represented in any way that it will do so in the future.

If and to the extent that internal financing and home sales revenues are inadequate to pay the costs to complete Davidson Communities ' planned development in Improvement Area No. 1 and other financing by Davidson Communities is not put into place, there could be a shortfall in the funds required to complete the proposed development by Davidson Communities, or to pay ad valorem property taxes or Special Taxes related to Davidson Communities ' property in Improvement Area No. 1 if so owned and taxed, and the 71 4160-0370-8238.9

remaining portions of Davidson Communities ' project in Improvement Area No. 1 may not be completed.

Many factors beyond Davidson Communities ' control, or a decision by Davidson Communities to alter its current plans, may cause the actual sources and uses to differ from the projections. See "SPECIAL RISK FACTORS" herein for a discussion of risk factors.

Woodbridge Pacific. WPG RANCHO MIRAGE 1, LLC, a California limited liability company (previously defined as "Woodbridge Pacific") is an affiliate of Woodbridge Pacific Group ("Woodbridge Pacific Group").

Woodbridge Pacific Group brings three decades of experience working with homebuyers and seeks to deliver a home that will bring years of pride and pleasure. Classic home design with modern innovation is brought to life through a dedication to details from foundation to finish.

Woodbridge Pacific Group is led by two experienced industry professionals who have spent their careers developing quality communities and neighborhoods throughout the West for a wide range of leading builders. The partnership between Todd Cunningham and Carl Neuss marks the opportunity for both to lead a team dedicated to the art of creating unique residences in desirable locations. Woodbridge Pacific Group's leadership team includes those with extensive experience in construction management, architectural design, land planning, financing and marketing. Together their passion for creating custom - caliber residences is the driving force behind helping families find value, craftsmanship and exquisite detailing all under one roof.

Woodbridge Pacific Group's homes and communities have won awards in a host of categories, from Best Architecture, Best Interior Design and Best Home, to Home of the Year, Community of the Year, and more. More information can be found at https://woodbridgepacific.com/ . This internet address is included for reference only, and the information on this internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on this internet site.

Woodbridge Pacific Ownership and Development Plan. On September 18, 2023, the Landowner and Woodbridge Pacific entered into a lot purchase and sale agreement pursuant to which Woodbridge Pacific agreed to acquire 39 lots within Improvement Area No. 1 from the Landowner, consisting of the "90's" lot size. Pursuant to the terms of the lot purchase contract, Woodbridge Pacific is required to acquire each lot once a purchase contract has been executed with a homebuyer for such lot. Under the Woodbridge Pacific structure, the homebuyer closes escrow on the lot from Woodbridge Pacific simultaneously with Woodbridge Pacific acquiring the lot from the Landowner and prior to the commencement of home construction thereon. The homebuyer enters into a construction contract with the builder at that time. The homebuyer then uses either cash or construction financing to finance the construction of the home on the lot by Woodbridge Pacific. This structure is typically referred to as a "one-time close" or "construction -to - permanent financing." As of May 1, 2024, Woodbridge Pacific had not acquired any lots from the Landowner as sales for Woodbridge Pacific are expected to commence in May 2024. Woodbridge Pacific plans to enter into initial lot sale and home construction contracts with homebuyers in approximately May 2024 and close escrow on the first lots to individual homebuyers in June or July 2024.

Woodbridge Pacific has 5 floor plans for the 90's lot type, with the base home square footage ranging from [3,516] square feet to [3,807] square feet. Certain options are available, such as a casita or second -story pop up guest suite, which may increase the home's base square footage. The floor plans typically include 3 bedrooms with 31/2 baths with 3 car garages. As of May 1, 2024, current base pricing for homes on the 90's lot type ranged from approximately $[XXX] to $[YYY]. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered.
72 4160-0370-8238.9

Additional summary information regarding the Landowner's current plans for the proposed development of the 90's Estate Collection is included in the Appraisal under the heading "Property Analysis — Proposed Improvements Description." See APPENDIX B — "APPRAISAL REPORT." Woodbridge Pacific's development expectations described above are based on Woodbridge Pacific's current plans. These plans may change due to changes in economic and market conditions or other factors. No assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans set forth above will not change after the date of this Official Statement. Woodbridge Pacific's reserves the right to change its development plans at any time without notice. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation by the homebuyer. See "SPECIAL RISK FACTORS — Risks of Real Estate Secured Investments Generally — [Declines in Value]" and "— Failure to Develop Properties; Government Approvals." Woodbridge Pacific Financing Plan. The structure of the sales and home construction transaction between Woodbridge Pacific and homebuyer reduces capital required for Woodbridge Pacific to construct homes. Under the structure, homebuyers use either cash or financing to purchase the lot up front and for the construction costs of the home. Since the homebuyer's funds are used to purchase the lot and to construct the homes, Woodbridge Pacific's capital requirement is reduced. Of the funding responsibilities that Woodbridge Pacific does have, which includes a cash deposit, construction of a model home and certain planning, engineering and architectural costs, Woodbridge Pacific expects to fund through internal sources, which may include homes sales revenue, and external sources, which may include debt financing.

Notwithstanding the belief of Woodbridge Pacific that it will have sufficient funds to complete its planned development in Improvement Area No. 1, no assurance can be given that sources of financing available to Woodbridge Pacific will be sufficient to complete its property development and home construction as currently anticipated. While Woodbridge Pacific Group has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Woodbridge Pacific nor any of its affiliates has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of Woodbridge Pacific Group to provide internal financing in the past, Woodbridge Pacific has not represented in any way that it will do so in the future.

If and to the extent that internal financing and home sales revenues are inadequate to pay the costs to complete Woodbridge Pacific's planned development in Improvement Area No. 1 and other financing by Woodbridge Pacific is not put into place, there could be a shortfall in the funds required to complete the proposed development by Woodbridge Pacific, or to pay ad valorem property taxes or Special Taxes related to Woodbridge Pacific's property in Improvement Area No. 1 if so owned and taxed, and the remaining portions of Woodbridge Pacific's project in Improvement Area No. 1 may not be completed. Many factors beyond Woodbridge Pacific's control, or a decision by Woodbridge Pacific to alter its current plans, may cause the actual sources and uses to differ from the projections. See "SPECIAL RISK FACTORS" herein for a discussion of risk factors.
[120 Builder]. [Ownership and development to come as available] Additional summary information regarding the Landowner's current plans for the proposed development of the is included in the Appraisal under the heading "Property Analysis — Proposed Improvements Description." See APPENDIX B — "APPRAISAL REPORT." Banking Relationship for Home Financing. The Landowner, Davidson Communities and Woodbridge Pacific have worked with [US Bank] to set up a preferred lender program for the "one-time 73 4160-0370-8238.9

close" financing structure that Davidson Communities and Woodbridge Pacific intend to use. According to the Landowner, US Bank is expected to offer construction and mortgage financing to buyers of homes for Davidson Communities and Woodbridge Pacific within the Development. US Bank has pre -approved these Merchant Builders and [educated sales staff] regarding the US Bank one-time close loan program.

US Bank has an extensive history working with and financing both Davidson Communities and Woodbridge Pacific. Buyers of homes in Improvement Area No. 1 will have the option of using their own sources of construction and mortgage financing, but the Landowner believes that this pre -arranged program will simplify the process for homebuyers and reduce Merchant Builder and homebuyer financing risk.

Condominiums
Improvement Area No. 1 includes three parcels comprising approximately 13 acres planned for the development of two or more condominium projects. The project entitlements allow for up to [30] dwelling units per acre in the condominium areas, however, the Landowner more conservatively estimates approximately 150 condominium units will be constructed in Improvement Area No. 1. The Landowner plans to sell and convey these parcels to one or more experienced condominium developers, who will complete the construction of the condominium units thereon.

A significant portion of the condominium parcels directly fronts the lagoon, and the parcels generally have both lagoon and mountain views. The premium location of these parcels within the Development and waterfront real estate, which is highly differentiated within the Coachella Valley, makes these parcels highly desirable for condominium developers.

The condominium parcels are currently in the planning stage. As of May 1, 2024, the Landowner was actively engaged in discussions with potential condominium developers regarding condominium development options. The Landowner has also conducted market research and engaged with various specialists to determine optimal condominium product to drive pricing and absorption. During 2024, the Landowner expects to enter into one or more agreements with one or more condominium developers for the sale, partnership or similar agreement in order to develop the condominium parcels. The condominiums will then need to be planned, engineered and constructed. There is no guarantee that one or more condominium developers will enter into any such sale agreement as planned.

Notwithstanding the foregoing, no assurance can be given that the condominium parcels will be developed as anticipated.

Limited Expectation for Merchant Builders to Pay Special Taxes Under the agreements between the Merchant Builders and the Landowner, the Merchant Builders acquire finished lots, with certain exceptions, at time the SBD has open escrow with the homebuyer. [It is expected that any additional merchant builders would be subject to similar agreements.] The Merchant Builders [and any additional merchant builders] therefor will only be responsible for Special Taxes during the time of home construction and prior to close of escrow. Buyer of the Improvement Area No 1. Bonds should not assume Merchant Builders will at any point be responsible for a significant portion of bond debt service.]

SPECIAL RISK FACTORS
The purchase of the Series 2024 Bonds involves certain investment risks. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Series 2024 Bonds. The discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be 74 4160-0370-8238.9

considered as risks in evaluating the credit quality of the Series 2024 Bonds, and this Official Statement should be read in its entirety for the purpose of making an informed investment decision.

INVESTMENT IN THE SERIES 2024 BONDS INVOLVES SIGNIFICANT RISKS WHICH MAY NOT BE APPROPRIATE FOR CERTAIN INVESTORS. THEREFORE, ONLY PERSONS WITH

SUBSTANTIAL FINANCIAL RESOURCES WHO UNDERSTAND THE RISKS OF INVESTMENT IN THE SERIES 2024 BONDS SHOULD CONSIDER SUCH AN INVESTMENT. SEE "SPECIAL RISK FACTORS" HEREIN FOR A DISCUSSION OF SPECIAL FACTORS WHICH SHOULD BE

CONSIDERED, IN ADDITION TO THE OTHER MATTERS SET FORTH HEREIN, IN EVALUATING THE INVESTMENT QUALITY OF THE SERIES 2024 BONDS.

The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in Improvement Area No. 1 to pay their Special Taxes when due. Such failure to pay Special Taxes could result in the inability of the Community Facilities District to make full and punctual payments of debt service on the Series 2024 Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in Improvement Area No. 1.

Risks of Real Estate Secured Investments Generally
The Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (a) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the Community Facilities District, the supply of or demand for competitive properties in such area, and the market value of land for development, homes or institutional facilities and/or sites in the event of sale or foreclosure, (b) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to hazardous materials) and fiscal policies, (c) natural disasters (including, without limitation, earthquakes, wildfires, desert sandstorms, floods and droughts), which may result in uninsured losses; and (d) increased delinquencies due to rising mortgage costs and other factors. No assurance can be given that the Landowner, merchant builders or individual property owners will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. Neither the Landowner nor other owner of a property is personally obligated to pay the Special Tax. The Special Tax is an obligation which is secured only by a lien against the property on which it is levied. See "— Payment of the Special Tax is not a Personal Obligation of the Owners" below See also "— Bankruptcy and Foreclosure Delays" below for a discussion of certain limitations on the Community Facilities District's ability to pursue judicial proceedings with respect to delinquent parcels.

Limited Obligations
The Series 2024 Bonds and the interest thereon and all obligations of the Community Facilities District under the Indenture shall be special obligations of the Community Facilities District, payable solely from Special Tax Revenues and the other assets pledged therefor under the Indenture; provided, however, that all obligations of the Community Facilities District under the Series 2024 Bonds shall be special obligations of the Community Facilities District, payable solely from Net Special Tax Revenues and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth herein), the City, or the State of California, or any political subdivision thereof, is pledged to the payment of the Series 2024 Bonds.

The Community Facilities District's legal obligations with respect to any delinquent Special Taxes are limited to: (1) payments from accounts of the Reserve Fund to the extent of funds on deposit therein; and (2) the institution of judicial foreclosure proceedings under certain circumstances with respect to any 75 4160-0370-8238.9

parcels for which Special Taxes are delinquent. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure." The Series 2024 Bonds cannot be accelerated in the event of any default.

The obligation to pay Special Taxes does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to such liens. Enforcement of Special Tax payment obligations by the Community Facilities District is limited to judicial foreclosure in the County Superior Court. There is no assurance that any current or subsequent owner of a parcel subject to a Special Tax lien will be able to pay the amounts due or that such owner will choose to pay such amounts even though financially able to do so.

Development Risks
The land in Improvement Area No. 1 comprises substantially undeveloped property. The completion of development of the land may be adversely affected by changes in general economic conditions, water shortages, increased construction costs, fluctuations in the real estate market, and other similar factors, including development in surrounding areas which may compete with the development within Improvement Area No. 1. There can be no assurance that development within Improvement Area No. 1 will not be adversely affected by these or other factors, including future governmental policies or environmental issues.

Development and construction are subject to a number of risks, including, without limitation, inclement weather, shortages of or other supply problems relating to labor and materials, increases in costs due to inflation, design or construction defects, global health concerns, delays in obtaining governmental or agency approvals and permits, compliance with existing permits and approvals and other risks. The realization of one or more of such risks could result in delays to or a failure to complete such required facilities, which could in turn result in delays to or a failure to develop the land within Improvement Area No. 1, or failure complete homes for sale to individual homeowners. See "SPECIAL RISK FACTORS — Failure to Develop" herein.

Cost overruns for public infrastructure to be constructed by the Landowner is generally the responsibility of the Landowner. The ability to pay for such cost overruns and to complete the applicable construction project is dependent on the availability of funding sources to the Landowner. No assurances can be given that the Landowner will obtain any such funding in a manner timely enough to avoid delays to the development of the land within Improvement Area No. 1 as described herein.

The Special Taxes are to be collected from the owners of property located within Improvement Area No. 1 regardless of the completion of the development of the properties within Improvement Area No. 1. Nevertheless, the extent of completion of the development of the property within Improvement Area No. 1 and the Landowner's success in selling the property to merchant homebuilders may affect the ability and willingness of landowners to pay the assessment and will affect the market value of any property foreclosed upon for nonpayment of installments of the assessment.

No assurance can be given that any development in progress or contemplated will be partially or fully completed, and in assessing the investment quality of the Series 2024 Bonds prospective purchasers should evaluate the risks of non -completion, especially as related to the concentration of ownership. (See "Concentration of Ownership" below.) Undeveloped land is less valuable than developed land and provides less valuable security to the Owners should it be necessary for the Community Facilities District to foreclose due to the nonpayment of Special Taxes on property in Improvement Area No. 1. In addition, the extent of development of land in Improvement Area No. 1 could affect the number of potential purchasers bidding, and the prices bid, at any foreclosure sale if the Community Facilities District were to foreclose upon the lien of a delinquent unpaid assessment. Finally, a slowdown of the economic development process in any 76 4160-0370-8238.9

of the regions of Improvement Area No. 1 could also adversely affect land values and reduce the proceeds received at a foreclosure sale in the event Special Taxes are not paid when due.

Challenges to the Homebuilding Industry
Due to the current state of world affairs, the pace of homebuilding and the sale of homes to individual homeowners in Improvement Area No. 1 may be adversely affected by a variety of factors, including rising interest rates, inflation and changes in economic conditions, increases in certain construction costs, droughts and water shortages and/or other similar environmental factors, and recently including workforce shortages and supply chain disruptions. Although the Appraiser notes that the Development's market segment has historically been less affected by mortgage interest rates, as the target market is a multi -home (second, third, or more) homebuyer. The recent increases in interest rates may slow the demand for new residential homes and a combination of historically high new home prices and rising interest rates may price some homebuyers out of entry-level homes. High inflation could force prospective homebuyers to account for other costs over purchasing a new home at a higher interest rate. These external factors, if and as they arise, could have a material adverse effect on the ability to develop the homes in Improvement Area No. 1 as planned, and no assurance can be provided that a homebuilder will be able to (a) complete in whole or in any part, or within any particular time, its construction of homes within Improvement Area No. 1; (b) avoid additional material increases in development costs or delays resulting from work stoppages, reduced attendance of workers, shortages or delays in the delivery of building materials, and inflation of the costs of building materials; or (c) sell homes, and close home sales or avoid purchase contract cancellations due to an economic downturn driven by rising interest rates, inflation or other changes in economic conditions.

Failure to Develop Properties; Government Approvals
Land development is subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. Such approvals, once obtained, may still be challenged or subject to subsequent referendum, and issuance of additional building permits for the homes in the Development may be delayed.

Revocation or challenge of any such agency approval could adversely affect the planned land development.

All discretionary entitlements are in place and none of the Landowner, Master Developer, or any Developer Entity is aware of any additional entitlements required to continue with development of its property in Improvement Area No. 1 or the Community Facilities District, other than the remaining building permits. See "PROPERTY OWNERSHIP AND THE DEVELOPMENT — The Development." The development of land is also subject to economic considerations such as the strength of the regional economy and the resulting demand for land and homes. Another economic downturn, similar to the recent national recession, for example, could adversely impact the demand for homes and land development operations generally throughout the Rancho Mirage and Coachella area. See "SPECIAL RISK FACTORS — Real Estate Market Fluctuations." Other factors out of the control of the Landowner, Master Developer, and Developer Entities, such as weather conditions, may delay development.

Owners of the Series 2024 Bonds should assume that any event that significantly impacts the ability to develop land in Improvement Area No. 1 or the Community Facilities District could cause the property values within Improvement Area No. 1 to decrease from those estimated by the Appraiser and could affect the willingness and ability of the owners of land within Improvement Area No. 1 to pay the Special Taxes when due. See "PROPERTY OWNERSHIP AND THE DEVELOPMENT — The Development" for information regarding the status of development in Improvement Area No. 1. The Appraiser makes limited 77 4160-0370-8238.9

observations about such potential impacts and market conditions. See APPENDIX B — "APPRAISAL REPORT."
Competition
The housing market in the area in which Improvement Area No. 1 is located has other pending and proposed projects that may be competitive with the projects in Improvement Area No. 1 [and in the Community Facilities District]. This competition could impact the future value of the property and the rate at which homes are sold and absorbed.

Buildout of the 502 homes in Improvement Area No. 1 is expected to occur over the next four years, with sales absorption in full currently projected by the Market Absorption Analyst on or about the second quarter of 2027. The Development as a whole is approved for 1,932 units. Specific neighborhood parameters (lot sizes, homes sizes) are currently only substantially known for Improvement Area No. 1.

The planning for future neighborhoods will likely be influenced at least some by the performance of the first neighborhoods being built in Improvement Area No. 1. The planning for future neighborhoods will be influenced by the pricing and absorption performance of the first neighborhoods being built in Improvement Area No. 1. The Landowner intends to have a continuous supply of homes available for purchase over the build -out period of the entire Development. The Landowner expects that there may be some overlap in the timing of home sales efforts between final sales/absorption in Improvement Area No. 1 and future phases of the Development. See the Appraisal in Appendix B, the Market Absorption Study in Appendix C, and "SPECIAL RISK FACTORS — Real Estate Market Fluctuations" below.

Vacation Home Development
As pointed out in the Market Absorption Study, a high preponderance of households in Rancho Mirage are second home/vacation home owners, including high numbers of empty nesters and retirees.

Assumptions for potential homebuyers in Improvement Area No. 1 are also considered, including: demand from the wealthy population in Los Angeles and Orange County living within a couple hours of the Development who may buy second homes for use on weekends and for short vacations as well as homebuyers from outside of the region, specifically the San Francisco Bay area, Canada, and the Midwest United States, the impact of Disney's global reach which may make it also possible buyers may come from Asia and the Middle East, and a number mature buyers at both the all -ages and age -qualified products, many of which may live full time in Improvement Area No. 1. Thus, an important contributory demand factor to the potential successful development of Improvement Area No. 1 may be sustained expansion of the U.S. economy, particularly in the western United Stated and Canada and consumption of luxury goods and accommodations. At this point there can be no assurance of such economic expansion. Moreover, the values of vacation home properties tend to fluctuate more than the values of primary residences. It is observed that the region's economy has continued to grow in recent decades, increasingly attracting full- time residents spanning the age spectrum.

Land Values
The value of land within Improvement Area No. 1 is a critical factor in determining the investment quality of the Series 2024 Bonds. If the Landowner, merchant builder, or other landowner defaults in the payment of a Special Tax, the Community Facilities District's only remedy is to commence foreclosure proceedings in an attempt to obtain funds to pay the delinquent Special Tax.

Prospective purchasers of the Series 2024 Bonds should not assume that the land within Improvement Area No. 1 could be sold for the appraised value described under the heading 78 4160-0370-8238.9

"IMPROVEMENT AREA NO. 1 — Appraised Value" at a foreclosure sale for delinquent Special Taxes.

For example, it is unlikely that common ownership would be maintained through foreclosure sales of multiple delinquent parcels because at foreclosure each parcel must be sold separately for the Special Tax lien claims against it and multiple parcels may not be foreclosed in a single "bulk" foreclosure sale. In particular, the Appraiser notes that it has assumed that the information provided by the Landowner, Master Developer, and Developer Entities is and is believed to be reliable, but no warranty is given for its accuracy.

See APPENDIX B — "APPRAISAL REPORT" for descriptions of other assumptions made by the Appraiser in determining its appraised values for the property in Improvement Area No. 1.

Additionally, reductions in land values within Improvement Area No. 1 could occur due to a downturn in the economy, physical events such as earthquakes, floods, extended drought, wildfire, or other events, all of which will adversely impact the security underlying the Special Tax.

No Independent Review of Valuation or Viability of Completed Projects The development of the property within Improvement Area No. 1 is comprised of phases, as described herein. Payment of Special Taxes is inherently dependent upon the completion of each of the phases of development in Improvement Area No. 1 and the ability the Landowner and of the buyers of completed homes to pay. None of the Community Facilities District, the City, the Municipal Advisor or the Underwriters have reviewed any business plan for continued ownership, development and/or operation of development in Improvement Area No. 1. Similarly, none of the Community Facilities District, the City, the Municipal Advisor or the Underwriters has conducted any independent evaluation of the existing or projected economic viability or profitability of development in Improvement Area No. 1 or any phase thereof, including review and/or evaluation of financial statements of any owner or developer of any parcel in Improvement Area No. 1. The information contained herein regarding the proposed development in Improvement Area No. 1, each phase and the Landowner and other owners of the parcels within Improvement Area No. 1 has been supplied by such owners and none of Community Facilities District, the City, the Municipal Advisor or the Underwriters has independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of such information.

In the event the Landowner or other owner, developer or merchant builder experiences financial difficulties, including difficulties resulting from construction or operation of development in Improvement Area No. 1 or any phase thereof, the value of the affected parcel within Improvement Area No. 1 may decline and/or such Landowner or other owner or developer may elect to refrain from payment of future Special Taxes for such parcel. See also "Development Risks" above.

CotinoTM reflects the first ever branded Storyliving by Disney' community. The physical centerpiece of the community is the under -development Crystal Lagoon that, once completed, will be the largest within the United States. There is not a fully comparable development or residential amenity configuration upon which to base the premium analysis set forth in the Appraisal or the Market Absorption Study. While three Merchant Builders have purchase and sale agreements in place with the Landowner for a substantial portion of the lots, the Landowner reports that as of April 1, 2024, the Landowner and the Master Developer are in the final stages of discussions with a builder and expects to enter into a purchase and sale agreement within the next couple of months for the remaining 120's. With respect to the condominium parcels, the Landowner reports that as of May 1, 2024, the condominium parcels were in the planning stage and the Landowner was actively engaged in discussions with potential condominium developers regarding condominium development options. The Landowner expects to enter into one or more agreements with one or more condominium developers later in 2024. There is no guarantee that one or more condominium developers will enter into any such sale agreement as planned. The private club to be located in Improvement Area No. lis not yet completed. Additional features of the development including 79 4160-0370-8238.9

retail, food and beverage space within a town center, and up to 400 hotel rooms, remain for later development and completion.

Concentration of Ownership
Improvement Area No. 1 has a significant concentration of ownership. Other than [12] lots conveyed to Shea Homes as described herein, the Landowner owned all of the land within Improvement Area No. 1 as of May 1, 2024. The concentration of ownership increases the risk that delinquencies in the payment of the Special Taxes will adversely affect payment of debt service on the Series 2024 Bonds. As of the date of this Official Statement, no homes had been completed or conveyed to individual homeowners, however Shea Homes has acquired [12] residential lots from the Landowner. Shea Homes has commenced construction of three model homes in February 2024 and the first [seven] production homes in April 2024 which were under contract with individual homebuyers as of May 1, 2024. Homes under contract may not result in closed escrows as sales contracts are subject to cancellation by the homebuyer. Woodbridge Pacific and Davidson Communities have completed home designs, are expected to begin marketing their homes in May 2024, and are expected to start model home construction by July 2024. Each will initially own is respective model homes. The fact that initially, substantially all of the property providing ultimate security for the payment of the Series 2024 Bonds is controlled by only a single owner means that the timely payment of the Special Taxes and, therefore, the Series 2024 Bonds, will depend substantially upon the willingness and ability of this owner to pay the Special Taxes when due. The only asset of the Landowner which constitutes security for the Local Obligations is the Landowner's real property holdings located within Improvement Area No. 1.

Although bondholders should not look to the assets or credit of the Landowner as a source of payment for the Bonds, the Landowner's ability to pay Special Tax and to develop Improvement Area No. 1 are subject to the financial resources available to it. See "THE PROPOSED DEVELOPMENT, PROPERTY OWNERSHIP AND THE DEVELOPER" herein for a description of the financial resources available to the Landowner. The only asset of the Landowner that constitutes security for the Bonds is such Landowner's real property holdings that are located within Improvement Area No. 1 and subject to the lien of the Special Tax. Concentration of ownership increases the risk of a failure to collect sufficient Special Tax to pay debt service on the Bonds, all other things being equal. The members, affiliates, and principals of the Landowner have no obligation to contribute additional capital to the Landowner in the event of a shortfall of other resources, and the Community Facilities District can give no assurance that any such additional capital contributions will occur.

The Special Tax will constitute a lien on property subject to taxation within Improvement Area No.

1. It does not constitute a personal indebtedness of the owner of such property. There is no assurance that the Landowner or any other or future landowner will be financially able to pay their annual Special Tax or that they will pay such tax even if financially able to do so.

Lack of diversity of ownership in Improvement Area No. 1, and, therefore, in the obligation to pay Special Taxes, presents a risk to Owners of Series 2024 Bonds. Failure of the Landowner or owners of the property within Improvement Area No. 1 to pay the annual Special Taxes when due could result in the rapid, total depletion of the Reserve Fund prior to replenishment from the resale of property upon a foreclosure or otherwise. In that event, there could be a default in payments of the principal of, and interest on, the Series 2024 Bonds. See "SPECIAL RISK FACTORS — Insufficiency of Special Tax Revenues" below.

There is no guarantee that the Landowner or the Merchant Builders will complete their respective development within Improvement Area No. 1 or when such development will be completed. The general slowing of sales in the housing market, both nationally and locally, could slow or prevent altogether the 80 4160-0370-8238.9

Landowner's and/or the current and any future merchant builders' developments within Improvement Area No. 1. Failure of any significant owner of taxable property within Improvement Area No. 1, such as the Landowner and the Merchant Builders, to pay the annual Special Taxes when due could result in the rapid, total depletion of the Reserve Fund prior to replenishment from the resale of the property upon a foreclosure or otherwise or prior to delinquency redemption after a foreclosure sale, if any. In that event, there could be a default in payments of the principal of and interest on the Series 2024 Bonds. Further development of property in Improvement Area No. 1 may not occur as currently proposed or at all. See "PROPERTY OWNERSHIP AND DEVELOPMENT" herein for information regarding property ownership and the status of development in Improvement Area No. 1.

There can be no assurance that the undeveloped land within Improvement Area No. 1 will be fully developed and conveyed to individual homeowners. See "BOND OWNERS' RISKS — Bankruptcy and Foreclosure" and "— Development and Construction Risks" and "SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure."
Payment of the Special Tax is not a Personal Obligation of the Owners An owner of a property is not personally obligated to pay the Special Tax. The Special Tax is an obligation which is secured only by a lien against the property on which it is levied. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the payment of the Special Tax, the Community Facilities District has no recourse against the owner. See "IMPROVEMENT AREA NO. 1 — Direct and Overlapping Indebtedness" for a table showing overlapping indebtedness payable from taxes to be levied on parcels in Improvement Area No. 1.

While the Landowner and ECRM GP through its affiliates and SBD and its affiliates have made certain advances for costs of development, none is personally obligated to pay the Special Tax nor under any obligation to make any additional advances to cover costs of the development or completion of homes for sale..

Landowner's Agreements with Merchant Builders
[The purchase contracts with Merchant Builders specify that individual lots are conveyed from the Landowner to the respective Merchant Builder at such time as an individual homebuyer enters into a contract to purchase such lot. In the case of Shea Homes, the lot transfers from the Landowner to Shea Homes, which then builds the specified home, before transferring to the homebuyer upon completion. In the case of Woodbridge Pacific and Davidson Communities, the lot transfers from the Landowner to such Merchant Builder and then immediately to the homebuyer, who enters into a construction agreement with the designated Merchant Builder. The price at which the Merchant Builder purchases the lot from the Landowner is, in part, a function of the price at which the homebuyer is acquiring the home. While this structure aligns incentives between the Landowner and Merchant Builders, the ownership of the lots — and therefore the responsibility for paying the Special Tax on Undeveloped Property is likely to remain concentrated in a single party, the Landowner, for a longer amount of time versus a lot acquisition structure where the builder acquires finished lots in scheduled takedowns or substantially all at one time earlier in the build cycle of a development.]
Availability of Funds to Pay Delinquent Special Taxes
Upon receipt of the proceeds from the sale of the Series 2024 Bonds, the Community Facilities District will initially establish the Reserve Fund in an amount of the Reserve Requirement. The monies in the Reserve Fund shall constitute a trust fund for the benefit of the Owners of the Series 2024 Bonds, shall be held by the Trustee, and shall be administered by the Trustee in accordance with and pursuant to the 81 4160-0370-8238.9

provisions of the Indenture. If a deficiency occurs in the Interest Account or the Principal Account for payment of interest on or principal of the Series 2024 Bonds, the Trustee will transfer into such funds an amount out of the respective accounts of the Reserve Fund needed to pay debt service on the Series 2024 Bonds. There is no assurance that the balance in the Reserve Fund will always be adequate to pay the debt service on the Series 2024 Bonds in the event of delinquent Special Taxes.

If, during the period of delinquency, there are insufficient funds in the respective accounts of the Reserve Fund to pay the principal of and interest on the Series 2024 Bonds as it becomes due, a delay may occur in payments of principal and/or interest to the owners of the Series 2024 Bonds.

No Teeter Plan
Although the Riverside County Board of Supervisors has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan") which allows each entity levying secured property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, the Community Facilities District is not included in the Teeter Plan. Consequently, the Community Facilities District may not draw on the County Tax Loss Reserve Fund in the event of delinquencies in Special Tax payments.

Collection of Special Tax
In order to pay debt service on the Series 2024 Bonds, it is necessary that the Special Tax levied against land within Improvement Area No. 1 be paid in a timely manner. The Community Facilities District has covenanted in the Indenture under certain conditions to institute foreclosure proceedings against property with delinquent Special Tax in order to obtain funds to pay debt service on the Series 2024 Bonds.

If foreclosure proceedings were instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of the delinquent Special Tax to protect its security interest. In the event such superior court foreclosure is necessary, there could be a delay in principal and interest payments to the owners of the Series 2024 Bonds pending prosecution of the foreclosure proceedings and receipt of the proceeds of the foreclosure sale, if any. No assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. Although the Act authorizes the City Council to cause such an action to be commenced and diligently pursued to completion, the Act does not specify the obligations of the City Council with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the foreclosure sale if there is no other purchaser at such sale. See "SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure" herein.

Appraised Values
The Appraisal attached as Appendix B estimates the market value of the property that is currently Taxable Property within Improvement Area No. 1. This market value is merely the opinion of the Appraiser as of the date of value set forth in the Appraisal and is subject to the assumptions and limiting conditions stated in the Appraisal. The City has not sought an updated opinion of value by the Appraiser subsequent to the date of value of the Appraisal, or an opinion of the value of the Taxable Property by any other appraiser. A different opinion of value might be rendered by a different appraiser. See APPENDIX B — "APPRAISAL REPORT."
The opinion of value assumes a sale by a willing seller to a willing buyer, each having similar information and neither being forced by other circumstances to sell or to buy. Consequently, the opinion is 82 4160-0370-8238.9

of limited use in predicting the selling price at a foreclosure sale, because the sale is forced and the buyer may not have the benefit of full information.

In addition, the opinion of value is made as of the date of value set forth in the Appraisal, based upon facts and circumstances existing as of the date of value. Differing facts and circumstances may lead to differing opinions of value. The appraised value is not evidence of future value because future facts and circumstances may differ significantly from the facts and circumstances at the time the Appraisal was prepared.

No assurance can be given that any of the Taxable Property in Improvement Area No. 1 could be sold for the estimated market value contained in the Appraisal if that property should become delinquent in the payment of Special Taxes and be foreclosed upon.

The average pace of sales is expected to fluctuate among product lines, as homes with lower price points typically average more sales per month than those with higher price points. Master planned communities often benefit from coordinated marketing efforts and enjoy momentum and drawing power that smaller infill projects do not have.

As described in the Appraisal, there is risk associated with estimating the timing that the subject components will be sold off, especially when the market is transitioning from declining to expansion. In addition, there is risk associated with unforeseen factors such as broad economic declines and job losses.

Finally, while the subject will benefit from Disney branding and extensive amenities, it remains this is the first Storyliving by DisneyTM community in the United States; there is some risk associated with being the first product of this kind in the market.

Increasing Mortgage Interest Rates
Between approximately November 2021 and April 2024, fixed interest mortgage rates have increased from approximately 3.1% to 6.9%. The Market Absorption Analyst notes that interest rates will be much less of an issue for the affluent buyer profile in Improvement Area No. 1, and assumes an average down payment of 40%, with many others paying all cash for their home, and the Appraiser notes that the respective market segment has historically been less affected by mortgage interest rates, as the target market is a multi -home (second, third, or more) homebuyer. Notwithstanding, increases in mortgage interest rates could have a negative impact on the estimated absorption rates of the planned for -sale residential units in Improvement Area No. 1 described herein. Increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for owning relative to renting a residence, thereby making purchasing less attractive. With respect to move -up households, higher mortgage interest rates may impact the desire of current homeowners to move from their present home due to the fact that their present home likely has a relatively low mortgage interest rate. In addition, the new home would likely have a higher interest rate on a new mortgage loan as well as higher purchase price and property taxes. Such considerations may decrease the desire for move -up households to purchase a new home.

Rising interest rates, decreased availability of mortgage financing or of certain mortgage programs, higher down payment requirements, or increased monthly mortgage costs could have a negative impact on the projected absorption rates of the planned for -sale homes in Improvement Area No. 1. Further, a combination of higher interest rates, decreased availability of mortgage financing, increased rates and decreased availability of hazard insurance, higher costs of construction, delays in construction stemming from delays in the supply chain, homebuyers' inability to sell existing homes and adverse changes in local, regional or national economic conditions, among other factors, could contribute to an increase in the rate of sale contract cancellations. An increase in the level of such cancellations could similarly have a negative impact on the estimated absorption rates of the planned for -sale homes in Improvement Area No. 1. 83 4160-0370-8238.9

No assurance can be given that home construction and sales will be carried out on the schedule and according to the plans outlined herein, or that the home construction and sale plans or base prices set forth herein will not change after the date of this Official Statement. Additionally, homes sold may not result in closed escrows as sales contracts are subject to cancellation. See "Challenges to the Homebuilding Industry" above. The Appraiser's estimated base prices are presented herein are intended only to provide an approximate level of sales prices.

Local, State and Federal Land Use Regulations
There can be no assurance that land development operations within Improvement Area No. 1 and the Community Facilities District will not be adversely affected by future government policies, including, but not limited to, governmental policies which directly or indirectly restrict or control development.

During the past several years, citizens of a number of local communities in California have placed measures on the ballot designed to control the rate of future development. It is possible that future initiatives applicable to the City, Improvement Area No. 1 or the Community Facilities District could be enacted and could negatively impact the ability of the property owners to further develop their land. In addition, state or federal laws and regulations could be adopted which would have preemptive effect on local land use regulations.

During the past several years, state and federal regulatory agencies have significantly expanded their involvement in local land use matters through increased regulatory enforcement of various environmental laws, including the Endangered Species Act, the Clean Water Act and the Clean Air Act, among others. Such regulations can substantially impair the rate and amount of development without requiring just compensation unless the effect of the regulation is to deny all economic use of the affected property. While the each of the Landowner, Master Developer, and Developer Entities believes that it has obtained all relevant environmental approvals for the Development of the nature described in the second preceding sentence (see "PROPERTY OWNERSHIP AND THE DEVELOPMENT — The Development"), Owners of Series 2024 Bonds should assume that any event that significantly impacts the ability to develop land in Improvement Area No. 1 or the Community Facilities District could cause the land values within Improvement Area No. 1 to decrease substantially and could affect the willingness and ability of the owners of land to pay the Special Taxes when due or to proceed with development of land in Improvement Area No. 1. See "SPECIAL RISK FACTORS — Governmental Approvals" and "— Land Values" herein.

Maximum Annual Special Tax Rates
Within the limits of the Maximum Special Tax, the Community Facilities District may adjust the Special Tax levied on all property in Improvement Area No. 1 to provide an amount required to pay Annual Debt Service on the Series 2024 Bonds, and the amount, if any, necessary to cure delinquencies and replenish the accounts of the Reserve Fund to an amount equal to the applicable Reserve Requirement and to pay all Administrative Expenses. However, the amount of the Special Tax that may be levied against any property in Improvement Area No. 1 is subject to the Maximum Special Tax applicable to that property.

There is no assurance that the Maximum Special Tax on the property in Improvement Area No. 1 will be sufficient to pay the amounts required to be paid by the Indenture at all times. (See "SECURITY FOR THE BONDS - Collection of Special Tax Revenues" herein.)
Furthermore, pursuant to the Rate and Method, and also pursuant to Section 53321(d) of the Government Code, the special tax levied against any Assessor's Parcel for which an occupancy permit for private residential use has been issued shall not be increased as a consequence of delinquency or default by the owner of any other Assessor's Parcel within Improvement Area No. 1 by more than 10% above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults. As a result, it is possible that the Community Facilities District may not be able to increase the 84 4160-0370-8238.9

tax levy to a level sufficient to collect Special Tax in the amount specified in the Rate and Method in all years. However, subject to the limitations on the Community Facilities District's ability to levy the necessary amount of Special Taxes as imposed by the Rate and Method and by Section 53321(d) of the Government Code, the Community Facilities District can levy Special Taxes on Approved Property, Undeveloped Property and Provisional Property (as defined in the Rate and Method) to make up all or a portion of any shortfall in the Special Tax levy. See "IMPROVEMENT AREA NO. 1 —Rate and Method of Apportionment of Special Tax" and APPENDIX A — "AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
Insufficiency of Special Tax Revenues
In order to pay debt service on the Series 2024 Bonds, it is necessary that the Special Taxes levied against land within Improvement Area No. 1 be paid in a timely manner. Should the Special Taxes not be paid on time, the Community Facilities District has established the Reserve Fund to pay debt service on the Series 2024 Bonds to the extent other funds are not available therefore. Although the Community Facilities District may levy the Special Taxes in an amount sufficient to replenish the Reserve Fund, the levy would be subject to the maximum annual Special Tax rates set forth in the Rate and Method and the limitation in the Act on increasing the Special Tax levy on property in residential use by no more than 10% as a consequence of delinquencies in the payment of Special Taxes. See "IMPROVEMENT AREA NO. 1 — Rate and Method of Apportionment of Special Tax." As discussed below, Net Special Tax Revenues could be insufficient to pay the Series 2024 Bonds either due to nonpayment of the amounts levied or in the event that acreage within Improvement Area No. 1 were to become exempt from taxation due to title being transferred to a public agency.

The Act provides that, if any property within Improvement Area No. 1 not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. The Owners of Series 2024 Bonds will be dependent on the ability and/or willingness of the public entity to pay the Special Tax levied on such property when due. In addition, the Act provides that, if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these provisions of the Act have not been tested. If for any reason property subject to the Special Tax becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government, or another public agency, subject to the limitation of the maximum authorized rate of levy, the Special Tax will be reallocated to the remaining taxable properties within Improvement Area No. 1, but in no case more than the maximum authorized Special Tax for such properties. If a substantial portion of land within Improvement Area No. 1 became exempt from the Special Tax because of public ownership or otherwise, the maximum Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Series 2024 Bonds when due and a default may occur with respect to the payment of such principal and interest.

The Community Facilities District has covenanted to institute foreclosure proceedings under specified circumstances to sell property with delinquent Special Taxes in order to obtain funds to pay debt service on the Series 2024 Bonds. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of delinquent Special Taxes to protect its security interest. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure" for provisions which apply in the event foreclosure is required and which the Community Facilities District is required to follow in the event of delinquency in the payment of Special Taxes. In the event such superior court foreclosure or foreclosures are necessary, there could be a delay in payments to 85 4160-0370-8238.9

Owners of the Series 2024 Bonds pending prosecution of the foreclosure sale, if the Reserve Fund were depleted.

No assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold, or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Taxes. Although the Act authorizes the Community Facilities District to cause such an action to be commenced and diligently pursued to completion, the Act does not specify the obligations of the Community Facilities District with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the execution sale pursuant to the judgment in any such action if there is no other purchaser at such sale.

Special Tax Delinquencies
Special Tax will be billed to properties within Improvement Area No. 1 on the ad valorem property tax bills sent to owners of such properties by the County. Such Special Tax installments will be due and payable and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.

Significant delinquencies in the payment of annual Special Tax installments, or delays in the prosecution of foreclosure proceedings to collect such Special Taxes, could result in the depletion of the Reserve Fund and default in payment of debt service on the Series 2024 Bonds. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure," for a discussion of the provisions that apply, and the procedures that the Community Facilities District is obligated to follow, under the Indenture in the event of delinquencies in the payment of Special Taxes. See "— Property Interests of Government Agencies; Federal Deposit Insurance Corporation" and "— Bankruptcy and Foreclosure Delays" for a discussion of the policy of the Federal Deposit Insurance Corporation regarding the payment of special taxes and limitations on the Community Facilities District's ability to foreclose on the lien of the Special Taxes in certain circumstances.

Other laws generally affecting creditors' rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six month period after termination of such military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if the court concludes the ability to pay such taxes or assessments is materially affected by reason of such service.

The County Treasurer -Tax Collector will, pursuant to State law permit limited options to postpone property taxes are for some residents under a State program which allows homeowners who are seniors (62 years of age or older), or taxpayers who have a disability, to defer current -year property taxes on their principal residence. There are several requirements for participation in the program, including at least 40 percent equity in the home and an annual household income of $45,000 or less. The deadline to apply for the state Property Tax Postponement Program is February 10. During the course of the COVID-19 pandemic, the County Treasurer -Tax Collector, like other tax collectors in California, permitted a waiver of penalties for property taxpayers who, as a result of the impact of COVID-19 do not pay an installment of their property tax bills, on qualifying properties. Such waivers attributed to the impact of COVID-19 are not currently available.
86 4160-0370-8238.9

Cybersecurity
The City, including on behalf of the Community Facilities District, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As the custodian of such information, the City, including on behalf of the Community Facilities District, may face cybersecurity threats from time to time including, but not limited to, hacking, viruses, malware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City's systems for the purposes of misappropriating assets or information or causing operational disruption or damage.

The City has never had a major cyber breach that resulted in a financial loss. The City maintains insurance coverage for cyber security losses should a successful breach ever occur.

No assurance can be given that the City's efforts to manage cyber threats and attacks will, in all cases, be successful or that any such attack will not materially impact the operations or finances of the City, including on behalf of the Community Facilities District. The Community Facilities District is reliant on other entities and service providers, such as the County Treasurer -Tax Collector for investment of funds and levy of the Special Taxes, the Trustee in its role as Trustee, and Willdan Financial Services, in its role as Special Tax Consultant and in its role as Dissemination Agent in connection with compliance with its disclosure undertakings. No assurance can be given that the City, the Community Facilities District, the County or the Trustee may not be affected by cyber threats and attacks against other entities or service providers in a manner which may affect the Owners or Beneficial Owners of the Series 2024 Bonds (e.g., systems related to the timeliness of payments to Owners of the Series 2024 Bonds or compliance with disclosure filings pursuant to the District Continuing Disclosure Agreement).

Collection of the Special Tax will be made by the County Treasurer -Tax Collector in the same manner as ordinary ad valorem property taxes are collected County.

The County, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As a recipient and provider of personal, private, or sensitive information, the County is subject to cyber threats including, but not limited to: hacking, malware, social engineering, and other attacks on its computer systems and sensitive digital networks. The Board of Supervisors adopted Policy No. A-58 - Enterprise Information Security Policy, which aligns with the National Institute of Standards and Technology ("NIST") Cybersecurity Framework regarding information security and privacy, and cyber risk management. In accordance with the adopted policy, all County employees are required to complete mandatory Policy No. A-58 Information Security Training on an annual basis. The County's Information Security Office operates a security operations center ("SOC") that provides 24x7x365 monitoring of the County's enterprise network, performs continuous penetration testing, conducts monthly simulated phishing attacks and phishing awareness campaigns, and distributes monthly security awareness newsletters to all County employees. Additionally, the County's Information Security Office has developed and implemented a formal Security Incident Response and Breach Notification Process for County -wide responses to information security incidents. The County carries a cyber liability insurance policy to cover the financial losses that may result from data breaches and cyberattacks.

No assurances can be given that the County's security and operational control measures will be successful in guarding against any and each cyber threat and attack. The results of any attack on the County's computer and information technology systems could impact its operations and damage the County's digital networks and systems including in a manner which may affect the Owners or Beneficial Owners of the Series 2024 Bonds (e.g., systems related to the timeliness of payments to Owners of the Series 2024 Bonds).
87 4160-0370-8238.9

Potential Early Redemption of Bonds from Special Tax Prepayments Property owners within Improvement Area No. 1 are permitted to prepay their Special Taxes at any time as provided in the Indenture at a redemption price, which may include a premium on the percentage of the principal amount of the Series 2024 Bonds to be redeemed, plus accrued interest thereon to the date of redemption. Such payments will result in a mandatory redemption of Series 2024 Bonds from a prepayment of Special Taxes on the Interest Payment Date for which timely notice may be given under the Indenture following the receipt of such prepayment of Special Taxes. The resulting redemption of Series 2024 Bonds purchased at a price greater than par could reduce the otherwise expected yield on such Series 2024 Bonds. See "THE SERIES 2024 BONDS — Redemption — Mandatory Redemption from Special Tax Prepayments."
Bankruptcy and Foreclosure Delays
The payment of Special Taxes and the ability of the Community Facilities District to foreclose the lien of a delinquent unpaid Special Tax, as discussed in the section herein entitled "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure," may be limited by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure could be delayed due to crowded local court calendars or legal delaying tactics.

The various legal opinions to be delivered concurrently with the delivery of the Series 2024 Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally.

Regardless of the priority of the Special Taxes securing the Series 2024 Bonds over non- governmental liens on a parcel, the exercise by the Community Facilities District of the foreclosure and sale remedy may be forestalled or delayed by bankruptcy, reorganization, insolvency, or other similar proceedings of the owner of, or anyone else who claims an interest in, a parcel. The federal bankruptcy laws provide for an automatic stay of foreclosure and sale proceedings, thereby delaying such proceedings perhaps for an extended period. Delay in exercise of remedies or the institution of bankruptcy proceedings may cause Special Tax collections to be insufficient to pay debt service on the Series 2024 Bonds.

Further, should remedies be exercised under the bankruptcy law against a parcel, payment of Special Taxes may be subordinated to other claims in the bankruptcy proceedings. Thus, certain claims may have priority over a claim for unpaid Special Taxes, even though, in the absence of the bankruptcy proceedings, no such priority would exist.

The Act provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem property taxes. Pursuant to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, P.L. 109-8, the lien for special taxes established after the filing of a petition in bankruptcy will be treated thereafter as a lien for ad valorem taxes. However, the amount of any such lien on property with delinquent Special Taxes could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien. The amount of the delinquent Special Taxes in excess of the reduced lien would then be treated as an unsecured claim by the court.

Any prohibition of or delay in the enforcement of the Special Tax lien would increase the likelihood of a delay or default in payment of the principal of and interest on the Series 2024 Bonds. Because a substantial portion of the taxable property in Improvement Area No. 1 is initially owned by the Landowner, 88 4160-0370-8238.9

the payment of Special Taxes and the ability of the Community Facilities District to foreclose the lien of a delinquent unpaid Special Tax could be substantially curtailed by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. No assurances can be given that any financial difficulties experienced by the Landowner, Master Developer, Developer Entities, or Merchant Builders will not adversely affect the completion of the Development.

Hazardous Materials
While government taxes, assessments and charges are a common claim against the value of a taxed parcel, other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value that may be realized to pay the Special Tax is a claim with regard to a hazardous substance. In general, the owners and operators of a taxed parcel may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1989, sometimes referred to as "CERCLA" or "Superfund Act," is one such law, but California laws with regard to hazardous substances are also stringent and somewhat similar. Under many of these laws, the owner (or operator) is obligated to remediate hazardous substances on, under or about the property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance; however, an owner (or operator) who is not at fault may seek recovery of its damages from the actual wrongdoer. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, may be to reduce the marketability and value of the parcel, because the purchaser, upon becoming an owner, may become obligated to remedy the condition just as is the seller.

Natural Disasters; Seismic Hazards; Potential Drought Conditions Natural disasters, including wildfires, desert sandstorms, floods, extended drought and earthquakes, could damage improvements and/or property in Improvement Area No. 1 [or the Community Facilities District], or impair the ability of landowners within Improvement Area No. 1 to develop their properties or to pay property taxes.

Earthquake. There are several identified faults within close proximity to or within the boundaries of the Community Facilities District and Improvement Area No. 1, including the Southern Segment of the San Andreas Fault that could potentially result in damage to buildings, roads, bridges, and property within Improvement Area No. 1 in the event of an earthquake. Past earthquakes have resulted in minimal damage to the infrastructure and property within the City. A majority of the property within the City has been developed in conformity with the 1988 Uniform Building Code standards.

However, like other areas of Southern California, property in Improvement Area No. 1, the Community Facilities District, and in the area of the City is subject to the risk of major earthquake damage.

Known active faults that could cause significant ground shaking in Improvement Area No. 1 include, but are not limited to, the Southern Segment of the San Andreas Fault. It should be assumed, therefore, that an earthquake or one or more of such other conditions may occur and may cause damage to improvements on parcels in Improvement Area No. 1 of varying seriousness, that such damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost or because repair or replacement will not facilitate usability or because other considerations may preclude such repair or replacement. Consequently, the occurrence of any of these conditions could result in a significant decrease in the market value of property in Improvement Area No. 1 or in such property becoming unmarketable. Most recently, in 2019, southern California has experienced a series of significant earthquakes centered in and around the Ridgecrest area, approximately 181 miles north of the City. The City reports that although these earthquakes and aftershocks (consisting of three main shocks of magnitudes

6.4, 5.4, and 7.1, each followed by aftershocks of substantially lower magnitude), were felt within the City, 89 4160-0370-8238.9

no significant structural damage has been reported. Since 1900, Rancho Mirage has experienced 82 quakes of magnitudes above 5 and up to 7.3 within up to 63 miles of the City including: 2 quakes above magnitude 7, 11 quakes between magnitude 6 and 7, and 69 quakes between magnitude 5 and 6.

In the event of seismic activity that results in substantial damage, it is possible that a significant portion of the properties within Improvement Area No. 1 would be affected. There can be no assurance that the owners of properties within Improvement Area No. 1 will elect to purchase earthquake insurance.

If an earthquake were to substantially damage or destroy taxable property within Improvement Area No. 1, the assessed valuation of such property would be reduced. Such a reduction of assessed valuations could result in a reduction of the Special Tax Revenues that secure the Series 2024 Bonds.

Flooding. The Federal Emergency Management Agency ("FEMA") oversees the delineation of flood zones and is currently in the process of re-evaluating the level of protection provided by all existing flood protection systems in the country. The Appraisal states that Improvement Area No. 1 is shown as Zone X which is outside of any flood zone area.

Wildfire. In recent years, wildfires have caused extensive damage throughout the State. Certain of these fires have burned thousands of acres and in some cases destroyed thousands of homes. In some instances, entire neighborhoods have been destroyed. The property in and around Improvement Area No. 1 has not been affected by a recent or current California wildfire. The California State Fire Marshal is mandated to classify lands within State Responsibility Areas into Fire Hazard Severity Zones (FHSZ).

Improvement Area No. 1 is located outside of designated State Responsibility Areas. Designations are based on the factors that influence fire likelihood and fire behavior. Many factors are considered such as fire history, existing and potential fuel (natural vegetation), predicted flame length, blowing embers, terrain, and typical fire weather for the area. Areas outside of designated State Responsibility Areas are designated Local Responsibility Areas. Local government has the responsibility to provide fire protection in Local Responsibility Areas and may provide structural and supplemental wildland fire protection in State Responsibility Areas. There can be no assurances that wildfires will not affect the property located in Improvement Area No. 1. Property damage due to wildfire could result in a significant decrease in the market value of property in Improvement Area No. 1 and in the ability or willingness of property owners to pay Special Taxes when due.

Drought. From time to time certain parts of California, including the City, may experience extended drought conditions. Extended drought conditions may impact development of undeveloped properties within Improvement Area No. 1, may negatively impact the use and enjoyment of amenities, and may affect the value of properties within Improvement Area No. 1 and in the ability or willingness of property owners to pay Special Taxes when due.

Property Interests of Government Agencies; Federal Deposit Insurance Corporation The ability of the Community Facilities District to collect the Special Taxes, and interest and penalties specified by State law, and to foreclose or to compel the foreclosure of the lien of delinquent Special Taxes may be limited in certain respects with regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC") or other similar federal governmental agencies has or obtains an interest. On June 4, 1991, the FDIC issued a Statement of Policy Regarding the Payment of State and Local Property Taxes (the "1991 Policy Statement"). The 1991 Policy Statement was revised and superseded by a new Policy Statement effective January 9, 1997 (the "Policy Statement"). The Policy Statement provides that real property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as 90 4160-0370-8238.9

promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC -owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent.

The Policy Statement states that the FDIC generally will not pay non -ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Act and a special tax formula which determines the special tax due each year, are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. With respect to property in California owned by the FDIC on January 9, 1997, and that was owned by the Resolution Trust Corporation ("RTC") on December 31, 1995, or that became the property of the FDIC through foreclosure of a security interest held by the RTC on that date, the FDIC will continue the RTC's prior practice of paying special taxes imposed pursuant to the Act if the taxes were imposed prior to the RTC's acquisition of an interest in the property. All other special taxes may be challenged by the FDIC.

The Community Facilities District is unable to predict what effect the FDIC's application of the Policy Statement would have in the event of a delinquency on a parcel within Improvement Area No. 1 in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed at a judicial foreclosure sale would reduce or eliminate the persons willing to purchase a parcel at a foreclosure sale. Owners of the Series 2024 Bonds should assume that the Community Facilities District will be unable to foreclose on any parcel owned by the FDIC. Such an outcome could cause draws on the Reserve Fund and perhaps, ultimately, a default in payment on the Series 2024 Bonds. Based upon the secured tax roll for Fiscal Year 2023-24, the FDIC does not presently own any of the property in Improvement Area No. 1.

The ability of the Community Facilities District to collect the Special Taxes and interest and penalties specified by State law, and to foreclose the lien of delinquent Special Taxes, may be limited in certain respects with regard to properties in which the FDIC, the Federal National Mortgage Association (Fannie Mae), Freddie Mac, the Drug Enforcement Agency, the Internal Revenue Service, or other similar federal governmental agencies has or obtains an interest.

Other laws generally affecting creditors' rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six-month period after termination of such military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate.

Similarly, in the event a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or a private deed of trust secured by a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Taxes may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution ("This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the authority of the United States, shall be the 91 4160-0370-8238.9

supreme Law of the Land; and the Judges in every State shall be bound thereby, anything in the Constitution or Laws of any State to the contrary notwithstanding"), in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal government entity owns a parcel of taxable property but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the Community Facilities District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government's mortgage interest.

Disclosure to Future Property Owners or Lenders
The Community Facilities District has recorded a Notice of Special Tax Lien, and an Amendment No. 1 to Notice of Special Tax Lien Improvement Area No. 1 of City of Rancho Mirage Community Facilities District No. 5 (Section 31) After Annexation of Territory and Boundary Adjustment and Changes to Rate and Method, in the Office of the County Recorder. While title insurance and search companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider the Special Tax obligation imposed on parcels in Improvement Area No. 1 in the purchase of property or the lending of money thereon. Under the Act, the Landowner, the subdivider, their agent, or representative, will also have an obligation to disclose the existence of the Special Taxes to homebuyers. Failure to disclose the existence of the Special Tax may affect the willingness and ability of future owners of property within Improvement Area No. 1 to pay the Special Tax when due. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of Improvement Area No. 1 or the full amount of the Special Taxes, could adversely affect the willingness or ability of the purchaser to pay the Special Taxes when due.

Non -Cash Payments of Special Taxes
Under the Act, the Community Facilities District may reserve to itself the right and authority to allow the owner of any taxable parcel to tender a Bond in full or partial payment of any installment of the Special Taxes or the interest or penalties thereon. A Bond so tendered is to be accepted at par and credit is to be given for any interest accrued thereon to the date of the tender. Thus, if Bonds can be purchased in the secondary market at a discount, it may be to the advantage of an owner of a taxable parcel to pay the Special Tax applicable thereto by tendering a Bond. Such a practice would decrease the cash flow available to the Community Facilities District to make payments with respect to any Series 2024 Bonds then outstanding; and, unless the practice was limited by the Community Facilities District, the Special Tax paid in cash could be insufficient to pay the debt service due with respect to the Series 2024 Bonds. In order to provide some protection against the potential adverse impact on cash flows which might be caused by the tender of Bonds in payment of the Special Tax, the Indenture includes a covenant pursuant to which the Community Facilities District will not authorize owners of taxable parcels within Improvement Area No. 1 to satisfy Special Tax obligations by the tender of Bonds unless the Community Facilities District shall have first obtained a report of an Independent Financial Consultant certifying that doing so would not result in the Community Facilities District having insufficient Net Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds when due.
92 4160-0370-8238.9

Limitations on Remedies
Remedies available to the owners of the Series 2024 Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Series 2024 Bonds or to preserve the tax-exempt status of the Series 2024 Bonds.

Bond Counsel has limited its opinion as to the enforceability of the Series 2024 Bonds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer, or other similar laws affecting creditors' rights generally, by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on remedies against public agencies in the State of California. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the owners of the Series 2024 Bonds.

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

Proposition 218
An initiative measure commonly referred to as the "Right to Vote on Taxes Act" (the "Proposition 218") was approved by the voters of the State at the November 5, 1996 general election. Proposition 218 added Article XIIIC and Article XIIID to the California Constitution ("Article XIIIC" and "Article XIIIC" respectively). According to the "Title and Summary" of Proposition 218 prepared by the California Attorney General, Proposition 218 limits "the authority of local governments to impose taxes and property - related assessments, fees and charges."
Among other things, Section 3 of Article XIIIC states that "... the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure, which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that:
"Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution."
Accordingly, although the matter is not free from doubt, it is likely that Proposition 218 has not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely retirement of the Series 2024 Bonds. Many provisions of Articles XIIIC and XIIID have not yet been interpreted by the courts, although a number of lawsuits have been filed requesting the courts to interpret various aspects thereof.
93 4160-0370-8238.9

Among other things, Section 3 of Article XIIIC states that ". . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure, which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt.

Although the matter is not free from doubt, it is likely that the exercise by the voters of the initiative power referred to in Article XIIIC to reduce or terminate a Special Tax is subject to the same restrictions as are applicable to the Community Facilities District pursuant to the Act. Accordingly, although the matter is not free from doubt, it is likely that Articles XIIIC and XIIID have not conferred on the voters the power to repeal or reduce the Special Tax if such reduction would interfere with the timely retirement of the Bonds.

It may be possible, however, for voters to reduce the Special Tax in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Tax that may be levied in any year below the existing levels. Therefore, no assurance can be given with respect to the levy of Special Tax for Administrative Expenses. Furthermore, no assurance can be given with respect to the future levy of the Special Tax in amounts greater than the amount necessary for the timely retirement of the Bonds.

On August 1, 2014, the California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in Shapiro v. San Diego City Council, 117 Cal. Rptr. 2d 631, 96 Cal. App. 4th 904 (2002). The case involved a Convention Center Facilities District (the "CCFD") established by the City of San Diego, much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in all of the City of San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties.

At the election to authorize such special tax, the electorate was limited to owners of hotel properties and lessees of certain of such hotel properties. Thus, the election was a landowner election limited to owners and lessees of properties on which the special tax would be levied, and not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was based on Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIII A, Section 4 thereof and Article XIII C, Section 2 thereof require that the electors in such an election be the registered voters within the district.

In the case of the CCFD, at the time of the election there were many, many registered voters within the CCFD (viz., all of the registered voters in the City of San Diego). In the case of Improvement Area No. 1, there were no registered voters within Improvement Area No. 1 at the time of the election to authorize the Special Tax. In City of San Diego, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court's holding does not apply to the special tax election in Improvement Area No. 1. Moreover, Section 53341 of the Act provides that any "action or proceeding to attack, review, set aside, void or annul the levy of a special tax...shall be commenced within 30 days after the special tax is approved by the voters." The voter in Improvement Area No. 1 approved the Special Tax and the issuance of bonds on April 20, 2023. Based on Sections 53341 and 53359 of the Act and an analysis of existing laws, regulations, rulings, and court decisions, the Community Facilities District believes that no successful challenge to the Special Tax being levied in accordance with the Rate and Method may now be brought.
94 4160-0370-8238.9

The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See "Limitations on Remedies" and "No Acceleration Provision" above.

Future Measures and Initiatives; Initiative 1935
Proposition 218 was adopted and approved by California voters pursuant to measures qualified for the ballot pursuant to the State's Constitutional initiative process and the State Legislature has in the past enacted legislation which has altered the spending limitations or established minimum funding provisions for particular activities. On March 6, 1995, in the case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. From time to time constitutional initiatives or other initiative measures may be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State or any political subdivision thereof, including the Community Facilities District, the City and the County, to increase revenues or to increase appropriations, might alter voting requirements, voting approval thresholds, and limits on approval other than by the governing body, or might affect the ability of the Landowner or the Master Developer to complete the remaining proposed development within Improvement Area No. 1 or of the Community Facilities District to collect the Special Tax. See "Failure to Develop Properties; Government Approvals" above.

One such proposed voter initiative, titled "The Taxpayer Protection and Government Accountability Act" ("Initiative 1935") has been determined to be eligible for the November 2024 Statewide general election and, unless withdrawn by its proponent prior to June 27, 2024, will be certified as qualified for the ballot in such election. Initiative 1935 would, among other things, amend the State Constitution to impose additional requirements for the imposition of taxes by State and local governments, such as requirements that the title and summary and ballot label or question for each tax measure identify the type, amount or rate, duration, and use of revenue of the tax. Additionally, Initiative 1935 would provide that any tax imposed after January 1, 2022, not in compliance with its requirements is void 12 months after the effective date of Initiative 1935 unless subsequently reenacted in accordance therewith. If adopted, the scope and impact of Initiative 1935 would be subject to future judicial interpretation. The Community Facilities District is unable to predict how Initiative 1935, if adopted, might be interpreted by the courts, and there can be no assurance that any such interpretation would not have an adverse impact on the Community Facilities District's ability to levy and collect the Special Taxes in Improvement Area No. 1.

As described above under the caption "THE COMMUNITY FACILITIES DISTRICT — Formation," at the election held on October 19, 2023, the Landowner and the sole qualified landowner of Improvement Area No. 4, as all such qualified electors of the Community Facilities District, voted to approve certain annexation and change proceedings and the measure to levy the Special Tax as amended by the amended and restated rate and method of special tax apportionment for Improvement Area No. 1 (the Rate and Method herein) including upon the annexed area, respectively. In connection with such election, all such qualified electors, by unanimous consent waived, among other things, certain requirements pertaining to the form of the ballot for such election, including requirements to include in the ballot the type, amount or rate, duration, and use of the Special Tax that Initiative 1935, if enacted, would impose.

Impact of Economic Conditions on the Development in Improvement Area No. 1 Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which the merchant builders are able to complete and sell homes and 95 4160-0370-8238.9

demand by and the ability of individuals to purchase homes within Improvement Area No. 1. Such events and factors could include rising inflation and interest rates, persistent supply chain issues, further impacts of the COV1D-19 pandemic, as described below, and global market instability caused by the war in Ukraine. Any adverse impact of the foregoing and other economic factors on the projects in Improvement Area No. 1 and the real estate market in general cannot be predicted.

Potential Impact of Global Health Concerns
The COVID-19 global pandemic had a severe and continuing effect on the nation and the State, with ongoing concerns relating to health and safety, preventive protocols, fiscal and economic issues, business operations, and global trade. In addition, the COVID-19 global pandemic resulted, in some instances, in the exercise by taxpayers of available waivers and otherwise demonstrated an impact on the willingness or ability of owners to pay property taxes as and when due. Although at present there are no restrictions on operations within the State relating to the COVID-19 pandemic or its subsequent variants, the response to COVID-19 had a profound effect on housing construction and the housing market.

Pandemic -related shutdowns severely disrupted global supply chains, resulting in difficulty for homebuilders to access necessary materials for home completion, including wood, windows, electrical transformers, water meters, and appliances. Although the Landowner and the Master Developer each reports that it has experienced no supply -chain related delays with respect to development of Improvement Area No. 1, many goods still experience a backlog, which may in the future result in development delays or increased costs within Improvement Area No. 1. Lingering supply chain issues, labor shortages, increased interest rates, and an uncertain economy can increase costs to individual homeowners and therefore slow demand. Further, the pandemic saw changing trends in where people choose to live and the types of homes people choose to live in, which may impact demand for the types of homes being constructed and to be constructed in Improvement Area No. 1 and in the Community Facilities District. The impacts of the COVID-19 pandemic continue to have a lasting effect, and the Community Facilities District cannot predict the effect of any potential future outbreak of COVID-19 or any other infectious disease.

Further, alterations in the behavior of businesses and people due to an infectious disease can occur in a manner that has a negative impact on global and/or local economies, and which results in a volatile stock market response. Such events and other factors resulting from such an outbreak, particularly if prolonged, could result in, or increase the likelihood of, the occurrence of certain of the other potential adverse effects described in this Official Statement, including those relating to declines in the value of property, slowing of development and/or sale of homes within Improvement Area No. 1, the inability or unwillingness to pay the Special Tax, and delays in (or insufficient funds received from) the collection of delinquent Special Taxes through judicial foreclosure. A future outbreak of the COVID-19 virus, its variants, or another infectious disease or the fear of any such outbreak could have similar or additional adverse effects. Neither the Community Facilities District nor the City can predict the ultimate effects of the COVID-19 virus outbreak, or of its variants, or any future outbreak or potential future outbreak of an infectious disease, or whether any such effects would have a material adverse effect on the ability to develop the Improvement Area No. 1 as planned, the ability or willingness of property owners to pay Special Taxes when due, or the ability of the Community Facilities District to pay the principal of, and interest on, the Series 2024 Bonds when due.
[After California Governor Gavin Newsom's declaration of a State of Emergency to exist in California as a result of the threat of the COVID-19 virus and the issuance of the State-wide stay-at-home order, the County Tax Collector in March 2020, announced his plan to grant waivers on penalties, as allowed by existing law, to taxpayers that do not make timely payment of property taxes, including the Special Taxes, due to the COVID-19 virus by April 10. Such taxpayers would be expected to submit to the County Treasurer -Tax Collector a "cancellation of penalty request form" and documentation to support the cancellation of penalties as allowed in limited circumstances under current State law, allowing for waiver 96 4160-0370-8238.9

of penalties, costs and other charges when failure to make a timely payment is due to reasonable cause and circumstances beyond the taxpayer's control, and occurred notwithstanding the exercise of ordinary care in the absence of willful neglect. Related thereto, On May 6, 2020, California Governor Gavin Newsom issued Executive Order N-61-20, which ordered that certain provisions of the California Revenue and Taxation Code were suspended until May 6, 2021, to the extent those provisions require a tax collector to impose penalties, cost, or interest for the failure to pay taxes on property on the secured or unsecured roll, or to pay a supplemental bill, before the dates and time such taxes became delinquent, and that a tax collector shall cancel such penalties, costs, and interest provided all of several conditions are satisfied, including that the taxpayer demonstrates to the satisfaction of the tax collector that the taxpayer has suffered economic hardship, or was otherwise unable to tender payment of taxes in a timely fashion, due to the COVID-19 pandemic, or any local, state or federal government response to COVID-19.

The COVID-19 health crisis, including COVID-19 variants which have materialized and may materialize, is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the health crisis, and the economic and other of actions that may be taken by governmental authorities to contain the health crisis or to treat its impact are uncertain. The City and the Community Facilities District are unable to predict at this time whether any future proposals will be enacted or in what form they may take, or whether any new requirements related to reducing the spread of COVID-19 and its variants will materially impact its finances or operations. Additional information with respect to events surround the health crisis of COVID-19 and responses thereto can be found on federal, State and local government websites, including but not limited to, the CDC ( https://www.cdc.gov) , the Governor's office ( http://www.gov.ca.gov) , the California Department of Public Health ( https://covidl9.ca.gov/) and the local County health agency ( https://rivcoph.org/coronavirus) . The information on these websites is not incorporated by reference herein, and neither the Community Facilities District nor the City can take responsibility for the continued accuracy of this internet address or for the accuracy, completeness or timeliness of information posted therein.]
The ultimate impact of COVID-19 and its variants is unknown. There can be no assurances that the spread of COVID-19, or the responses thereto by local, State, or the federal government, will not materially adversely impact the local, State and national economies or the assessed valuation of property within Improvement Area No. 1.

Loss of Tax Exemption
As discussed under the caption "CONCLUDING INFORMATION — Tax Matters" herein, interest on the Series 2024A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Series 2024A Bonds were issued, as a result of future acts or omissions of the Community Facilities District in violation of its covenants in the Indenture. Should such an event of taxability occur, the Series 2024A Bonds are not subject to a special redemption and will remain outstanding until maturity or until redeemed under one of the other redemption provisions contained in the Indenture.

In addition, legislation affecting the tax exemption of interest on the Series 2024A Bonds may be considered by the United States Congress and the State legislature. Federal and state court proceedings and the outcome of such proceedings could also affect the tax exemption of interest on the Series 2024A Bonds.

No assurance can be given that legislation enacted or proposed, or actions by a court, after the date of delivery of the Series 2024 Bonds will not have an adverse effect on the tax exemption of interest on the Series 2024A Bonds or the market value of the Series 2024A Bonds. 97 4160-0370-8238.9

IRS Audit of Tax -Exempt Issues
The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax-exempt issues, including both random and targeted audits. It is possible that the Series 2024A Bonds will be selected for audit by the IRS. It is also possible that the market value of the Series 2024A Bonds might be affected as a result of such an audit of the Series 2024A Bonds (or by an audit of similar obligations). See "CONCLUDING INFORMATION — Tax Matters." Limited Liquidity of the Series 2024 Bonds
The Community Facilities District has not applied for, and does not expect to receive, a rating on the Series 2024 Bonds from any nationally recognized rating organization. This fact may limit the secondary market for, and therefore the liquidity of, the Series 2024 Bonds.

Absence of Secondary Market
No representation is made concerning the existence of any secondary market for the Series 2024 Bonds. No assurance can be given that any secondary market will develop following the completion of the offering of the Series 2024 Bonds and no assurance can be given that the initial offering prices for the Series 2024 Bonds will continue for any period of time. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances.

CONCLUDING INFORMATION
Continuing Disclosure
The Community Facilities District, pursuant to the District Continuing Disclosure Agreement, and the Landowner, pursuant to the Landowner Continuing Disclosure Certificate, have each agreed to provide certain financial information and operating data on an annual basis, and to provide notices of the occurrence of certain enumerated events. In addition, the Landowner has agreed to provide certain financial information and operating data on a semi-annual basis. See APPENDIX H — "FORM OF DISTRICT CONTINUING DISCLOSURE AGREEMENT" and APPENDIX I — "FORM OF LANDOWNER CONTINUING DISCLOSURE CERTIFICATE." The covenants in the District Continuing Disclosure Agreement have been made by the Community Facilities District in order to assist the Underwriters in complying with the Rule. The Underwriters do not consider the Landowner to be an "obligated person" with respect to the Series 2024 Bonds for purposes of the Rule. [The Landowner Continuing Disclosure Certificate shall terminate at such time as the Landowner and its Affiliates, in the aggregate (a) are responsible for less than 20% of the annual Special Tax levy within Improvement Ara No. 1 or (b) own less than _ residential lots (or parcels planned to be developed with less than residential units) within Improvement Area No. 1 subject to the Special Tax]. In the event of a conveyance by the Landowner of any of its property to an entity that is not an Affiliate of the Landowner, the result of which conveyance is to cause any such transferee to [be obligated for 20% or more of an annual Special Tax levy within Improvement Area No. 1 or own more than residential lots (or parcels planned to be developed with more than residential units) within Improvement Area No. 1 subject to the Special Tax], the Landowner shall cause such transferee to assume the Landowner's obligation to provide certain financial information and operating data with respect to the portion of the property transferred on a semi-annual basis and to provide notices of the occurrence of certain enumerated events during which time such transferee shall [be obligated for 20% or more of an annual Special Tax levy within Improvement Area No. 1 or own more than residential lots (or parcels planned to be developed with more than residential units) within Improvement Area No. 1 subject to the Special Tax]. Alternatively, the Landowner shall continue to provide such reports on behalf of each such transferee. In addition, the Landowner Continuing Disclosure 98 4160-0370-8238.9

Certificate may terminate in certain other circumstances, as described in the Landowner Continuing Disclosure Certificate.

A failure by the Community Facilities District or the Landowner to comply with its respective continuing disclosure obligations will not constitute a default under the Indenture. However, the Continuing Disclosure Undertakings provide that, in the event of a failure of the Community Facilities District or the Landowner, as applicable, to comply with any provision of their respective Continuing Disclosure Agreement, any Bond Owner, any Beneficial Owner, the Trustee or the Underwriters may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Community Facilities District or the Landowner, respectively, to comply with its obligations under the Continuing Disclosure Undertakings. The sole remedy under the Continuing Disclosure Undertakings in the event of any failure of the Community Facilities District or the Landowner, respectively, to comply with its obligations under the Continuing Disclosure Undertakings is an action to compel performance.

Community Facilities District Prior Continuing Disclosure Compliance. The Community Facilities District has not had any prior continuing disclosure obligations under the Rule. The City will assist the Community Facilities District in preparing its continuing disclosure reports.

Neither the Community Facilities District nor the City has undertaken to determine whether the Landowner is an obligated person under Rule 15c2-12. Neither the Community Facilities District nor the City has participated in the preparation, negotiation or implementation of the Landowner Continuing Disclosure Certificate. Neither the Community Facilities District nor the City takes any responsibility for the adequacy of the Landowner Continuing Disclosure Certificate for its intended purpose. None of the Community Facilities District, the City or the Trustee is a party to the Landowner Continuing Disclosure Certificate, and none of the Community Facilities District, the City or the Trustee has any obligation or right to monitor or enforce compliance by the Landowner with its obligations under the Landowner Continuing Disclosure Certificate.

Landowner Prior Continuing Disclosure Compliance. [Discuss: The Landowner has represented to the Community Facilities District that, based on a review of prior continuing disclosure undertakings, the Landowner has and has , and
otherwise has not failed to comply in any material respect with any previous undertaking by it to provide periodic continuing disclosure reports or notices of listed events with respect to community facilities districts or assessment districts in California within the past five years.] Absence of Litigation
The Community Facilities District. At the time of delivery of and payment for the Series 2024 Bonds, the Community Facilities District will deliver a certificate to the effect that there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, public board or body, pending with respect to which the Community Facilities District has been served with process or known by the official of the Community Facilities District executing the Bond Purchase Agreement with the Underwriters for the Series 2024 Bonds to be threatened, which in any way questions the powers of the City Council or the Community Facilities District with respect to the Community Facilities District entering into the Indenture or the District Continuing Disclosure Agreement, or the issuance, sale and delivery of the Series 2024 Bonds, or the validity of any proceeding taken by the City Council in connection with the issuance of the Series 2024 Bonds, or wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions on the part of the Community Facilities District contemplated by any of such documents, or which, in any way, could adversely affect the validity or enforceability of, the resolutions adopted by the City Council with respect to the Community Facilities District, the ordinance levying Special 99 4160-0370-8238.9

Taxes in Improvement Area No. 1, the Indenture, the Series 2024 Bonds or the Bond Purchase Agreement, or which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Series 2024A Bonds for federal income tax purposes or in any other way questions the status of the interest on the Series 2024 Bonds under State tax law or regulations.

The Landowner. At the time of delivery and payment for the Series 2024 Bonds, the Landowner will deliver a certificate to the effect that to the Actual Knowledge of the Landowner (as defined in such certificate), [no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, regulatory agency, public board or body is pending against the Landowner (with proper service of process or proper notice to the Landowner having been accomplished) or to the Actual Knowledge of the Landowner, overtly threatened in writing against the Landowner (a) which, if successful, is reasonably likely to materially and adversely affect the Landowner's ability to complete the development and sale of the property owned by the Landowner in Improvement Area No. 1 as described in this Official Statement, or to pay its Special Taxes, or ordinary ad valorem property tax obligations related to the Property when due; or (b) which challenges or questions the validity or enforceability of the Series 2024 Bonds or the Landowner Continuing Disclosure Certificate to be executed by the Landowner in connection with the issuance of the Series 2024 Bonds].

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

To the extent the issue price of any maturity of the Series 2024A Bonds is less than the amount to be paid at maturity of such Series 2024A Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2024A Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Series 2024A Bonds which is excluded from gross income for federal income tax purposes and exempt from State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Series 2024A Bonds is the first price at which a substantial amount of such maturity of the Series 2024A Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Series 2024A Bonds accrues daily over the term to maturity of such Series 2024A Bonds on the basis of a constant interest rate compounded semiannually (with straight- line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Series 2024A Bonds to determine taxable gain or loss upon trade or business disposition (including sale, redemption, or payment on maturity) of such Series 2024A Bonds. Beneficial Owners of the Series 2024A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2024A Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Series 2024A Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2024A Bonds is sold to the public. 100
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Series 2024A Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2024A Bonds.

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

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

Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2024A Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Series 2024A Bonds.

Prospective purchasers of the Series 2024A Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.

The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Series 2024A Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Community Facilities District, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Community Facilities District has covenanted, however, to comply with the requirements of the Code.

Bond Counsel's engagement with respect to the Series 2024A Bonds ends with the issuance of the Series 2024A Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the 101
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Community Facilities District or the Beneficial Owners regarding the tax-exempt status of the Series 2024A Bonds in the event of an audit examination by the IRS. Under current procedures, Beneficial Owners would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Community Facilities District legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Series 2024A Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Series 2024A Bonds, and may cause the Community Facilities District or the Beneficial Owners to incur significant expense.

Payments on the Series 2024A Bonds generally will be subject to U.S. information reporting and possibly to "backup withholding." Under Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non -corporate Beneficial Owner of Series 2024A Bonds may be subject to backup withholding with respect to "reportable payments," which include interest paid on the Series 2024A Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Series 2024A Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number ("TIN") to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a "notified payee underreporting" described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code.

Amounts withheld under the backup withholding rules may be refunded or credited against a Beneficial Owner's federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain Beneficial Owners (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. The failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.

The Series 2024B Bonds. In the opinion of Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2024B Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Code. Bond Counsel is of the opinion that interest on the Series 2024B Bonds is exempt from State of California personal income taxes.

Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Series 2024B Bonds. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix F hereto.

The following discussion summarizes certain U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below) of the Series 2024B Bonds that acquire their Series 2024B Bonds in the initial offering. The discussion below is based upon laws, regulations, rulings, and decisions in effect and available on the date hereof, all of which are subject to change, possibly with retroactive effect.

Prospective investors should note that no rulings have been or are expected to be sought from the IRS with respect to any of the U.S. federal income tax considerations discussed below, and no assurance can be given that the IRS will not take contrary positions. Further, the following discussion does not deal with all U.S. tax considerations applicable to any given investor in the Series 2024B Bonds, nor does it address the U.S. tax considerations applicable to all categories of investors, some of which may be subject to special taxing rules (regardless of whether or not such investors constitute U.S. Holders), such as certain U.S. expatriates, banks, REITs, RICs, insurance companies, tax-exempt organizations, dealers or traders in securities or currencies, partnerships, S corporations, estates and trusts, investors that hold their Series 2024B Bonds as part of a hedge, straddle or an integrated or conversion transaction, investors whose "functional currency" is not the U.S. dollar, or certain taxpayers that are required to prepare certified financial statements or file financial statements with certain regulatory or governmental agencies. Furthermore, it does not address (i) alternative minimum tax consequences, (ii) the net investment income tax imposed under Section 1411 of 102
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the Code, or (iii) the indirect effects on persons who hold equity interests in a holder. This summary also does not consider the taxation of the Series 2024B Bonds under state, local or non-U.S. tax laws. In addition, this summary generally is limited to U.S. tax considerations applicable to investors that acquire their Series 2024B Bonds pursuant to this offering for the issue price that is applicable to such Series 2024B Bonds (i.e., the price at which a substantial amount of the Series 2024B Bonds are sold to the public) and who will hold their Series 2024B Bonds as "capital assets" within the meaning of Section 1221 of the Code.

The following discussion does not address tax considerations applicable to any investors in the Series 2024B Bonds other than investors that are U.S. Holders.

As used herein, "U.S. Holder" means a beneficial owner of a Series 2024B Bond that for U.S. federal income tax purposes is an individual citizen or resident of the United States, a corporation or other entity taxable as a corporation created or organized in or under the laws of the United States or any state thereof (including the District of Columbia), an estate the income of which is subject to U.S. federal income taxation regardless of its source or a trust where a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as defined in the Code) have the authority to control all substantial decisions of the trust (or a trust that has made a valid election under U.S. Treasury Regulations to be treated as a domestic trust). If a partnership holds Series 2024B Bonds, the tax treatment of such partnership or a partner in such partnership generally will depend upon the status of the partner and upon the activities of the partnership. Partnerships holding Series 2024B Bonds, and partners in such partnerships, should consult their own tax advisors regarding the tax consequences of an investment in the Series 2024B Bonds (including their status as U.S. Holders).

Prospective investors should consult their own tax advisors in determining the U.S. federal, state, local or non-U.S. tax consequences to them from the purchase, ownership and disposition of the Series 2024B Bonds in light of their particular circumstances.

U.S. Holders
Interest. Interest on the Series 2024B Bonds generally will be taxable to a U.S. Holder as ordinary interest income at the time such amounts are accrued or received, in accordance with the U.S. Holder's method of accounting for U.S. federal income tax purposes.

To the extent that the issue price of any maturity of the Series 2024B Bonds is less than the amount to be paid at maturity of such Series 2024B Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2024B Bonds) by more than a de minimis amount, the difference may constitute "original issue discount." U.S. Holders of Series 2024B Bonds will be required to include original issue discount in income for U.S. federal income tax purposes as it accrues, in accordance with a constant yield method based on a compounding of interest (which may be before the receipt of cash payments attributable to such income). Under this method, U.S. Holders generally will be required to include in income increasingly greater amounts of original issue discount in successive accrual periods.

Investors should consult their own tax advisors with respect to the tax consequences of ownership of Series 2024B Bonds having original issue discount.

Series 2024B Bonds purchased, whether at original issuance or otherwise, for an amount in excess of the principal amount payable at maturity (or, in some cases, at their earlier call date) will be treated as having amortizable bond premium. A U.S. Holder of a Series 2024B Bond issued at a premium may make an election, applicable to all debt securities purchased at a premium by such U.S. Holder, to amortize such premium, using a constant yield method over the term of such Series 2024B Bond. Investors should consult their own tax advisors with respect to the tax consequences of ownership of Series 2024B Bonds having bond premium.
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Sale or Other Taxable Disposition of the Series 2024B Bonds. Unless a nonrecognition provision of the Code applies, the sale, exchange, redemption, retirement (including pursuant to an offer by the Community Facilities District) or other disposition of a Series 2024B Bond will be a taxable event for U.S. federal income tax purposes. In such event, in general, a U.S. Holder of a Series 2024B Bond will recognize gain or loss equal to the difference between (i) the amount of cash plus the fair market value of property received (except to the extent attributable to accrued but unpaid interest on the Series 2024B Bond, which will be taxed in the manner described above) and (ii) the U.S. Holder's adjusted U.S. federal income tax basis in the Series 2024B Bond (generally, the purchase price paid by the U.S. Holder for the Series 2024B Bond, decreased by any amortized premium, and increased by the amount of any original issue discount previously included in income by such U.S. Holder with respect to such Series 2024B Bond). Any such gain or loss generally will be capital gain or loss. In the case of a non -corporate U.S. Holder of the Series 2024B Bonds, the maximum marginal U.S. federal income tax rate applicable to any such gain will be lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income if such U.S. holder's holding period for the Series 2024B Bonds exceeds one year. The deductibility of capital losses is subject to limitations.

Defeasance of the Series 2024B Bonds. If the Community Facilities District defeases any Series 2024B Bond, the Series 2024B Bond may be deemed to be retired and "reissued" for U.S. federal income tax purposes as a result of the defeasance. In that event, in general, a holder will recognize taxable gain or loss equal to the difference between (i) the amount realized from the deemed sale, exchange or retirement (less any accrued qualified stated interest which will be taxable as such) and (ii) the holder's adjusted U.S. federal income tax basis in the Series 2024B Bond.

Information Reporting and Backup Withholding. Payments on the Series 2024B Bonds generally will be subject to U.S. information reporting and possibly to "backup withholding." Under Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non -corporate U.S. Holder of the Series 2024B Bonds may be subject to backup withholding at the current rate of 24% with respect to "reportable payments," which include interest paid on the Series 2024B Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Series 2024B Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a TIN to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a "notified payee underreporting" described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against the U.S. Holder's federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain U.S. holders (including among others, corporations, and certain tax- exempt organizations) are not subject to backup withholding. A holder's failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.

Foreign Account Tax Compliance Act ("FATCA')
Sections 1471 through 1474 of the Code impose a 30% withholding tax on certain types of payments made to foreign financial institutions, unless the foreign financial institution enters into an agreement with the U.S. Treasury to, among other things, undertake to identify accounts held by certain U.S. persons or U.S.-owned entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these and other reporting requirements, or unless the foreign financial institution is otherwise exempt from those requirements. In addition, FATCA imposes a 30% withholding tax on the same types of payments to a non -financial foreign entity unless the entity certifies that it does not have any substantial U.S. owners or the entity furnishes identifying information regarding each substantial U.S. owner. Under current guidance, failure to comply with the additional certification, information reporting and other specified requirements imposed under FATCA could result in the 30% withholding tax being imposed on payments of interest on 104
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the Series 2024B Bonds. In general, withholding under FATCA currently applies to payments of U.S. source interest (including original issue discount) and, under current guidance, will apply to certain "passthru" payments no earlier than the date that is two years after publication of final U.S. Treasury Regulations defining the term "foreign passthru payments." Prospective investors should consult their own tax advisors regarding FATCA and its effect on them.

The foregoing summary is included herein for general information only and does not discuss all aspects of U.S. federal taxation that may be relevant to a particular holder of Series 2024B Bonds in light of the holder's particular circumstances and income tax situation. Prospective investors are urged to consult their own tax advisors as to any tax consequences to them from the purchase, ownership and disposition of Series 2024B Bonds, including the application and effect of state, local, non-U.S., and other tax laws.

Legal Matters Incident to the Issuance of the Series 2024 Bonds Certain legal matters incident to the authorization and issuance of the Series 2024 Bonds are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, acting in its capacity as Bond Counsel to the Community Facilities District. Bond Counsel, as such, undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Community Facilities District by the City Attorney, and by Orrick, Herrington & Sutcliffe LLP, Disclosure Counsel. Certain legal matters will be passed upon for the Underwriters by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Underwriters' Counsel. Payment of the fees and expenses of Bond Counsel, Disclosure Counsel and Underwriters' Counsel is contingent upon the sale and issuance of the Series 2024 Bonds.

The various legal opinions to be delivered concurrently with the delivery of the Series 2024 Bonds will be qualified as to enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally.

Municipal Advisor
Columbia Capital Management, LLC, Carlsbad, California, has served as Municipal Advisor to the Community Facilities District in connection with the issuance of the Series 2024 Bonds. The Municipal Advisor has not undertaken to make an independent verification or assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Municipal Advisor is an independent financial advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

No Rating
The Series 2024 Bonds are not rated. No application has been made by the Community Facilities District to any rating agency for the assignment of a municipal bond credit rating for the Series 2024 Bonds.

Underwriting
The Series 2024A Bonds are being purchased by the Underwriters for a price of $ , which is equal to the initial principal amount of the Series 2024A Bonds, [plus a net original issue premium] of $ , and less an Underwriters' discount of $ . The Series 2024B Bonds are being purchased by the Underwriters for a price of $ , which is equal to the initial principal amount of the Series 2024B Bonds, [plus a net original issue premium] of $ , and less an Underwriters' discount of $ . The Underwriters have committed to purchase all of the Series 2024 Bonds if any of the Series 2024 Bonds are purchased. The Series 2024 Bonds are being offered for sale to the public at 105
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the prices set forth on the inside cover page of this Official Statement, which prices may be changed by the Underwriters from time to time without notice. The Series 2024 Bonds may be offered and sold to dealers, including the Underwriters and dealers acquiring Series 2024 Bonds for their own account or an account managed by them, at prices lower than the public offering price.

The initial public offering prices stated on the inside cover of this Official Statement may be changed from time to time by the Underwriters. The Underwriters may offer and sell the Series 2024 Bonds to certain dealers, dealer banks, banks acting as agents and others at prices lower than said public offering prices.

Miscellaneous
Any statements made in this Official Statement involve matters of opinion or of estimates, whether or not expressly stated, are intended as such and not as representations of fact. No representation is made that any of such statements made will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract or agreement between the Community Facilities District or the Underwriters and the purchasers or the Owners or holders of any of the Series 2024 Bonds.

The execution and delivery of this Official Statement by the Community Facilities District has been duly authorized by the City Council of the City, acting as the legislative body of the Community Facilities District.

CITY OF RANCHO MIRAGE

COMMUNITY FACILITIES DISTRICT
NO. 5 (SECTION 31)
By:

City Manager
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APPENDIX A

AMENDED AND RESTATED RATE AND METHOD

OF APPORTIONMENT OF SPECIAL TAX
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 5 (SECTION 31) IMPROVEMENT AREA NO. 1
A Special Tax shall be levied on all Taxable Property within the boundaries of the City of Rancho Mirage Community Facilities District No. 5 (Section 31) Improvement Area No. 1 ("CFD No. 5 IA 1") and collected each Fiscal Year commencing in Fiscal Year 2022-23, in an amount determined by the CFD Administrator through the application of the procedures described below. All of the real property within CFD No. 5 IA 1, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided.

Section 1. Definitions. The terms hereinafter set forth have the following meanings:
"Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable Final Map. An Acre means 43,560 square feet of land.
"Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs related to the administration of CFD No. 5 IA 1 including, but not limited to: the costs of preparing and computing the Special Tax (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City, the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 5 IA 1, or any designee thereof complying with arbitrage rebate requirements, including without limitation rebate liability costs and periodic rebate calculations; the costs to the City, CFD No. 5 IA 1, or any designee thereof complying with disclosure or reporting requirements of the City or CFD No. 5 IA 1, associated with applicable federal and State laws; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs to the City, CFD No. 5 IA 1, or any designee thereof related to an appeal of the Special Tax; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 5 IA 1 for any other administrative purposes of CFD No. 5 IA 1, including attorney's fees and other costs related to commencing and pursuing any foreclosure of delinquent Special Taxes.
"Apartment Unit" means a for -rent Residential Unit located on an Assessor's Parcel of Multi - Family Property.
"Approved Property" means all Assessor's Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) for which a Building Permit has not been issued on or prior to the May 1st preceding the Fiscal Year in which the Special Tax is being levied. "Assessor" means the Assessor of the County of Riverside.

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"Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel Number.
"Assessor's Parcel Map" means an official map of the Assessor designating parcels by Assessor's Parcel Number.
"Assessor's Parcel Number" means the number assigned to an Assessor's Parcel by the County for purposes of identification.
"Assigned Special Tax" means the Special Tax of that name described in Section 3.A below. "Backup Special Tax" means the Special Tax of that name described in Section 3.B below. "Bonds" means any bonds or other Debt of CFD No. 5 IA 1, whether in one or more series, secured by the levy of Special Taxes.
"Building Permit" means a building permit for construction of a Residential Unit or non-residential structure within CFD No. 5 IA 1 issued by the City.
"Building Square Footage" means (i) for Residential Property, all of the square footage of usable area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, or similar area and (ii) for Non -Residential Property, all of the square footage within the interior of a non- residential building. The determination of Building Square Footage shall be made by reference to the Building Permit(s) issued for such Assessor's Parcel and/or by reference to appropriate records kept by the City.
"Calendar Year" means the period commencing January 1st of any year and ending the following December 31.
"CFD Administrator" means an authorized representative of the City, or designee thereof, responsible for determining the Special Tax Requirement, for preparing the Special Tax roll and/or calculating the Backup Special Tax.
"CFD No. 5 IA 1" means the City of Rancho Mirage Community Facilities District No. 5 (Section 31) Improvement Area No. 1
"City" means the City of Rancho Mirage, California.
"Club Property" means (i) Lot Numbers 178 through 183 inclusive, and 186 of Tract Map No. 38291 in the City of Rancho Mirage, County of Riverside recorded on July 12, 2023 as Instrument No. 2023-0202826 and (ii) all Assessor's Parcels within CFD No 5 IA 1 owned in fee by a private entity which is not a homeowner, exclusive of Property Owner Association Property, and which consists of one or more buildings and/or recreation areas used to support operations of the private club. If at any time either (a) Residential Units or (b) non-residential facilities not being used by members of the private club nor to support operations of the private club, are constructed on an Assessor's Parcel classified as Club Property, such Assessor's Parcel will no longer be classified as Club Property, but will be classified as either Residential Property, Commercial Property, Hotel Property or Other Non -Residential Property, as applicable, and subject to the levy of the Special Taxes accordingly. "Commercial Property" means Assessor's Parcels of Developed Property for which a Building Permit has been issued permitting the construction of one or more non-residential facilities which is A-2
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primarily used for: the sale of general merchandise, hard goods, personal services, and other items directly to consumers, or other uses that are consistent with commercial or retail land use designations, as determined by the City.
"Council" means the City Council of the City acting as the legislative body of CFD No. 5 IA 1 under the Act.
"County" means the County of Riverside, California.
"Debt" means any binding obligation to pay or repay a sum of money, including obligations in the form of bonds, certificates of participation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts. "Debt Service" means for each Fiscal Year, the total amount of principal and interest payable on any Outstanding Bonds during the Calendar Year commencing on January 1st of such Fiscal Year. "Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Provisional Property, for which a Building Permit was issued prior to May 1st of the previous Fiscal Year. An Assessor's Parcel classified as Developed Property but for which the Building Permit that caused such Assessor's Parcel to be classified as Developed Property has been cancelled and/or voided prior to the Fiscal Year for which Special Taxes are being levied shall be reclassified as Approved Property, provided that the levy of the Special Tax after such reclassification shall not be less than 1.1 times the annual Debt Service less Administrative Expenses on all Outstanding Bonds. If Bonds have not been issued, an Assessor's Parcel classified as Developed Property for which such a Building Permit has been cancelled and/or voided shall be reclassified as Approved Property. "Exempt Property" means for each Fiscal Year, all Assessor's Parcels designated as being exempt from Special Taxes pursuant to Section 8 below.
"Final Map" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, 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. "Fiscal Year" means the period starting on July 1 and ending the following June 30. "Hotel Property" means Assessor's Parcels of Developed Property for which a Building Permit has been issued permitting the construction of a non-residential structure that constitutes a place of lodging providing sleeping accommodations and related facilities for travelers. Residential Units for which the owner may have the option to rent as part of a resort or hotel brand rental program shall not be considered Hotel Property but shall be considered Single Family Property taxed accordingly. "Hotel Room" means a room or suite available for overnight lodging located on an Assessor's Parcel of Hotel Property.
"Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same.
"Land Use Class" means any of the classes listed in Table 1 under Section 3 below.

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"Lot" means a parcel created by a Final Map on which one or more Residential Units and/or non- residential buildings may be constructed.
"Maximum Special Tax" means for each Assessor's Parcel, the maximum Special Tax, determined in accordance with Sections 3.0 and 3.D below, which may be levied in a given Fiscal Year on such Assessor's Parcel of Taxable Property.
"Multi -Family Property" means all Assessor's Parcels of Residential Property for which a Building Permit has been issued for the purpose of constructing a building or buildings comprised of attached Residential Units available for rental by the general public, not for sale to an end user, and under common management.
"Non -Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued for the purpose of constructing one or more non-residential units or facilities.
"Other Non -Residential Property" means all Assessor's Parcels of Non -Residential Property which are not classified as Commercial Property or Hotel Property. "Outstanding Bonds" means all Bonds, which are deemed to be outstanding under the Indenture. "Prepayment Amount" means the amount required to prepay the Special Tax Obligation in full for an Assessor's Parcel as described in Section 6.A below. "Property Owner Association Property" means any Assessor's Parcel within the boundaries of CFD No. 5 IA 1 owned in fee by a property owner association, including any master or sub -association. "Proportionately" or "Proportionate" means for Developed Property, that the ratio of the actual Special Tax levy to the applicable Assigned Special Tax or Backup Special Tax is equal for all Assessor's Parcels of Developed Property. For Approved Property or 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 all Assessor's Parcels of Approved Property or Undeveloped Property. "Proportionately" may similarly be applied to other categories of Taxable Property as listed in Section 4 below. "Provisional Property" means all Assessor's Parcels of Public Property, Property Owner Association Property, Club Property or property that would otherwise be classified as Exempt Property pursuant to the provisions of Section 8 but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum Acreage as set forth in Section 8. "Public Property" means any property within the boundaries of CFD No. 5 IA 1, which is owned by, or irrevocably offered for dedication to the federal government, the State of California, the County, the City or any other public agency; provided however that any property owned by a public agency and leased to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified in accordance with its use.
"Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued for the purpose of constructing one or more Residential Units. "Residential Unit" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental, separate from adjacent residential dwelling units.

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"Single Family Attached" means all Assessor's Parcels of Single Family Property for which building permits have been or will be issued for a Residential Unit that shares an interior wall with another Residential Unit.
"Single Family Detached" means all Assessor's Parcels of Single Family Property not classified as Single Family Attached.
"Single Family Property" means all Assessor's Parcels of Residential Property not classified as Multi -Family Property.
"Special Tax" means any special tax levied within CFD No. 5 IA 1 pursuant to the Act and this Rate and Method of Apportionment of Special Tax.
"Special Tax Obligation" means the total obligation of an owner of an Assessor's Parcel of Taxable Property to pay the Special Tax for the remaining life of CFD No. 5 IA 1. "Special Tax Requirement" means that amount required in any Fiscal Year to: (i) pay regularly scheduled Debt Service on all Outstanding Bonds; (ii) pay periodic costs on the Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on the Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) accumulate funds to pay directly for acquisition or construction of facilities, provided that the inclusion of such amount does not cause an increase in the Special Tax to be levied on Approved Property, Undeveloped Property, or Provisional Property, until the date that all Bonds have been issued; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. "State" means the State of California.
"Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 5 IA 1, which are not exempt from the levy of the Special Tax pursuant to law or Section 8 below. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Approved Property or Provisional Property. "Waterfront Property" means Residential Property within Zone 3 classified as Single Family Attached and which include separate Residential Units stacked above one another two or more levels high. "Zone" means either Zone 1, Zone 2 or Zone 3.
"Zone 1" means the separate geographic area within CFD No. 5 IA 1 that is designated as Zone 1 on the Exhibit A attached hereto.
"Zone 2" means the separate geographic area within CFD No. 5 IA 1 that is designated as Zone 2 on the Exhibit A attached hereto.
"Zone 3" means the separate geographic area within CFD No. 5 IA 1 that is designated as Zone 3 on the Exhibit A attached hereto.

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Section 2. Land Use Classification. Each Fiscal Year, beginning with Fiscal Year 2022- 23, each Assessor's Parcel within CFD No. 5 IA 1 shall be classified as Taxable Property or Exempt Property. In addition, all Taxable Property shall further be classified as Developed Property, Approved Property, Undeveloped Property or Provisional Property, and all such Taxable Property shall be subject to the levy of Special Taxes in accordance with this Rate and Method of Apportionment of Special Tax determined pursuant to Sections 3 and 4 below. Furthermore, each Assessor's Parcel of Developed Property shall be classified Residential Property or Non -Residential Property. Each Assessor's Parcel of Residential Property shall be further classified as Single Family Detached, Single Family Attached or Waterfront Property and shall be assigned a corresponding Land Use Class based on its Building Square Footage. Each Assessor's Parcel of Non -Residential Property shall be further classified as Commercial Property, Hotel Property or Other Non -Residential Property and shall be assigned to the corresponding Land Use Class.

Section 3. Special Tax Rates.
(a) Assigned Special Tax for Developed Property. The Assigned Special Tax applicable to an Assessor's Parcel classified as Developed Property shall be determined pursuant to Table 1 below.

Table 1
Assigned Special Tax Rates - Fiscal Year 2022-23
Zone 1. Zone 2 & Zone 3
Land
Use
Class
Land Use Type
Building
Square Footage
Fiscal Year 2022-23
Assigned
Special Tax
1 Single Family Detached
> 5,900
$11,383 per
Residential Unit
2 Single Family Detached
5,701 - 5,900
$11,077 per
Residential Unit
3 Single Family Detached
5,501 - 5,700
$10,770 per
Residential Unit
4 Single Family Detached
5,301 - 5,500
$10,463 per
Residential Unit
5 Single Family Detached
5,101 - 5,300
$9,994 per
Residential Unit
6 Single Family Detached
4,901 - 5,100
$9,525 per
Residential Unit
7 Single Family Detached
4,701 - 4,900
$9,025 per
Residential Unit
8 Single Family Detached
4,501 - 4,700
$8,758 per
Residential Unit
9 Single Family Detached
4,301 - 4,500
$8,490 per
Residential Unit
10 Single Family Detached
4,101 - 4,300
$7,922 per
Residential Unit
11 Single Family Detached
3,901 - 4,100
$7,382 per
Residential Unit
12 Single Family Detached
3,701 - 3,900
$7,107 per
Residential Unit
13 Single Family Detached
3,501 - 3,700
$6,832 per
Residential Unit
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14 Single Family Detached
3,301 - 3,500
$5,907 per
Residential Unit
15 Single Family Detached
3,101 - 3,300
$5,568 per
Residential Unit
16 Single Family Detached
2,901 - 3,100
$5,168 per
Residential Unit
17 Single Family Detached
2,701 - 2,900
$4,918 per
Residential Unit
18 Single Family Detached
2,501 - 2,700
$4,600 per
Residential Unit
19 Single Family Detached
2,300 - 2,500
$4,053 per
Residential Unit
20 Single Family Detached
2,101 - 2,300
$3,685 per
Residential Unit
21 Single Family Detached
1,901 - 2,100
$3,310 per
Residential Unit
22 Single Family Detached
2,050
$3,442 per
Residential Unit
24 Single Family Attached
1,851 - 2,050
$3,207 per
Residential Unit
25 Single Family Attached
1,651 -1,851
$2,896 per
Residential Unit
26 Single Family Attached
1,451 - 1,650
$2,539 per
Residential Unit
27 Single Family Attached
2,050
$4,131 per
Residential Unit
29 Waterfront Property
1,851 - 2,050
$3,848 per
Residential Unit
30 Waterfront Property
1,651 -1,851
$3,475 per
Residential Unit
31 Waterfront Property
1,451 - 1,650
$3,047 per
Residential Unit
32 Waterfront Property
0 $3.00 per Building
Square Footage
36 Other Non -Residential Property
> 0
$3.00 per Building
Square Footage
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(b) Backup Special Tax for Developed Property. The Backup Special Tax for Developed Property shall be an amount per Acre for each Zone as shown in Table 2 below.

Table 2
Backup Special Tax Rates — Fiscal Year 2022-23
Zone
Fiscal Year 2022-23
Backup
Special Tax
Zone 1
$17,460 per Acre
Zone 2
$20,449 per Acre
Zone 3
$51,201 per Acre
For the purpose of calculating the Backup Special Tax, the Acreage applicable to Assessor's Parcels of Single Family Property created by recordation of a condominium plan shall be computed from the Acreage of the Lot on which the Residential Unit is located, with the Acreage for such Lot allocated equally among all of the Residential Units located or to be located on such Lot. (c) Maximum Special Tax for Developed Property. The Maximum Special Tax for Developed Property shall be the greater of the Assigned Special Tax for Developed Property or the Backup Special Tax for Developed Property.

In some instances, an Assessor's Parcel may contain both Undeveloped Property and Developed Property. Furthermore, Developed Property may contain more than one Land Use Class. In such cases, the Acreage of the Assessor's Parcel shall be allocated between Developed Property and Undeveloped Property based on the portion of the Assessor's Parcel for which Building Permits had been issued prior to May 1st of the prior Fiscal Year and the portion of the Assessor's Parcel for which Building Permits had not been issued prior to May 1st of the prior Fiscal Year. The Acreage that is considered Developed Property shall be allocated between Residential Property and Non -Residential Property based on the site plan or similar document or exhibit as reasonably determined by the CFD Administrator. The Maximum Special Tax that can be levied on such Assessor's Parcel shall be the sum of the Maximum Special Tax that can be levied on each type of property located on that Assessor's Parcel. (d) Maximum Special Tax for Provisional Property, Approved Property and Undeveloped Property. The Maximum Special Tax for Provisional Property, Approved Property, and Undeveloped Property shall be an amount per Acre for each Zone as shown in Table 3 below.

Table 3
Maximum Special Tax Rates — Fiscal Year 2022-23
Provisional Property, Approved Property, and Undeveloped Property Zone
Fiscal Year 2022-23
Maximum
Special Tax
Zone 1
$17,460 per Acre
Zone 2
$20,449 per Acre
Zone 3
$51,201 per Acre
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(e) Increases in the Assigned Special Tax, Backup Special Tax and Maximum Special Tax.

On each July 1, commencing with July 1, 2023, the Assigned Special Tax, Backup Special Tax and Maximum Special Tax shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. On July 1, 2033, and July 1 of each subsequent Fiscal Year, the Assigned Special Tax, Backup Special Tax and Maximum Special Tax shall not increase from the amount in effect for the previous Fiscal Year.
(f) Decreases in the Special Taxes. Prior to the issuance of the first series of Bonds, the owner of not less than 100% of the Taxable Property within the CFD No. 5 IA 1 may elect to reduce the Maximum Special Taxes for Developed Property, Approved Property, Undeveloped Property and Provisional Property, including the Assigned Special Tax and Backup Special Tax applicable to Developed Property, by written request to the City or the CFD Administrator. The requested reduction must be acceptable to CFD No. 5 IA 1 and consistent with the Act. In the event of a Special Tax reduction pursuant to this Section

3.F., the CFD Administrator shall cause a notice of the reduced Maximum Special Tax to be recorded pursuant to the Act. Upon recordation of such notice, the reduction to the Maximum Special Tax shall be permanent.

Section 4. Method of Apportionment. For each Fiscal Year, commencing Fiscal Year 2022- 23, the CFD Administrator shall levy the Special Tax on all Taxable Property in accordance with the following steps:

Step 1:

Step 2:

Step 3:

Step 4:

Step 5:

The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax as needed to satisfy the Special Tax Requirement;
If additional monies are needed to satisfy the Special Tax Requirement after Step 1 has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Approved Property in an amount up to 100% of the Maximum Special Tax for Approved Property as needed to satisfy the Special Tax Requirement;
If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property in an amount up to 100% of the Maximum Special Tax for Undeveloped Property as needed to satisfy the Special Tax Requirement;
If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax amount determined in Step 1 shall be increased in equal percentages for each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined by application of the Backup Special Tax up to an amount equal to 100% of the Maximum Special Tax as needed to satisfy the Special Tax Requirement; If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Provisional Property in an amount up to 100% of the Maximum Special Tax for Provisional Property as needed to satisfy the Special Tax Requirement.
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Notwithstanding the above, under no circumstances will the Special Tax levied in any Fiscal Year against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased as a result of a delinquency or default in the payment of the Special Tax applicable to any other Assessor's Parcel within CFD No. 5 IA 1 by more than ten percent (10%) above what would have been levied in the absence of such delinquencies or defaults.

Section 5. Collection of Special Taxes. Collection of the Special Tax shall be made by the County in the same manner as ordinary ad valorem property taxes are collected and the Special Tax shall be subject to the same penalties and the same lien priority in the case of delinquency as ad valorem taxes; provided, however, that the Council may provide for (i) other means of collecting the Special Tax, including direct billings thereof to the property owners; and (ii) judicial foreclosure of delinquent Special Taxes.

Section 6. Prepayment of Special Tax Obligation.
(a) Prepayment in Full. Property owners may prepay and permanently satisfy the Special Tax Obligation by a cash settlement with the CFD No. 5 IA 1 as permitted under Government Code Section 53344. The following definitions apply to this Section 6:
"CFD Public Facilities Costs" means $60,000,000 or such lower number as (i) shall be determined by the CFD Administrator as sufficient to acquire or construct the facilities to be financed under the Act and financing program for CFD No. 5 IA 1, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more Bonds (except refunding bonds). "Construction Fund" means the fund (regardless of its name) established pursuant to the Indenture to hold funds, which are currently available for expenditure to acquire or construct the facilities or pay fees authorized to be funded by CFD No. 5 IA 1.
"Future Facilities Costs" means the CFD Public Facilities Costs minus (i) costs previously paid from the Construction Fund to acquire or construct the facilities, (ii) monies currently on deposit in the Construction Fund, and (iii) monies currently on deposit in an escrow or other designated fund that are expected to be available to finance CFD Public Facilities Costs. "Outstanding Bonds" means all Previously Issued Bonds, which remain outstanding as of the first interest and/or principal payment date following the current Fiscal Year excluding Bonds to be redeemed at a later date with proceeds of prior Special Tax prepayments. "Previously Issued Bonds" means all Bonds that have been issued prior to the date of prepayment.

The Special Tax Obligation applicable to an Assessor's Parcel of Developed Property, Approved Property, Undeveloped Property, or Provisional Property may be prepaid and the obligation to pay the Special Tax for such Assessor's Parcel permanently satisfied as described herein, provided that a prepayment may be made with respect to a particular Assessor's Parcel only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel eligible for prepayment of the Special Tax Obligation shall provide the CFD Administrator with written notice of intent to prepay and designate or identify the company or agency that will be acting as the escrow agent, if any. The CFD Administrator shall provide the owner with a statement of the Prepayment Amount for such Assessor's Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. Prepayment must be made at least 60 days prior to any redemption date for the CFD No. 5 IA 1 Bonds to be redeemed with the proceeds of such prepaid Special Taxes, unless a shorter period is acceptable to the Trustee and the City.

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The Prepayment Amount shall be calculated for each applicable Assessor's Parcel or group of Assessor's Parcels as follows (capitalized terms are defined below):

Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Equals: Prepayment Amount
The Prepayment Amount shall be determined as of the proposed prepayment date as follows:

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

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

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

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

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

6. Determine the Future Facilities Costs.

7. Multiply the quotient derived pursuant to paragraph 3 by the amount determined pursuant to paragraph 6 to determine the portion of the Future Facilities Costs applicable to the Assessor's Parcel (the "Future Facilities Amount").

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

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

A-11
4160-0370-8238.9

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

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

12. Verify the administrative fees and expenses associated with the prepayment, including the cost to invest the Prepayment Amount, the cost of redeeming the Outstanding Bonds, and the cost of recording notices to evidence the prepayment of the Special Tax Obligation for the Assessor's Parcel and the redemption of Outstanding Bonds (the "Administrative Fees and Expenses").

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

14. If any capitalized interest for the Outstanding 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 quotient computed pursuant to paragraph 3 by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the "Capitalized Interest Credit").

15. The amount to prepay the Special Tax Obligation is equal to the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Amount and the Administrative Fees and Expenses, less the Reserve Fund Credit and the Capitalized Interest Credit.

The Prepayment Amount, the Bond Redemption Amount, the Redemption Premium, and Defeasance Amount shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make Debt Service payments. The Future Facilities Amount shall be deposited into the Construction Fund. The Administrative Fees and Expenses shall be retained by the CFD No. 5 IA 1.

The Prepayment Amount may be sufficient to redeem an amount other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to redeem Bonds with the next prepayment of a Special Tax Obligation.

The CFD Administrator will confirm that all previously levied Special Taxes have been paid in full. With respect to any Assessor's Parcel for which the Special Tax Obligation is prepaid in full, once the CFD Administrator has confirmed that all previously levied Special Taxes have been paid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special A-12
4160-0370-8238.9

Tax and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of the owner of such Assessor's Parcel to pay the Special Tax shall cease.

Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the aggregate amount of Maximum Special Taxes that may be levied on Taxable Property, less Administrative Expenses, after the proposed prepayment is at least 1.1 times the Debt Service on all Outstanding Bonds in each Fiscal Year.
(b) Partial Prepayment. The Special Tax Obligation for an Assessor's Parcel of Developed Property, Approved Property, Undeveloped Property, or Provisional Property may be partially prepaid.

The amount of the prepayment shall be calculated as in Section 6.A.; except that a partial prepayment shall be calculated according to the following formula:

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

PP = the partial prepayment
P = the Prepayment Amount calculated according to Section 6.A E
F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax Obligation
A = the Prepayment Administrative Fees and Expenses from Section 6.A The owner of any Assessor's Parcel who desires such partial prepayment shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Special Tax Obligation, (ii) the percentage by which the Special Tax Obligation shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if any. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax Obligation for an Assessor's Parcel within sixty (60) days of the request and may charge a reasonable fee for providing this service.

With respect to any Assessor's Parcel for which the Special Tax Obligation is partially prepaid, the City shall (i) distribute the funds remitted to it according to Section 6.A., and (ii) indicate in the records of CFD No. 5 IA 1 that there has been a partial prepayment of the Special Tax Obligation 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 Maximum Special Tax, shall continue to be levied on such Assessor's Parcel.

Notwithstanding the foregoing, no partial prepayment shall be allowed unless the aggregate amount of Maximum Special Taxes that may be levied on Taxable Property, less Administrative Expenses, after the proposed partial prepayment is at least 1.1 times the Debt Service on all Outstanding Bonds in each Fiscal Year.

Section 7. Term of Special Tax. The Special Tax shall be levied as long as necessary to meet the Special Tax Requirement, provided that the Special Tax shall not be levied after Fiscal Year 2064-65. The Special Tax will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined that all required interest and principal payments on CFD No. 5 IA 1 bonds have been paid.

Section 8. Exemptions. The CFD Administrator shall classify as Exempt Property (i) Assessor's Parcels of Public Property, (ii) Assessor's Parcels of Property Owner Association Property, or (iii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property A-13
4160-0370-8238.9

taxes because they are owned by a religious organization, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, and (v) Assessor's Parcels classified as Club Property as determined reasonably by the CFD Administrator, provided that no such classification would reduce the sum of all Taxable Property in a Zone below the amount of Acreage shown for such Zone in Table 4 below.

Table 4
Minimum Acreage of Taxable Property
Zone
Minimum Acreage of
Taxable Property
Zone 1

36.22 Acres
Zone 2

62.83 Acres
Zone 3

33.42 Acres
Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the sum of all Taxable Property within a Zone to less than the amount indicated for such Zone in Table 4 shall be classified as Provisional Property and will continue to be subject to the Special Taxes accordingly. Tax exempt status for the purpose of this paragraph will be assigned by the CFD Administrator for each Zone in the chronological order in which property becomes eligible for classification as Exempt Property.

If the use of an Assessor's Parcel of Exempt Property changes so that such Assessor's Parcel is no longer classified as one of the uses set forth in the first paragraph of Section 8 above that would make such Assessor's Parcel eligible to be classified as Exempt Property, such Assessor's Parcel shall cease to be classified as Exempt Property and shall be deemed to be Taxable Property.

Section 9. Appeals. Any landowner who pays the Special Tax and claims the amount of the Special Tax levied on his or her Assessor's Parcel is in error shall first consult with the CFD Administrator regarding such error not later than thirty-six (36) months after first having paid the first installment of the Special Tax that is disputed. If following such consultation, the CFD Administrator determines that an error has occurred, then the CFD Administrator shall take any of the following actions, in order of priority, in order to correct the error:
(i) Amend the Special Tax levy on the landowner's Assessor's Parcel(s) for the current Fiscal Year prior to the payment date,
(ii) Require the CFD to reimburse the landowner for the amount of the overpayment to the extent of available CFD funds, or
(iii) Grant a credit against, eliminate or reduce the future Special Taxes on the landowner's Assessor's Parcel(s) in the amount of the overpayment.

If following such consultation and action by the CFD Administrator the landowner believes such error still exists, such person may file a written notice of appeal with the Council. Upon the receipt of such notice, the Council or designee may establish such procedures as deemed necessary to undertake the review of any such appeal. If the Council or designee determines an error still exists, the CFD Administrator shall take any of the actions described as (i), (ii) and (iii) above, in order of priority, in order to correct the error.

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The Council or designee thereof shall interpret this Rate and Method of Apportionment of Special Tax for purposes of clarifying any ambiguities and make determinations relative to the administration of the Special Tax and any landowner appeals. The decision of the Council or designee shall be final.

A-15
4160-0370-8238.9

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A -16
4160-0370-8238. 9

Exhibit A
CITY OF RANCHO MIRAGE CFD NO. 5 (SECTION 31)
Zone Descriptions
ZONE 1
Map No.

Lot No.

Map No.

Lot No.
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37856 A
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37856 AE
37856 81
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37856 BK
37856 BL
37856 BM
37856 81,1
37856 80
37856 BP
37856 8U
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37856 8W
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37856 BY
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ZONE 2
Map No.
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A-17
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Map No.

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4160-0370-8238.9

Exhibit A
A-18
4160-0370-8238.9

CITY OF RANCHO MIRAGE CFD NO. 5 (SECTION 31)
Zone Descriptions
ZONE 3
Map No.
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A-19

APPENDIX B

APPRAISAL REPORT
B-1
4160-0370-8238.9

Integra Realty Resources
Orange County
Appraisal of Real Property
City of Rancho Mirage CFD No. 5 (Section 31) - Improvement Area No. 1 Master Planned Community
10 Danube Dr.

Rancho Mirage, Riverside County, California 92270
Prepared For:

City of Rancho Mirage
Date of the Report:

April 25, 2024
Report Format:

Appraisal Report
IRR - Orange County
File Number: 220-2024-0003

Subject Photographs
City of Rancho Mirage CFD No. 5 (Section 31) - Improvement Area No. 1 10 Danube Dr.

Rancho Mirage, California

Integra Realty Resources
Orange County
April 25, 2024
Kofi Antobam
City of Rancho Mirage
69825 Highway 111
Rancho Mirage, CA 92270
4695 MacArthur Court
Suite 115
Newport Beach, CA 92660
T 949.459.3717
www.irr.com
SUBJECT: Market Value Appraisal
City of Rancho Mirage CFD No. 5 (Section 31) - Improvement Area No. 1 10 Danube Dr.

Rancho Mirage, Riverside County, California 92270
IRR - Orange County File No. 220-2024-0003
Dear Mr. Antobam:

Integra Realty Resources — Orange County is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value, subject to a hypothetical condition, pertaining to the fee simple interest in the property. The client for the assignment is the City of Rancho Mirage and the intended use of the report is for bond underwriting purposes.

The subject property represents all of the City of Rancho Mirage Community Facilities District No. 5 (Section 31), Improvement Area No. 1 ("CFD No. 5 (Section 31), IA 1"), which encompasses 239.64 ± acres of residentially zoned land. The subject property reflects Phase 1 of a master planned community known as Cotino, a Storyliving by Disney community ("Cotino"). The subject is proposed and entitled for development of 652 detached and attached single family residential homes; at final build out, Cotino will include approximately 1,932 homes, a retail town center/mixed use core, 24 -acre Crystal Lagoon, and extensive community amenities.

Cotino reflects the first ever branded Storyliving by Disney community; as such, Disney is heavily involved in the design and marketing of the project. Further discussion of Disney's influence on the project, as well as other unique features of the community, are provided in the body of this Appraisal Report. The master developer (DMB Development, LLC) is overseeing construction of horizontal improvements and amenities at the subject. The

Kofi Antobam
City of Rancho Mirage
April 25, 2024

Page 2 ends

Rancho Mirage City CouncilMay 2, 2024

Rancho Mirage City Council
May 2, 2024