Agenda packet — Mayor and City Council, July 20, 2022 (part 8 of 9)

RESOLUTION NO. 2022-147

RESOLUTION OF THE MAYOR AND CITY COUNCIL OF

THE CITY OF SAN BERNARDINO, CALIFORNIA,
AUTHORIZING THE ACCEPTANCE OF THE 2020 AND
2021 EDWARD BYRNE JUSTICE ASSISTANCE GRANTS
AND INCREASING THE FY2022/23 ADOPTED BUDGET
GRANT REVENUE AND EXPENDITURES $379,025.

WHEREAS, the City of San Bernardino is a sub-recipient to the County of San Bernardino for the Edward Byrne Memorial Justice Assistance Grant and; WHEREAS, the City of San Bernardino’s combined allocation of Justice Assistance Grant funds for fiscal years 2020 and 2021 is $379,025.

BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:

SECTION 1. The above recitals are true and correct and are incorporated herein by this reference.

SECTION 2. The City Manager is authorized to execute the 2020, and 2021 Sub Award Grant Agreements for the Edward Byrne Memorial Justice Assistance Grant Program between the City of San Bernardino and County of San Bernardino attached hereto, marked Exhibit “A”, and Exhibit “B” and by this reference made a part thereof.

SECTION 3. The Director of Finance is hereby authorized and directed to appropriate revenue and expenditures of and to incorporate the changes in the FY2022/23 Adopted Budget.

SECTION 4. That the City Council finds this Resolution is not subject to the California Environmental Quality Act (CEQA) in that the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty, as in this case, that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.

SECTION 5. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications, and to this end the provisions of this Resolution are declared to be severable.

SECTION 6. Effective Date. This Resolution shall become effective immediately.

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Resolution 2022-147
July 20, 2022

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APPROVED and ADOPTED by the City Council and signed by the Mayor and attested by the Acting City Clerk this 20th day of July 2022.

John Valdivia, Mayor
City of San Bernardino
Attest:

Genoveva Rocha, CMC, City Clerk
Approved as to form:

Sonia Carvalho, City Attorney
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CERTIFICATION

STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO) ss

CITY OF SAN BERNARDINO )
I, Genoveva Rocha, CMC, Acting City Clerk, hereby certify that the attached is a true copy of Resolution No. 2022-147, adopted at a regular meeting held on the 20th day of July 2022 by the following vote:

Council Members: AYES NAYS ABSTAIN ABSENT
SANCHEZ _____ _____ _______ _______
IBARRA _____ _____ _______ _______
FIGUEROA _____ _____ _______ _______
SHORETT _____ _____ _______ _______
REYNOSO _____ _____ _______ _______
CALVIN _____ _____ _______ _______
ALEXANDER _____ _____ _______ _______
WITNESS my hand and official seal of the City of San Bernardino this ___ day of ____________ 2022.

Genoveva Rocha, CMC, Acting City Clerk
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CONSENT CALENDAR
City of San Bernardino
Request for Council Action
Date: July 20, 2022
To: Honorable Mayor and City Council Members
From: Robert D. Field, City Manager
Barbara Whitehorn, Agency Director of Administrative Services Department: Finance
Subject: Community Facilities District No. 2020-1 (Rancho Palma) Special Tax Bonds, Series 2022
Recommendation
Adopt Resolution No. 2022-148 of the Mayor and City Council of the City of San Bernardino, California, authorizing the issuance of, not to exceed $5,000,000, aggregate principal amount of Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino Special Tax Bonds, Series 2022, appointing Fiscal Agent, approving forms of the Fiscal Agent Agreement, Purchase Contract and Continuing Disclosure Certificate, approving the form Preliminary Official Statement and authorizing preparation of Final Official Statement and authorizing certain City staff to negotiate the terms of the sale of the Bonds.

Background
The City Council formed the Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino, County of San Bernardino, State of California” (“CFD No. 2020-1”) on August 5, 2020, under the provisions of the Mello-Roos Community Facilities Act of 1982 (the “Act”), which authorizes CFDs to levy special taxes (the “Special Taxes”) to pay for the costs of certain public facilities, including the Facilities, and to issue bonds payable from the Special Taxes. In 2020, the City Council authorized the sale of up to $5 million in bonds.

In accordance therewith, CFD No. 2020-1 now intends to issue its Special Tax Bonds, Series 2022 (the “Series 2022 Bonds”), secured by the Special Taxes levied on 17.68 net taxable acres which upon build out will consist of 119 single family homes within the boundaries of CFD No. 2020-1. The City Council action proposed approves the sale and issuance of up to $5 million in CFD No. 2020-1 Special Tax Bonds and approves forms of related documents including the Preliminary Official Statement, Packet Pg. 1959
Fiscal Agent Agreement, Bond Purchase Agreement, and other related documents.

The bond sale is proposed for the week of August 1, 2022, and a bond closing at the end of August. The Series 2022 Bonds will be sold by the City to finance the City Facilities and repaid over a term of 30 years in approximately equal annual payments.

In addition to bond debt service, Special Taxes will be levied to pay for annual administration of the Series 2022 Bonds by CFD No. 2020-1.

TH Rancho Palma, LLC, the Developer, is a Delaware limited liability company (“TH Rancho Palma”). TH Rancho Palma acquired the property in the District on April 2, 2020. As of May 1, 2022, 53 of the 119 planned single family lots had been completed and conveyed to individual homeowners. Of the remaining 66 homes, TH Rancho Palma owned six completed model homes (none of which were in escrow), 12 homes which were over 95% completed (all of which were in escrow), 28 homes under construction (all of which were in escrow) and 20 finished lots (with no lots in escrow).

Since May 1, an additional 12 homes have been conveyed to homeowners.

The sole member and manager of TH Rancho Palma is Trumark Homes LLC, a California limited liability company (“Trumark Homes”). Trumark Homes is managing the development and construction of the homes within the District. Trumark Homes develops and constructs office, retail, mixed-use, industrial facilities and residential homes in California and Colorado. The Rancho Palma Project is located in the Verdemont Community of San Bernardino north of Little League Drive and east of Magnolia Avenue. City Facilities authorized to be financed from Bond proceeds consist of water system facilities, including capacity in existing facilities, and sewer system facilities, including capacity in existing facilities and sewage treatment and disposal capacity, storm drain improvements and transportation improvements, including street and traffic improvements of the City and such other improvements as well as incidental expenses related to the planning, design and completion of such facilities.

The CFD 2020-1 contains approximately 28 gross acres or approximately 17.68 net taxable acres, located in the southwestern portion of the County and in the northwestern portion of the City. Specifically, the District is located at the northeast corner of Little League Drive and Magnolia Avenue, north of Interstate 215, in the Verdemont neighborhood of the City. The District encompasses Tract Map No. 20006 (the “Property”) and is planned for 119 single family homes at buildout. The development within the District consists of two product lines called “Navarra” and “Rioja.” The Navarra neighborhood is planned to consist of 64 single family homes, including three model homes (“Plan 1,” “Plan 2,” and “Plan 3”) and will be built in 10 phases. The Rioja neighborhood is planned to consist of 55 single family homes, including three model homes (“Plan 4,” “Plan 5,” and “Plan 6”) and will be built in nine phases.

As of May 1, 2022, the date of value of the appraisal of CFD No. 2020-1, a total of 53 of the 119 planned single family lots have been completed and conveyed to individual homeowners. Of the remaining 66 homes, TH Rancho Palma owned six completed model homes (none of which were in escrow), 12 homes, which were over 95% Packet Pg. 1960
completed (all of which were in escrow), 28 homes under construction but less than 95% completed (all of which were in escrow) and 20 finished lots without any vertical construction thereon (with no lots in escrow).

Development has continued since the appraisal was completed, with 71 completed homes, 65 of which are owned by individual owners and 6 by TH Rancho Palma, 34 homes are under construction, and there are 14 finished lots.

Discussion
For CFD No. 2020-1, it is proposed that bonds be sold to generate approximately $3.480 million in bond proceeds, depending on bond market conditions at time of sale.

The bond sale is expected to occur the week of August 1, 2022, with a closing by the end of August 2022. Bond proceeds will be used to fund approximately $3 million in reimbursements for public improvements and public facilities fees paid by the Developer, fund a one-year bond reserve fund, and fund costs of bond issuance, including a fee to cover City staff time spent towards issuing the Series 2022 Bonds.

The term of the Series 2022 Bonds will be 30 years and debt service is expected to not exceed $220,000 per year. The bond true interest rate, depending on bond market condition at time of sale, is expected to be approximately 5%.

The Series 2022 Bonds will be sold by CFD No. 2020-1 through a negotiated sale.

Hilltop Securities is the proposed bond underwriter procured by the City following an RFP process earlier this year. The Series 2022 Bonds will be non-rated as development related CFD bonds like Series 2022 Bonds do not qualify for investment grade bond ratings from Standard and Poor’s, Moody’s or any major bond rating agencies even though sufficient CFD special taxes can now be levied against fully developed homes to cover annual debt service. In the future, once all the homes have been developed and sold, an investment grade bond rating may be possible.

In May of 2022, the City retained Kitty Siino & Associates, Inc., an experienced MAI appraiser and qualified appraiser of CFD projects, following an RFP process, which has valued the property subject to the CFD No. 2020-1 Special Taxes. The appraised value of the properties in CFD No. 2020-1 totals $47,976,884 and will in aggregate exceed the amount of Series 2022 Bonds issued by a factor of 13.79 (the appraised value exceeds the amount of the bonds by 13.79 times). This is known as the value to lien ratio. Annual special taxes are expected range between $1,880 and $2,525 per home depending on home size. Home values are appraised between $520,000 and $604,000. In accordance with the Local Goals and Policies for all Community Facilities Districts of the City of San Bernardino, the total tax burden on the homes will be under 2% of assessed value.

The property values become significant in the event a property owner fails to pay special taxes and it becomes necessary to initiate foreclosure proceedings in order to obtain payment of special taxes to pay bond debt service. In the bond Fiscal Agent Agreement, the City has covenanted to initiate property foreclosure proceedings in the event of a failure to pay the special taxes by the following October 1st of each year.

This covenant is required in order for investors to buy the bonds. The Special Tax lien Packet Pg. 1961
is co-equal in priority to general property taxes and is senior to any mortgages. Property owners can prepay their respective share of CFD No. 2020-1 Special Taxes on any interest payment date. The CFD No. 2020-1 Bonds will also be subject to early redemption for refinancing or special tax prepayment. The Series 2022 Bonds will have a maximum allowable funded bond reserve fund equal to maximum annual bond debt service to help cover delinquencies. The CFD law allows the City to raise CFD taxes on each home by up to 10% to cover delinquencies. Buyers of homes in CFD No. 2020- 1 have, and will, receive detailed disclosure notices related to CFD 2020-1 regarding the terms of the special taxes levied on their homes and its impact on their property tax bill.

The City will be required to annually calculate the special taxes necessary to pay bond debt service and pay annual administrative costs. The City CFD Administrator, Spicer Consulting Group LLC will place the special tax amounts on the County property tax roll annually. Once the City collects the taxes, the funds will be sent to the Fiscal Agent to make interest and principal payments on the bonds. The City together with the Fiscal Agent will also manage the bond reserve fund to apply any investment earnings to the related bond debt service. If there are property owners who are delinquent in their payment, as referenced above, the City will be required to initiate foreclosure actions.

The City CFD Administrator will monitor and take any required actions. Any costs associated with administering the CFD will come from the Administrative Expense account funded by the special taxes set up for such purposes.

CFD No. 2020-1 bond and disclosure counsel, Best Best & Krieger (who also serves as City Attorney), has prepared a Preliminary Official Statement to be approved by the City and provided to investors. A substantially final draft is attached as part of this Staff Report together with the Fiscal Agent Agreement, Bond Purchase Contract, and other legal documents related to the sale and issuance of the Bonds. The Preliminary Bond Official Statement will disclose information about the CFD and will describe the risks associated with the bonds to investors. The final Bond Official Statement will be available after the bond sale and will be delivered to investors. Neither the City nor CFD No. 2020-1 has any obligation to pay debt service on the bonds in the event of default or non-payment of CFD 2020-1 Special Taxes by property owners. 2021-2025 Key Strategic Targets and Goals
The issuance of Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino Special Tax Bonds will meet Key Target No.1b: Improved Operational & Financial Stability, Continue to seek opportunities to secure long-term revenue sources, by securing a revenue source for the Community Facilities District. This project will also contribute to ensuring that the City is clean and attractive and provide infrastructure designed for long-term economic growth, contributing to Key Targets

3.d., Improved Quality of Life, Improve the City’s appearance, cleanliness and attractiveness, and 4. Economic Growth & Development.

Fiscal Impact
There is no direct fiscal impact to the City as a result of CFD No. 2020-1 issuing the Packet Pg. 1962
bonds. All costs associated with administering the CFD will come from CFD funds.

Conclusion
It is recommended the Mayor and City Council approve Resolution No. 2022-148 authorizing the issuance of, not to exceed $5,000,000, aggregate principal amount of Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino Special Tax Bonds, Series 2022, appointing Fiscal Agent, approving forms of the Fiscal Agent Agreement, Purchase Contract and Continuing Disclosure Certificate, approving the form Preliminary Official Statement and authorizing preparation of Final Official Statement and authorizing certain City staff to negotiate the terms of the sale of the Bonds.

Attachments
Attachment 1 Resolution No. 2022-148 Authorizing Special Revenue Bonds Attachment 2 Fiscal Agent Agreement
Attachment 3 Bond Purchase Agreement
Attachment 4 Preliminary Official Statement
Ward Fifth Ward
Synopsis of Previous Council Actions: N/A
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RESOLUTION NO. 2022-148

RESOLUTION OF THE MAYOR AND CITY COUNCIL OF

THE CITY OF SAN BERNARDINO, CALIFORNIA,

AUTHORIZING THE ISSUANCE OF BONDS OF
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO,

COUNTY OF SAN BERNARDINO, STATE OF
CALIFORNIA DESIGNATED 2022 SPECIAL TAX BONDS,

APPOINTING FISCAL AGENT, APPROVING FISCAL

AGENT AGREEMENT AND PURCHASE CONTRACT AND

AUTHORIZING NEGOTIATION OF TERMS OF THE SALE

OF SAID BONDS, APPROVING PRELIMINARY OFFICIAL

STATEMENT AND AUTHORIZING PREPARATION OF

FINAL OFFICIAL STATEMENT AND APPROVING

CONTINUING DISCLOSURE CERTIFICATE
WHEREAS, Community Facilities District 2020-1 (Rancho Palma) of the City of San Bernardino, County of San Bernardino, State of California (the “District”) was established on August 5, 2020 by adoption by the City Council (the “City Council”) of the City of San Bernardino (the “City”) of Resolution No. 2020-195; and
WHEREAS, on August 5, 2020, the City Council also adopted Resolution No. 2020-196 determining the necessity for the District to incur bonded indebtedness in an aggregate principal amount not to exceed $5,000,000; and
WHEREAS, on August 5, 2020, consolidated special elections were held within the District and there was submitted to the qualified voters of the District, among other propositions, the proposition of whether a bonded indebtedness in an aggregate principal amount not to exceed $5,000,000 should be incurred by and for the District for the purpose of financing certain public facilities for the benefit of the District (the “Facilities”), and more than two-thirds of the votes cast in said consolidated special elections were cast in favor of incurring such bonded indebtedness, and the District was thereby authorized to issue bonds in an aggregate principal amount not to exceed $5,000,000 for the purposes set forth in said proposition; and WHEREAS, the City Council has determined that it is necessary that bonds of the District designated “Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds” be issued in an aggregate principal amount which shall not exceed $5,000,000 (the “Bonds”) to finance a portion of the costs of the acquisition or construction of the Facilities; and
WHEREAS, payment of the principal of and interest on the Bonds will be secured by special taxes to be levied on parcels of taxable property in the District (the “Special Taxes”); and Packet Pg. 1964
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WHEREAS, pursuant to Section 53345.8 of the California Government Code, the City Council, as the legislative body of the District, may sell bonds of the District only if it determines prior to the sale of such bonds that the value of the real property that would be subject to the Special Tax to pay debt service on the bonds will be at least three (3) times the principal amount of the bonds to be sold and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Mello-Roos Community Facilities Act of 1982 (Section 53311, et seq., of the California Government Code) on property within the District or a special assessment levied on property within the District; and
WHEREAS, the appraised value of the taxable property within the District, based upon the appraisal prepared by Kitty Siino & Associates, Inc. (the “Appraiser”), and as set forth in the report of the Appraiser dated June 23, 2022 (the “Appraisal”), is $47,976,884 as of May 1, 2022; and
WHEREAS, if the Bonds are issued and sold in an aggregate principal amount that does not exceed $5,000,000, the appraised value of the taxable property in the District, as set forth in the Appraisal, will be more than three (3) times such principal amount of the Bonds, and there are no other special tax or assessment bonds of the District; and WHEREAS, there has been presented to the City Council a form of Purchase Contract (the “Purchase Contract”) whereby Hilltop Securities, Inc. (the “Underwriter”) has offered to purchase the Bonds from the City, and a form of Preliminary Official Statement relating to the Bonds; and WHEREAS, there has also been presented to the City Council a form of Fiscal Agent Agreement (the “Fiscal Agent Agreement”) with respect to the Bonds to be executed and delivered by the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”), whereby the Fiscal Agent will authenticate and deliver the Bonds and perform certain other duties; and
WHEREAS, there has also been presented to the City Council a form of Continuing Disclosure Certificate to be executed and delivered by the City, for the benefit of the owners of the Bonds and in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission, as amended (the “Rule”); and WHEREAS, the City Council has considered the forms of the Fiscal Agent Agreement, the Continuing Disclosure Certificate, the Purchase Contract and the Preliminary Official Statement and has determined that it is in the best interest of the owners of property in and the future residents of the District that the City Council authorize the issuance and sale of the Bonds and the execution and delivery of said agreements and approve and authorize the distribution of the Preliminary Official Statement subject to the conditions hereinafter contained; and WHEREAS, Section 5852.1 of the Government Code of the State of California (“Section 5852.1”) provides that the City Council obtain from an underwriter, financial advisor or private Packet Pg. 1965
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lender and disclose, in a meeting open to the public, prior to authorization of the issuance of the Bonds, good faith estimates of: (a) the true interest cost of the Bonds, (b) the finance charge of the Bonds, meaning the sum of all fees and charges paid to third parties, (c) the amount of proceeds of the Bonds received less the finance charge described above and any reserves or capitalized interest paid or funded with proceeds of the Bonds and (d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Bonds; and WHEREAS, in accordance with Section 5852.1, the City Council has obtained such good faith estimates from Columbia Capital Management, LLC, the City’s municipal advisor (the “Municipal Advisor”), and such estimates are disclosed in Exhibit A attached hereto; and WHEREAS, the City Council wishes at this time to authorize all proceedings relating to the issuance and sale of the Bonds and all other agreements and documents relating thereto.

BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:

SECTION 1. Findings. The City Council finds (a) that the preceding recitals are true and correct, (b) that the sale of the Bonds at private sale, without advertising for bids, will result in a lower overall cost to the District, and (c) that if the Bonds are issued and sold in an aggregate principal amount that does not exceed $5,000,000, the value of the parcels of real property within the District which will be subject to the levy of the Special Taxes to pay the principal of and interest on the Bonds, based on the appraised value of such parcels as determined by the Appraiser and as set forth in the Appraisal, i.e., $47,976,884, will be more than three (3) times the principal amount of such Bonds and all other outstanding bonds that are secured by special taxes that are to be levied on such parcels or special assessments that have been levied on such parcels.

SECTION 2. Authorization of the Issuance of the Bonds. The City Council authorizes the issuance and sale of the Bonds in an aggregate principal amount which shall not exceed $5,000,000. The Mayor, the Mayor Pro Tem, the City Manager and the Finance Director (each an “Authorized Representative”) are each authorized and directed to take all steps and actions which are necessary to accomplish the issuance, sale and delivery of the Bonds pursuant to the authorization given by and the conditions specified in this resolution. The Mayor and the City Clerk of the City are authorized to execute the Bonds for and on behalf of the City and the District by their manual or facsimile signatures. The Bonds shall be dated as of their date of delivery pursuant to the Purchase Contract.

SECTION 3. Approval of Fiscal Agent Agreement. The form of Fiscal Agent Agreement which provides generally for (i) the authentication and delivery by the Fiscal Agent of the Bonds, (ii) the establishment and administration by the Fiscal Agent of certain funds and accounts for the benefit of the City and the owners of the Bonds, (iii) the payment by the Fiscal Agent of the principal of and interest on the Bonds from the Special Tax Revenues (as defined therein), and (iv) Packet Pg. 1966
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the performance of other duties by the Fiscal Agent, is approved in the form provided to the City Council at the meeting at which this resolution is adopted, and the Authorized Representatives are each individually authorized to execute and deliver, on behalf of the City, such Fiscal Agent Agreement with respect to the Bonds.

SECTION 4. Approval of Preliminary Official Statement; Preparation of Final Official Statement. The Preliminary Official Statement is approved, and the Authorized Representatives are each individually authorized to consent to and assist in the preparation of such modifications thereto as may be specified by Best Best & Krieger LLP, bond counsel and disclosure counsel to the City (“Bond Counsel”), and the Municipal Advisor. The Authorized Representatives are each individually authorized to determine, with the assistance of Bond Counsel and the Municipal Advisor when the Preliminary Official Statement is to be deemed final within the meaning of the Rule and to deliver a certificate to that effect to the Underwriter. The Underwriter is authorized to distribute the Preliminary Official Statement as approved hereby, or as modified with the consent of the City Manager or the Finance Director, or to prospective purchasers of the Bonds. The Authorized Representatives and the Municipal Advisor are each authorized to participate in the preparation of the Final Official Statement, based on the Preliminary Official Statement, and such modifications thereto as may be agreed to by Bond Counsel, the Municipal Advisor and the Underwriter. The Authorized Representatives are each authorized to sign the Final Official Statement on behalf of the City and the District.

SECTION 5. Appointment of Professionals. The City Council hereby authorizes and approves the following professionals to provide services in connection with the issuance of the Bonds:
(a) Fiscal Agent. U.S. Bank Trust Company, National Association is appointed as Fiscal Agent pursuant to the Fiscal Agent Agreement and to take any and all action provided therein to be taken by the Fiscal Agent;
(b) Municipal Advisor. Columbia Capital Management, LLC is hereby appointed to provide municipal advisory services;
(c) Bond Counsel and Disclosure Counsel. Best Best & Krieger LLP is hereby appointed as bond and disclosure counsel in connection with the issuance of the Bonds; and (d) Special Tax Consultant. Spicer Consulting Group, LLC is hereby appointed as Special Tax Consultant in connection with the issuance of the Bonds.

SECTION 6. Sale of Bonds; Purchase Contract. The City Council approves and authorizes the issuance and sale of the Bonds by negotiation with the Underwriter pursuant to the Purchase Contract between the City and the Underwriter in the form presented to the City Council at the meeting at which this resolution is adopted, together with any changes therein or additions thereto which are deemed advisable by the Authorized Representatives upon consultation with Packet Pg. 1967
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Bond Counsel and the Municipal Advisor. The Authorized Representatives are each authorized and directed to execute and deliver the final form of the Purchase Contract on behalf of the City and the District upon the submission of an offer by the Underwriter to purchase the Bonds, which offer is acceptable to the City Manager and is consistent with the requirements of this resolution; provided that the true interest cost on the Bonds shall not exceed six percent (6.00%) the Underwriter’s discount for the purchase of the Bonds shall not be greater than one and half percent (1.5%) (exclusive of original issue discount) of the aggregate principal amount of the Bonds; and the last maturity of the Bonds shall be paid and redeemed no later than September 1, 2052. When the City Manager has negotiated the Purchase Contract with the Underwriter within the parameters specified above and when the other terms and conditions of the Purchase Contract are satisfactory to the City Manager or the Finance Director or Deputy Finance Director and Bond Counsel, the City Manager or the Finance Director or Deputy Finance Director is authorized to execute and deliver the Purchase Contract to the Underwriter on behalf of the City and the District.

SECTION 7. Accountability Measures. Pursuant to Section 53410 of the California Government Code, the issuance of and sale of the Bonds is subject to the following accountability measures:
(a) The proceeds of the Bonds shall be applied only for the specific purposes identified in the propositions regarding the authorization of the District incurring bonded indebtedness which the qualified electors of the District approved in the election held on August 5, 2020;
(b) Except as otherwise provided in the Fiscal Agent Agreement, the proceeds of the sale of the Bonds shall be deposited in the funds and accounts established pursuant to the Fiscal Agent Agreement and the proceeds deposited in each such fund or account shall be expended as provided in the Fiscal Agent Agreement with respect to each such fund or account; and
(c) The Finance Director or Deputy Finance Director shall file a report with the City Council at least once in each calendar year, beginning in 2023, which shall contain the information required by Section 53411 of the California Government Code with respect to the expenditure of the proceeds of the sale of the Bonds and the status of the construction and acquisition of the public facilities comprising the Project (as defined in the Fiscal Agent Agreement).

SECTION 8. Findings Regarding the Levy and Rates of Special Taxes. The City Council finds that the City will covenant in the Fiscal Agent Agreement, for the benefit of the owners of the Bonds, that it will not initiate proceedings under the Mello-Roos Community Facilities Act of 1982 to reduce the Maximum Special Tax rates on then existing Developed Property (as defined in the Fiscal Agent Agreement) in the District below the amounts which are necessary to provide Special Tax Revenues in an amount equal to estimated Administrative Expenses for the then current Fiscal Year plus an amount equal to one hundred ten percent (110%) of Maximum Annual Packet Pg. 1968
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Debt Service on the Outstanding Bonds. The City Council further finds and determines that any reduction or limitation of the Special Tax rates below the Maximum Rates would interfere with the timely retirement of the Bonds.

SECTION 9. Approval of Continuing Disclosure Certificate. The Continuing Disclosure Certificate is approved in the form submitted to the City Council at the meeting at which this resolution is adopted, and the City Manager or the Finance Director or Deputy Finance Director is authorized to execute and deliver said certificate on behalf of the City.

SECTION 10. Modifications. The approval of the Fiscal Agent Agreement, the Continuing Disclosure Certificate and the Purchase Contract given by this resolution shall apply to any modification or amendment of any of said agreements which is agreed upon and approved by Bond Counsel, the Municipal Advisor and the City Manager or the Finance Director or Deputy Finance Director as being necessary to carry out the provisions thereof and the authorization and direction provided in this resolution.

SECTION 11. Further Action. The Authorized Representatives are authorized to take any and all action which is directed by Bond Counsel with respect to the execution and delivery of the Fiscal Agent Agreement, the Continuing Disclosure Certificate and the Purchase Contract and the issuance, sale and delivery of the Bonds, which in the opinion of Bond Counsel is necessary in order for the authorization and direction provided in this resolution to be carried out.

SECTION 12. Conditions of Approval. The approvals, authorization and direction given by this resolution are conditioned upon the satisfaction of the requirements of Section 6 hereof with respect to the issuance and sale of the Bonds. The officers of the City designated above shall not take any action with respect to the execution and delivery of the Fiscal Agent Agreement, the Continuing Disclosure Certificate and the Purchase Contract or the issuance, sale and delivery of the Bonds unless and until such conditions are satisfied; provided, however, that upon satisfaction of such conditions, this resolution shall be fully effective and shall be carried out by such officers without further approval or action of the City Council. The approvals, authorization and direction provided by this resolution shall continue, subject to the satisfaction of such conditions, until December 31, 2022, and the Bonds may be sold, and the Bonds, the Fiscal Agent Agreement, the Continuing Disclosure Certificate, the Purchase Contract, the Preliminary Official Statement and the Final Official Statement may be dated, entered into, executed and delivered or distributed, as appropriate, on any date selected by the Authorized Representatives and the Municipal Advisor and the Underwriter prior to said date.

SECTION 13. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications, and to this end the provisions of this Resolution are declared to be severable.

SECTION 14. Effective Date. This Resolution shall become effective immediately.

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APPROVED and ADOPTED by the City Council and signed by the Mayor and attested by the Acting City Clerk this 20th day of July, 2022.

John Valdivia, Mayor
City of San Bernardino
Attest:

Genoveva Rocha, CMC, City Clerk
Approved as to form:

Sonia R. Carvalho, City Attorney
Packet Pg. 1970
Resolution No. 2022-148
Resolution 2022-148
July 20, 2022

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CERTIFICATION

STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO ) ss

CITY OF SAN BERNARDINO )
I, Genoveva Rocha, CMC, City Clerk, hereby certify that the attached is a true copy of Resolution No. 2022-148, adopted at a regular meeting held on the 20th day of July, 2022 by the following vote:

Council Members: AYES NAYS ABSTAIN ABSENT
SANCHEZ ______ ______ _______ _______
IBARRA ______ ______ _______ _______
FIGUEROA ______ ______ _______ _______
SHORETT ______ ______ _______ _______
REYNOSO ______ ______ _______ _______
CALVIN ______ ______ _______ _______
ALEXANDER ______ ______ _______ _______
WITNESS my hand and official seal of the City of San Bernardino this ____ day of _______________, 2022.
__________________________________
Genoveva Rocha, CMC, City Clerk
Packet Pg. 1971
Resolution No. 2022-___
Resolution 2022-XXX
July 20, 2022

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EXHIBIT A

GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the City by the Municipal Advisor in consultation with the Underwriter.

Principal Amount. The Municipal Advisor has informed the City that, based on the financing plan and current market conditions, it’s good faith estimate of the aggregate principal amount of the Bonds to be sold is $3,280,000 (the “Estimated Principal Amount”), which excludes approximately $42,080.45 of net premium estimated to be generated based on current market conditions. Net premium is generated when, on a net aggregate basis for a single issuance of bonds, the price paid for such bonds is higher than the face value of the bonds.

True Interest Cost of the Bonds. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 4.957%.

Finance Charge of the Bonds. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $267,734.40.

Amount of Proceeds to be Received. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the City, on behalf of the District, for the sale of the Bonds, less the finance charge of the Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the Bonds, is $2,837,846.05.

Total Payment Amount. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the District will make to pay debt service on the Bonds, plus the finance charge for the Bonds, as described above, not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $6,413,926.26 (excluding any offsets from reserves or capitalized interest).

The foregoing estimates constitute good faith estimates only. The actual principal amount of the Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from Packet Pg. 1972
Resolution No. 2022-___
Resolution 2022-XXX
July 20, 2022

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such good faith estimates due to (a) the actual date of the sale of the Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Bonds sold being different from the Estimated Principal Amount, (c) the actual amortization of the Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the financing plan or finance charges, or a combination of such factors. The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be determined by the City, on behalf of the District, based on the timing of the need for proceeds of the Bonds and other factors. The actual interest rates borne by the Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the City.

Packet Pg. 1973
55600.00915\34953569.2
___________________________________________________________________________

FISCAL AGENT AGREEMENT
by and between

THE CITY OF SAN BERNARDINO
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
as Fiscal Agent
Dated as of _________ 1, 2022
Relating to
Community Facilities District No. 2020-1
(Rancho Palma)
of the City of San Bernardino,
County of San Bernardino
State of California
$___________
2022 Special Tax Bonds
___________________________________________________________________________ Packet Pg. 1974
55600.00915\34953569.2

TABLE OF CONTENTS
Page
i
ARTICLE I AUTHORITY AND DEFINITIONS ...................................................................2 Section 1.01. Authority for this Agreement........................................................................2 Section 1.02. Agreement for Benefit of Owners ................................................................2 Section 1.03. Definitions ....................................................................................................2 ARTICLE II THE BONDS......................................................................................................13 Section 2.01. Principal Amount; Designation ..................................................................13 Section 2.02. Terms of Bonds...........................................................................................13 Section 2.03. Redemption.................................................................................................14 Section 2.04. Form of Bonds ............................................................................................17 Section 2.05. Execution of Bonds.....................................................................................17 Section 2.06. Transfer of Bonds .......................................................................................17 Section 2.07. Exchange of Bonds.....................................................................................18 Section 2.08. Bond Register .............................................................................................18 Section 2.09. Temporary Bonds .......................................................................................18 Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen ..............................................18 Section 2.11. Special Obligation ......................................................................................19 Section 2.12. Book-Entry .................................................................................................19 Section 2.13. Parity Bonds................................................................................................20 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; IMPROVEMENT FUND; SPECIAL TAX FUND; ADMINISTRATIVE
EXPENSE FUND; COSTS OF ISSUANCE FUND .........................................21 Section 3.01. Issuance and Delivery of Bonds .................................................................21 Section 3.02. Application of Proceeds of Sale of Bonds..................................................21 Section 3.03. Improvement Fund......................................................................................21 Section 3.04. Special Tax Fund. .......................................................................................22 Section 3.05. Administrative Expense Fund.....................................................................23 Section 3.06. Costs of Issuance Fund. ..............................................................................24 ARTICLE IV SPECIAL TAX REVENUES; BOND FUND; RESERVE FUND ...................24 Section 4.01. Pledge of Special Tax Revenues.................................................................24 Section 4.02. Bond Fund. .................................................................................................25 Section 4.03. Reserve Fund. .............................................................................................27 ARTICLE V OTHER COVENANTS OF THE CITY ............................................................28 Section 5.01. Punctual Payment .......................................................................................28 Section 5.02. Special Obligation ......................................................................................28 Section 5.03. Extension of Time for Payment..................................................................28 Section 5.04. Against Encumbrances ...............................................................................29 Section 5.05. Books and Accounts ...................................................................................29 Section 5.06. Protection of Security and Rights of Owners .............................................29 Section 5.07. Collection of Special Tax Revenues...........................................................29 Packet Pg. 1975
55600.00915\34953569.2

TABLE OF CONTENTS
(continued)
Page
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Section 5.08. Levy of Special Taxes for Administrative Expenses..................................30 Section 5.09. Further Assurances .....................................................................................30 Section 5.10. Tax Covenants ............................................................................................31 Section 5.11. Covenant to Foreclose ................................................................................31 Section 5.12. Prepayment of Special Taxes......................................................................31 Section 5.13. Calculation of Prepayments........................................................................32 Section 5.14. Continuing Disclosure ................................................................................32 Section 5.15. Accountability Measures ............................................................................32 ARTICLE VI INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE CITY...............................................................................32 Section 6.01. Deposit and Investment of Moneys in Funds .............................................32 Section 6.02. Rebate Fund; Rebate to the United States ..................................................33 Section 6.03. Liability of City ..........................................................................................34 Section 6.04. Employment of Agents by City ..................................................................34 ARTICLE VII THE FISCAL AGENT.......................................................................................35 Section 7.01. Appointment of Fiscal Agent......................................................................35 Section 7.02. Liability of Fiscal Agent.............................................................................35 Section 7.03. Information .................................................................................................37 Section 7.04. Notice to Fiscal Agent ................................................................................37 Section 7.05. Compensation, Indemnification..................................................................38 Section 7.06. Books and Accounts ...................................................................................38 ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS AGREEMENT ...................38 Section 8.01. Amendments Permitted. .............................................................................38 Section 8.02. Owners’ Meetings.......................................................................................39 Section 8.03. Procedure for Amendment with Written Consent of Owners ....................40 Section 8.04. Disqualified Bonds .....................................................................................40 Section 8.05. Effect of Supplemental Agreement ............................................................41 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments ..........41 Section 8.07. Amendatory Endorsement of Bonds...........................................................41 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES.....................................................41 Section 9.01. Events of Default ........................................................................................41 Section 9.02. Remedies of Owners...................................................................................42 Section 9.03. Application of Special Taxes and Other Funds After Default....................42 Section 9.04. Restoration of Positions..............................................................................42 Section 9.05. Rights and Remedies Cumulative...............................................................43 Section 9.06. Delay or Omission Not Waiver ..................................................................43 ARTICLE X MISCELLANEOUS...........................................................................................43 Section 10.01. Benefits of Agreement Limited to Parties ................................................43 Packet Pg. 1976
55600.00915\34953569.2

TABLE OF CONTENTS
(continued)
Page
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Section 10.02. Successor is Deemed Included in All References to Predecessor ............43 Section 10.03. Discharge of Agreement...........................................................................43 Section 10.04. Execution of Documents and Proof of Ownership by Owners.................44 Section 10.05. Waiver of Personal Liability.....................................................................45 Section 10.06. Notices to and Demands on City and Fiscal Agent ..................................45 Section 10.07. Partial Invalidity .......................................................................................45 Section 10.08. Unclaimed Moneys...................................................................................45 Section 10.09. Applicable Law.........................................................................................45 Section 10.10. Conflict with Act ......................................................................................46 Section 10.11. Conclusive Evidence of Regularity ..........................................................46 Section 10.12. Payment on Business Day ........................................................................46 Section 10.13. Counterparts..............................................................................................46 EXHIBIT A – FORM OF BOND ..............................................................................................A-1 Packet Pg. 1977
55600.00915\34953569.2
1 FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT (the “Agreement”) is made and entered into as of _________ 1, 2022, by and between the City of San Bernardino, a charter city duly established under its charter and the laws of the State of California (the “City”), for and on behalf of Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino, County of San Bernardino, State of California (the “District”), and U.S. Bank Trust Company, National Association, a national banking association organized and existing under the laws of the United States of America, as fiscal agent (the “Fiscal Agent”).

W I T N E S S E T H:

WHEREAS, the City Council of the City (the “City Council”) has established the District pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code (the “Act”); and
WHEREAS, the District is authorized to incur bonded indebtedness and issue bonds in the aggregate principal amount of $5,000,000 for the purpose of financing the construction and acquisition of certain public facilities and the City Council has determined that it is necessary that bonds of the District be issued and sold in the aggregate principal amount of $___________ for the purpose of financing the construction and acquisition of the public facilities which are hereinafter identified as the Project; and
WHEREAS, on ____________, 2022, the City Council adopted Resolution No. 2022-___ (the “Resolution”) authorizing the issuance and sale of Bonds pursuant to this Agreement, designated “Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds” (the “Bonds”) for the purpose of financing the construction and acquisition of such public facilities, or to reimburse the costs thereof; and WHEREAS, it is in the public interest and for the benefit of the District, the City, the persons responsible for the payment of special taxes and the owners of the Bonds that the City enter into this Agreement to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds, the disposition of the special taxes securing the Bonds, and the administration and payment of the Bonds; and
WHEREAS, all things necessary to cause the Bonds, when executed by the City and authenticated by the Fiscal Agent for the District and issued as in the Act, the Resolution (as hereinafter defined) and this Agreement provided, to be legal, valid and binding special obligations of the District in accordance with their terms, and all things necessary to cause the authorization, execution and delivery of this Agreement and the authorization, execution, authentication and delivery of the Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:

Packet Pg. 1978
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2 ARTICLE I

AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement. This Agreement is entered into pursuant to the provisions of the Act and the Resolution.

Section 1.02. Agreement for Benefit of Owners. The provisions, covenants and agreements herein set forth to be performed by or on behalf of the City and/or the District shall be for the equal benefit, protection and security of the Owners. All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. The Fiscal Agent may become the owner of any of the Bonds with the same rights it would have if it were not Fiscal Agent.

Section 1.03. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof.
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code.
“Administrative Expenses” means any or all of the following: the fees and expenses of the Fiscal Agent (including any fees or expenses of its counsel), the expenses of the City in carrying out its duties hereunder (including, but not limited to, the levying and collection of the Special Taxes) including the fees and expenses of its counsel, an allocable share of the salaries of City staff directly related thereto and a proportionate amount of City general administrative overhead related thereto, any amounts paid by the City from its general funds pursuant to Section 6.02 hereof, the fees and expenses of the Municipal Advisor, and the Special Tax Consultant, the costs of the District, the City or any designee of either thereof of complying with the arbitrage rebate requirements; the costs to the District, the City or any designee of either thereof of complying with the District, City or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the District, or City, or any designee of either thereof related to an appeal of the Special Tax; the costs associated with the release of funds from an escrow account; and the District’s annual administration fee and third party expenses; and all other costs and expenses of the City or the Fiscal Agent incurred in connection with the discharge of their respective duties hereunder and, in the case of the City, in any way related to the administration of the District. “Administrative Expense Fund” means the fund by that name established by Section 3.05(A) hereof.

Packet Pg. 1979
55600.00915\34953569.2
3 “Agreement” means this Fiscal Agent Agreement, as it may be amended or supplemented form time to time by any Supplemental Agreement adopted pursuant to the provisions hereof. “Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled, and (ii) the principal amount of the Outstanding Bonds scheduled to be paid. “Appraisal” means the appraisal of the estimated market values of the properties within the District prepared by Kitty Siino & Associates, Inc. dated June 23, 2022. “Auditor” means the Auditor-Controller of the County of San Bernardino. “Authorized Officer” means the Mayor, the Mayor Pro Tem, the City Manager or Finance Director, or Deputy Finance Director or any officer or employee of the City authorized by the City Council or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer.
“Bond Counsel” means any attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities.
“Bond Fund” means the fund by that name established by Section 4.02(A) hereof. “Bond Year” means the period beginning on the Closing Date and ending on September 1, 2022 and thereafter the period beginning on each September 2 and ending on the following September 1.
“Bonds” means, unless otherwise expressly provided, the Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds authorized by and at any time Outstanding pursuant to the Act and this Agreement. “Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State of California or in any state in which the Fiscal Agent has its Principal Office are authorized or obligated by law or executive order to be closed. “City” means the City of San Bernardino.
“City Council” means the City Council of the City.
“Closing Date” means the date upon which there is an exchange of the Bonds for the proceeds representing payment of the purchase price of the Bonds by the Original Purchaser. “Code” means the Internal Revenue Code of 1986, as amended. “Continuing Disclosure Certificate” means the Continuing Disclosure Certificate of the City, dated as of _________ 1, 2022, as originally executed by the City and as it may be amended from time to time in accordance with the terms thereof.

Packet Pg. 1980
55600.00915\34953569.2
4 “Costs of Issuance” means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, including but not limited to the preliminary official statement and official statement regarding the Bonds, closing costs, filing and recording fees, premiums for any reserve fund, surety bond or bond insurance policy, initial fees and charges of the Fiscal Agent including its first annual administration fee and the fees of its counsel, expenses incurred by the City in connection with the issuance of the Bonds and the establishment of the District, Bond (underwriter’s) discount, legal fees and charges, including the fees of Bond Counsel and counsel to the Underwriter, Municipal Advisor’s fees, charges for authentication, transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the foregoing. “Costs of Issuance Fund” means the fund by that name established by Section 3.06(A) hereof.
“Debt Service” means the amount of interest and principal payable on the Bonds scheduled to be paid during the period of computation, excluding amounts payable during such period which relate to principal of the Bonds which are scheduled to be retired and paid before the beginning of such period.
“Defeasance Securities” means, for purposes of Section 10.03(C) hereof, the following:
(i) United States Treasury Certificates, Notes and Bonds (including State and Local Government Series - “SLGs”);
(ii) Direct obligations of the United States Treasury which have been stripped by the Treasury itself, CATS, TIGRS and similar securities;
(iii) Resolution Funding Corporation (REFCORP) obligations; provided that only the interest component of REFCORP strips which have been stripped by request of the Federal Reserve Bank of New York in book-entry form are acceptable; (iv) Pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by Standard & Poor’s; provided, however, that if the issue is only rated by Standard & Poor’s (i.e., there is no Moody’s rating), then the pre-refunded bonds must have been pre-refunded with cash, direct United States or United States guaranteed obligations, or “AAA” rated pre-refunded municipal bonds; and
(v) Obligations issued by the following agencies which are backed by the full faith and credit of the United States of America:
(a) U.S. Export-Import Bank
Direct obligations or fully guaranteed certificates of beneficial ownership (b) Farmers Home Administration
Certificates of beneficial ownership
(c) Federal Financing Bank
Packet Pg. 1981
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5 (d) General Services Administration
Participation certificates
(e) United States Maritime Administration
Guaranteed Title XI financing
(f) United States Department of Housing and Urban Development Project notes
Local Authority Bonds
New Communities Debentures - United States government
guaranteed debentures
United States Public Housing Notes and Bonds - United States government guaranteed public housing notes and bonds.
“District” means Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino, County of San Bernardino, State of California. “Event of Default” shall mean any one or more of the events described in Section 9.1 hereof.
“Federal Securities” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein:
(i) Cash; and
(ii) Direct general obligations of (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America and CATS and TIGRS), or obligations, the payment of principal of and interest on which is unconditionally guaranteed by the United States of America.
“Fiscal Agent” means U.S. Bank Trust Company, National Association, the Fiscal Agent appointed by the City, acting as an independent fiscal agent with the duties and powers herein provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01 hereof. “Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive.
“Improvement Fund” means the fund by that name established by Section 3.03(A) hereof. “Independent Financial Consultant” means a firm of certified public accountants, a financial consulting firm, a consulting engineering firm or engineer which is not an employee of, or otherwise controlled by, the City.

Information Services” means in accordance with then-current guidelines of the Securities and Exchange Commission, the Electronic Municipal Market Access System (referred to as Packet Pg. 1982
55600.00915\34953569.2
6 “EMMA”), a facility of the Municipal Securities Rulemaking Board (at http://emma.msrb.org) or such service or services as the City may designate in a certificate delivered to the Fiscal Agent. “Interest Account” means the account by that name established in the Bond Fund by Section 4.02 (A).
“Interest Payment Dates” means March 1 and September 1 of each year, commencing September 1, 2022, until the maturity or redemption of all Outstanding Bonds. “Investment Earnings” means all interest earned and any gains and losses on the investment of moneys in any fund or account created by this Agreement, excluding interest earned and gains and losses on the investment of moneys in the Rebate Fund. “Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. “Moody’s” shall mean Moody’s Investors Service, a national rating service with offices in New York, New York.
“Municipal Advisor” means an independent financial consulting firm appointed by the City to advise the City as to financial matters relating to the Bonds. “Officer’s Certificate” means a written certificate of the City signed by an Authorized Officer of the City.
“Ordinance” means any ordinance of the City or resolution of the City Council levying the Special Taxes.
“Original Purchaser” means the first purchaser of the Bonds from the City. “Outstanding,” when used as of any particular time with reference to the Bonds, means (subject to the provisions of Section 8.04 hereof) all Bonds except:
(i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation;
(ii) Bonds called for redemption which, for the reasons specified in Section 2.03 (F) hereof, are no longer entitled to any benefit under this Agreement other than the right to receive payment of the redemption price therefor;
(iii) Bonds paid or deemed to have been paid within the meaning of Section 10.03 hereof; and
(iv) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City and authenticated by the Fiscal Agent pursuant to this Agreement or any Supplemental Agreement.
“Owner” means any person who shall be the registered owner of any Outstanding Bond.

Packet Pg. 1983
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7 “Parity Bonds” means bonds issued by the District for the purpose of accomplishing the defeasance and redemption of all or a portion of the Outstanding Bonds pursuant to Section 2.13 hereof.
“Permitted Investments” means:
(i) Federal Securities;
(ii) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):
(a) U.S. Export-Import Bank
Direct obligations or fully guaranteed certificates of beneficial ownership (b) Farmers Home Administration
Certificates of beneficial ownership
(c) Federal Financing Bank
(d) Federal Housing Administration Debentures
(e) General Services Administration
Participation certificates
(f) Government National Mortgage Association (GNMA)
GNMA - guaranteed mortgage-backed bonds
GNMA - guaranteed pass-through obligations
(g) U.S. Maritime Administration
Guaranteed Title XI financing
(h) U.S. Department of Housing and Urban Development
Project Notes
Local Authority Bonds
New Communities Debentures - United States government guaranteed debentures
U.S. Public Housing Notes and Bonds - United States government guaranteed public housing notes and bonds;
(iii) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit United States government agencies (stripped securities are only permitted if they have been stripped by the agency itself):
(a) Federal Home Loan Bank System
Senior debt obligations
Packet Pg. 1984
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8 (b) Federal Home Loan Mortgage Corporation
Participation Certificates
Senior debt obligations
(c) Federal National Mortgage Association
Mortgage-backed securities and senior debt obligations
(d) Student Loan Marketing Association
Senior debt obligations
(e) Resolution Funding Corporation
(REFCORP) obligations
(f) Farm Credit System
Consolidated systemwide bonds and notes;
(iv) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by Standard & Poor’s of “AAAm-G,” “AAA-m” or “AA-m” and, if rated by Moody’s, rated “Aaa,” “Aa1” or “Aa2” by Moody’s, including funds for which the Fiscal Agent, its parent holding company, if any, or any affiliates or subsidiaries of the Fiscal Agent or such holding company receive and retain a fee for services provided to the fund whether as a custodian, transfer agent, investment advisor or otherwise;
(v) Certificates of deposit secured at all times by collateral described in clauses (i) and/or (ii) above. Such certificates must be issued by commercial banks, including the Fiscal Agent and its affiliates, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the Fiscal Agent on behalf of the Owners of the Bonds must have a perfected first security interest in the collateral;
(vi) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF including those that may be issued or provided by the Fiscal Agent and its affiliates; (vii) Investment agreements with domestic or foreign banks, insurance companies or corporations the long-term debt or claims paying ability of which or, in the case of a guaranteed corporation, the long-term debt of the guarantor, or, in the case of a monoline financial guaranty insurance company, the claims paying ability or financial strength, of the guarantor is rated in at least the double A category by Standard & Poor’s and Moody’s; provided that, by the terms of the investment agreement:
(a) interest payments are to be made to the Fiscal Agent at times and in amounts as necessary to pay Debt Service on the Bonds (if the funds invested pursuant to the investment agreement are from the Reserve Fund);
(b) the investment agreement shall provide that the invested funds are available for withdrawal without penalty or premium at any time upon not more than seven (7) days’ prior notice (The City and the Fiscal Agent shall give or cause to be given notice in accordance with the Packet Pg. 1985
55600.00915\34953569.2
9 terms of the investment agreement so as to receive funds thereunder with no penalty or premium payable.);
(c) the investment agreement shall provide that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof; (d) the City and the Fiscal Agent receive the opinion of domestic counsel (which opinion shall be addressed to the City and the Fiscal Agent) that such investment agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and of foreign counsel (if applicable) in form and substance acceptable, and addressed to, the City and the Fiscal Agent;
(e) the investment agreement shall provide that if during its term (1) the provider’s (or its guarantor’s) rating by either Standard & Poor’s or Moody’s falls below “AA-” or “Aa3”, respectively, the provider shall, at its option, within ten (10) days of receipt of publication of such downgrade, either (i) collateralize the investment agreement by delivering or transferring in accordance with the applicable state and federal laws (other than by means of entries on the provider’s books) to the City, the Fiscal Agent or a third party acting solely as agent therefor (the “Holder of the Collateral”) collateral free and clear of any third-party liens or claims, the market value of which collateral is maintained at one hundred four percent (104%) of securities identified in clauses (i) and (ii) of this definition; or (ii) assign the investment agreement and all of its obligations thereunder to a financial institution mutually acceptable to the provider, the City and the Fiscal Agent which is rated either in the first or second highest category by Standard & Poor’s and Moody’s; and
(2) the provider’s (or its guarantor’s) rating by either Standard & Poor’s or Moody’s is withdrawn or suspended or falls below “A-” or “A3”, respectively, the provider must, at the direction of the City or the Fiscal Agent, within ten (10) days of receipt of such direction, repay the principal of and accrued but unpaid interest on the invested funds, in either case with no penalty or premium to the City or the Fiscal Agent; and (f) the investment agreement shall provide and an opinion of counsel shall be rendered, in the event collateral is required to be pledged by the provider under the terms of the investment agreement at the time such collateral is delivered, that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this shall mean the Holder of the Collateral is in possession of such collateral); and
(g) the investment agreement shall provide that if during its term (1) the provider shall default in its payment obligations, the provider’s obligations under the investment agreement shall, at the direction of the City or the Fiscal Agent, be accelerated and amounts invested and accrued but unpaid interest thereon shall be paid to the City or the Fiscal Agent, as appropriate; and
(2) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. (“event of insolvency”), the Packet Pg. 1986
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10 provider’s obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be paid to the City or the Fiscal Agent, as appropriate; (viii) Commercial paper rated, at the time of purchase, “Prime - 1” by Moody’s and “A-1” or better by Standard & Poor’s;
(ix) Bonds or notes issued by any state or municipality which are rated by Moody’s and/or Standard & Poor’s in one of the two highest rating categories assigned by them; (x) Federal funds or bankers acceptances with a maximum term of one year of any bank or deposit accounts, including the Fiscal Agent and its affiliates, which has an unsecured, uninsured and unguaranteed obligation rating of “Prime - 1” or better by Moody’s and “A-1” or better by Standard & Poor’s;
(xi) Repurchase agreements which satisfy the following criteria:
(a) Repurchase agreements must be between the City or the Fiscal Agent and an entity which is:
(1) A primary dealer on the Federal Reserve reporting dealer list which is rated “A” or better by Standard & Poor’s and Moody’s, or (2) A bank rated “A” or above by Standard & Poor’s and Moody’s; or (3) A corporation the long-term debt or claims paying ability of which, or in the case of a guaranteed corporation, the long-term debt of the guarantor, or, in the case of a monoline financial guaranty insurance company, the claims paying ability or financial strength of the guarantor, is rated in at least the double A category by Standard & Poor’s and Moody’s. (b) The written agreement must include the following:
(1) Securities which are acceptable for transfer are:
(A) direct obligations of the United States government, or (B) obligations of federal agencies backed by the full faith and credit of the United States of America (or the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC)),
(2) The collateral must be delivered to the City or the Fiscal Agent (if the Fiscal Agent is not supplying the collateral) or a third party acting as agent for the Fiscal Agent (if the Fiscal Agent is supplying the collateral) before or simultaneous with payment (perfection by possession of certificated securities),
(3) (A) The securities must be valued weekly, marked-to-market at current market price plus accrued interest, and
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11 (B) The value of the collateral must be at least equal to one hundred four percent (104%) of the amount of money transferred by the Fiscal Agent to the dealer, bank or corporation under the agreement plus accrued interest. If the value of the securities held as collateral is reduced below one hundred four percent (104%) of the value of the amount of money transferred by the Fiscal Agent, then additional acceptable securities and/or cash must be provided as collateral to bring the value of the collateral to one hundred four percent (104%); provided, however, that if the securities used as collateral are those of FNMA or FHLMC, then the value of the collateral must equal to one hundred five percent (105%) of the amount of money transferred by the Fiscal Agent; and
(xii) the Local Agency Investment Fund in the State Treasury of the State of California as permitted by the State Treasurer pursuant to Section 16429.1 of the California Government Code.
“Principal Account” means the account by that name established in the Bond Fund by Section 4.02 (A).
“Principal Office” means the principal corporate trust office of the Fiscal Agent in Los Angeles, California or such other addresses may be specified in writing by the Fiscal Agent; provided, however, that for purposes of the transfer, registration, exchange, payment and surrender of Bonds “Principal Office” means the office or agency of the Fiscal Agent at which, at any time, its corporate trust agency business shall be conducted or such other office or address as may be specified in writing by the Fiscal Agent.
“Proceeds,” when used with reference to the Bonds, means the aggregate principal amount of the Bonds, plus accrued interest and premium, if any, less original issue discount, if any, less Original Purchaser’s discount.
“Project” means the public facilities which are to be financed with the proceeds of the sale of the bonds of the District, as described in Resolution No. 2020-195 adopted by the City Council on August 5, 2020.
“Rate and Method of Apportionment” means the rate and method of apportionment of special taxes originally authorized to be levied on property within the District as approved at a special election held within the District on August 5, 2020, and as it may be modified from time to time in accordance with the Act.
“Rebate Certificate” means the certificate delivered by the City upon the delivery of the Bonds relating to Section 148 of the Code, or any functionally similar replacement certificate. “Rebate Fund” means the fund by that name established by Section 6.02 hereof. “Record Date” means the fifteenth (15th) day of the month next preceding the applicable Interest Payment Date whether or not such day is a Business Day. “Regulations” means the temporary and permanent regulations of the United States Department of the Treasury promulgated under the Code.

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12 “Representation Letter” means the representation letter which the City has delivered to The Depository Trust Company (“DTC”) with respect to the utilization of the book-entry system maintained by DTC for the issuance and registration of bonds. “Reserve Fund” means the fund by that name established by Section 4.03(A) hereof. “Reserve Requirement” means, as of the date of calculation, as determined by the City and provided in writing to the Fiscal Agent, the lesser of (i) ten percent (10%) of the original issue price of the Bonds calculated in accordance with Treasury Regulations Section 1.148-2(f)(1), (ii) Maximum Annual Debt Service on the Bonds or (iii) 125 percent (125%) of average Annual Debt Service on the Bonds.
“Resolution” means Resolution No. 2022-____, adopted by the City Council on ____________, 2022.
“Securities Depositories” means The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York, 10041-0099, Call Notification Department, Fax (212) 855-7232, and, in accordance with then current guidelines of the Securities and Exchange Commission, such other securities depositories as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Special Taxes” or “Special Tax” means Special Tax A (as defined in the Rate and Method of Apportionment) levied by the City Council on parcels of taxable property within the District pursuant to the Act and this Agreement.
“Special Tax Fund” means the fund by that name established by Section 3.04(A) hereof. “Special Tax Prepayments” means amounts received by the City as prepayments of all or a portion of the Special Tax obligation of a parcel of property in the District. “Special Tax Prepayments Account” means the account by that name established by the Fiscal Agent in the Bond Fund pursuant to Section 4.02(A) hereof. “Special Tax Revenues” means the proceeds of the Special Taxes received by the City, including any scheduled payments, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes in the amount of said lien and interest and penalties thereon.
“Standard & Poor’s” shall mean S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, a national rating service with offices in New York, New York. “Tax Consultant” means an engineer or financial consultant or other such person or firm with expertise in the apportionment and levy of special taxes in community facilities districts which is employed by the City to assist the City in levying the Special Taxes.

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13 ARTICLE II

THE BONDS
Section 2.01. Principal Amount; Designation. The Bonds in the aggregate principal amount of $___________ are hereby authorized to be issued by the City for the District under and subject to the terms of the Resolution, this Agreement, the Act and other applicable laws of the State of California. The Bonds shall be designated “Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds.” The Bonds shall be issued in the form attached hereto as Exhibit A.

Section 2.02. Terms of Bonds.
(A) The Bonds. The Bonds shall be issued as fully registered bonds, without coupons, in the denominations of $5,000 or any integral multiple thereof. The Bonds shall be lettered and numbered in a customary manner as determined by the Fiscal Agent. The Bonds shall be dated ____________, 2022.
(B) Maturities. The Bonds shall mature and become payable on September 1 of each year, as follows:

Maturity Dates
(September 1)
Principal
Amounts
Interest
Rates
(C) Interest. The Bonds shall bear interest at the rates set forth in subsection (B) above payable on the Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from ____________, 20__; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon or from ____________, 20__, if no interest has previously been paid or made available for payment thereon.
(D) Method of Payment. Interest on the Bonds is payable by check of the Fiscal Agent mailed by first class mail, postage prepaid, on each Interest Payment Date, to the registered Owner thereof at such registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Packet Pg. 1990
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14 Payment Date. The principal of the Bonds and any premium on the Bonds are payable in lawful money of the United States of America by check of the Fiscal Agent upon surrender of such Bonds at the Principal Office of the Fiscal Agent; provided, however, that at the written request of the Owner of at least $1,000,000 in aggregate principal amount of Outstanding Bonds filed with the Fiscal Agent prior to any Record Date, interest on such Bonds shall be paid to such Owner on each succeeding Interest Payment Date by wire transfer of immediately available funds to an account in the United States of America designated in such written request. (E) CUSIP Identification Numbers. “CUSIP” identification numbers shall be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds. In addition, failure on the part of the City or the Fiscal Agent to use such CUSIP numbers in any notice to the Owners shall not constitute an Event of Default or any violation of the City’s contract with the Owners and shall not impair the effectiveness of any such notice.

Section 2.03. Redemption.
(A) Optional Redemption. The Bonds are subject to redemption prior to their stated maturity dates at the option of the City on September 1, 20__, or any Interest Payment Date thereafter, from such maturities as selected by the City (and by lot within any one maturity), in integral multiples of $5,000, at the option of the City from moneys derived by the City from any source, at a redemption price (expressed as a percentage of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption, as follows:

Redemption Dates Redemption Price
September 1, 20__ and March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and each Interest Payment Date thereafter 100 (B) Mandatory Redemption From Special Tax Prepayments. The Bonds are subject to mandatory redemption prior to their stated maturity dates on any Interest Payment Date, as selected among maturities by the City (and by lot within any one maturity), in integral multiples of $5,000, from moneys derived by the City from Special Tax Prepayments, at redemption prices (expressed as percentages of the principal amounts of the Bonds to be redeemed), together with accrued interest to the date of redemption, as follows:

Redemption Dates Redemption Price
Any Interest Payment Date through March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100 (C) Mandatory Sinking Fund Redemption. The Outstanding Bonds maturing on September 1, 20__ and September 1, 20__ are subject to mandatory sinking fund redemption, in part, on September 1, 20__ and September 1, 20__, respectively and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be Packet Pg. 1991
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15 redeemed, together with accrued interest to the date of redemption, without premium, and from sinking payments as follows:

Bonds Maturing on September 1, 20
Redemption Date
(September 1) Sinking Payment
Bonds Maturing on September 1, 20
Redemption Date
(September 1) Sinking Payment
The amounts in the foregoing schedules shall be reduced by the City pro rata among redemption dates, in order to maintain substantially level Debt Service, as a result of any prior or partial redemption of the Bonds pursuant to subsection (A) or subsection (B) above. The City shall provide the Fiscal Agent with a revised sinking fund schedule. (D) Purchase of Bonds. In lieu of payment at maturity or redemption under this Section 2.03, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase. In such event, the City shall, as may be appropriate, provide to the Fiscal Agent a revised maturity schedule or a revised mandatory sinking fund schedule for the Bonds, or both. (E) Notice to Fiscal Agent. An Authorized Officer shall give the Fiscal Agent written notice of the City’s intention to redeem Bonds not less than forty-five (45) days prior to the applicable redemption date specifying the principal amounts and maturities of the Bonds to be redeemed. The provisions of this subsection (E) shall not apply to the redemption of the Bonds pursuant to Section 2.03(C) hereof.
(F) Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, or electronically submitted, to the Securities Depositories and to one or more Information Services selected by an Authorized Officer, and to the respective registered Owners of any Bonds designated for redemption, at their addresses Packet Pg. 1992
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16 appearing on the Bond registration books maintained by the Fiscal Agent at its Principal Office; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds. The Fiscal Agent shall also cause notice of any redemption to be mailed, in such manner and within such time, to the Underwriter.

Such notice shall state the date of such notice, the date of issue of the Bonds, the place or places of redemption, the redemption date, the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed, by giving the individual CUSIP number and Bond number of each Bond to be redeemed, or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called for redemption in part the portion of the principal of the Bond to be redeemed, shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date. The cost of the mailing and publication of any such redemption notice shall be paid by the District.

Any notice of optional redemption of the Bonds delivered in accordance with this Section

2.03 may be conditional and if any condition stated in the notice of redemption shall not have been satisfied on or prior to the redemption date, said notice shall be of no force and effect and the District shall not be required to redeem such Bonds and the redemption shall not be made and the Fiscal Agent shall within a reasonable time thereafter give notice, to the persons and in the manner in which the notice of redemption was given, that such condition or conditions were not met and that the redemption was cancelled.

Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.

In the event of a mandatory redemption pursuant to Section 2.03(B) hereof, the City shall transfer or cause to be transferred to the Fiscal Agent for deposit in the Bond Fund moneys in an amount equal to the redemption price of the Bonds being redeemed on or before the fifteenth (15th) day of the month preceding the Interest Payment Date upon which such Bonds are to be redeemed.

If less than all the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and, in selecting portions of such Bonds for redemption, the Fiscal Agent shall treat each such Bond as representing the number of Bonds of $5,000 denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by $5,000.

Whenever provision is made in this Agreement for the redemption of less than all of the Bonds of a maturity or any given portion thereof, the Fiscal Agent shall select the Bonds of such maturity to be redeemed, from all Bonds of such maturity or such given portion thereof not previously called for redemption, by lot within a maturity in any manner which the Fiscal Agent in its sole discretion shall deem appropriate.

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17 Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the Owner, at the expense of the District, a new Bond or Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds.
(G) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption prices of the Bonds called for redemption shall have been deposited in the Bond Fund, such Bonds shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and interest shall cease to accrue on the Bonds to be redeemed on the redemption date specified in the notice of redemption.

All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section 2.03 shall be canceled by the Fiscal Agent.

Section 2.04. Form of Bonds. The Bonds, including the Fiscal Agent’s certificate of authentication and the assignment to appear thereon, shall be substantially in the form set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions as permitted or required by this Agreement.

Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the District by the facsimile signatures of the Mayor and City Clerk of the City, who are in office on the date of this Agreement or at any time thereafter. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bond to the Owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bond to the Owner. Any Bond may be signed and attested on behalf of the District by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City.

Only such Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A hereto or Exhibit B hereto, as appropriate, manually executed and dated by the Fiscal Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that such Bonds have been duly authenticated, registered and delivered hereunder, and are entitled to the benefits of this Agreement.

Section 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 hereof, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation at the Principal Office of the Fiscal Agent, accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the District. The Fiscal Agent shall collect from the Owner requesting transfer of a Bond any tax or other governmental charge required to be paid with respect to such transfer.

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18 Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of like aggregate principal amount.

No transfers of Bonds shall be required to be made (i) during the fifteen (15) days preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with respect to Bonds which have been selected for redemption.

Section 2.07. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Fiscal Agent only for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity and interest rate. The cost for any services rendered or any expense incurred by the Fiscal Agent in connection with any such exchange shall be paid by the District. The Fiscal Agent shall collect from the Owner requesting exchange of a Bond any tax or other governmental charge required to be paid with respect to such exchange.

No exchanges of Bonds shall be required to be made (i) during the fifteen (15) days preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with respect to Bonds which have been selected for redemption.

Section 2.08. Bond Register. The Fiscal Agent shall keep, or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the Bonds which books shall show the series, number, CUSIP identification number, date of issuance, amount, rate of interest and Owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the Bonds as hereinbefore provided.

Section 2.09. Temporary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate.

Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall designate, and the Fiscal Agent shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Agreement as definitive Bonds authenticated and delivered hereunder.

Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent shall authenticate and deliver, a replacement Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be canceled and destroyed by the Fiscal Agent. If any Bond shall be lost, destroyed or stolen, evidence of such Packet Pg. 1995
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19 loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity satisfactory to it shall be given, the City, at the expense of the Owner, shall execute, and the Fiscal Agent shall authenticate and deliver, a replacement Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City or Fiscal Agent may require payment of a sum not exceeding the actual cost of preparing each replacement Bond delivered under this Section 2.10 and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation, execution, authentication and delivery thereof.

Any Bond delivered under the provisions of this Section 2.10 in replacement of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation of the District whether or not the Bond so alleged to be lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement.

Section 2.11. Special Obligation. All obligations of the City and the District under this Agreement and the Bonds shall be special obligations of the City and the District, payable solely from the Special Tax Revenues and the funds pledged therefor pursuant hereto. Neither the faith and credit nor the taxing power of the City, the District (except to the limited extent set forth herein) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds.

Section 2.12. Book-Entry. The Bonds shall be initially issued in the form of a single, fully registered Bond for each maturity (which may be typewritten). Upon initial issuance, the ownership of such Bonds shall be registered in the name of the Nominee identified below as nominee of The Depository Trust Company, New York, New York and its successors and assigns (the “Depository” or “DTC”). Except as hereinafter provided, all of the Outstanding Bonds shall be registered in the name of the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to this Section 2.12 (the “Nominee”).

With respect to the Bonds registered in the name of the Nominee, neither the City nor the Fiscal Agent shall have any responsibility or obligation to any broker-dealers, banks and other financial institutions from time to time for which the Depository holds Bonds as securities depository (the “Participant”) or to any person on behalf of which such a Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, neither the City nor the Fiscal Agent shall have any responsibility, liability or obligation whatsoever with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person, other than an Owner of a Bond as shown in the registration books maintained by the Fiscal Agent pursuant to Section 2.08 hereof (the “Registration Books”), of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event the City redeems the Bonds in part, or (iv) the payment to any Participant or any other person, other than an Owner of a Bond as shown in the Registration Books, of any amount with respect to principal of or interest on the Bonds. The City and the Fiscal Agent may treat and consider conclusively the person in whose name each Bond is registered as the holder and absolute Owner of such Bond for the purpose of payment of principal and interest with respect to such Bond, for the purpose of giving notices of redemption, if applicable, and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The City shall pay all principal Packet Pg. 1996
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20 of and interest on the Bonds only to or upon the order of the respective Owner of a Bond, as shown in the Registration Books, or his or her attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City’s obligations with respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner of a Bond, as shown in the Registration Books, shall receive a Bond evidencing the obligation of the City to make payments of principal and interest pursuant to this Agreement. Upon delivery by the Depository to the Owners of the Bond, and the City of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Agreement shall refer to such nominee of the Depository.

In the event (i) the Depository determines not to continue to act as securities depository for the Bonds, or (ii) the Depository shall no longer so act and gives notice to the City of such determination, then the City will discontinue the book-entry system with the Depository. If the City determines to replace the Depository with another qualified securities depository, the City shall prepare or direct the preparation of a new, single, separate, fully registered Bond, per maturity, registered in the name of such successor or substitute qualified securities depository or its nominee. If the City fails to identify another qualified securities depository to replace the Depository, then the Bonds shall no longer be restricted to being registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names Owners of the Bonds transferring or exchanging Bonds shall designate, in accordance with the provisions of Sections 2.06 and 2.07 hereof, and the City shall prepare and deliver Bonds to the Fiscal Agent for authentication and delivery to the Owners thereof for such purpose.

In the event of a reduction in aggregate principal amount of Bonds Outstanding or an advance refunding of part of the Bonds Outstanding, the Depository, in its discretion, (a) may request the City to prepare and issue a new Bond or (b) may make an appropriate notation on a Bond indicating the date and amounts of such reduction in principal, but in such event the Registration Books maintained by the Fiscal shall be conclusive as to what amounts are Outstanding with respect to the Bond, except in the case of final maturity, in which case the Bond must be presented to the Fiscal Agent prior to payment.

Notwithstanding any other provision of this Agreement to the contrary, so long as any Bond is registered in the name of the Nominee, all payments of principal and interest with respect to such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository and acceptable to the City.

The initial Nominee shall be Cede & Co., as Nominee of DTC.

Section 2.13. Parity Bonds. The District and the City covenant that except as provided below they will not issue any other obligations payable, as to principal or interest, from the Special Tax Revenues which have, or purport to have, any lien upon the Special Tax Revenues superior to or on a parity with the lien of the Bonds. Nothing in this Agreement shall, however, preclude, subject to the limitations contained hereunder, the redemption prior to maturity of any Bonds subject to call and redemption and payment of said Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State Packet Pg. 1997
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21 of California, which shall be payable from and have a lien upon the Special Tax Revenues on a parity with the Bonds to be outstanding following the issuance of such refunding bonds.

ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS;
IMPROVEMENT FUND; SPECIAL TAX FUND; ADMINISTRATIVE EXPENSE FUND;

COSTS OF ISSUANCE FUND
Section 3.01. Issuance and Delivery of Bonds. At any time after the execution of this Agreement, the City may issue the Bonds for the District in the aggregate principal amounts set forth in Section 2.01 hereof and deliver the Bonds to the Original Purchaser. The Authorized Officers of the City are hereby authorized and directed to deliver any and all documents and instruments necessary to cause the issuance of the Bonds in accordance with the provisions of the Act, the Resolution and this Agreement, to authorize the payment of Costs of Issuance by the Fiscal Agent from the proceeds of the Bonds, and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Original Purchaser.

Section 3.02. Application of Proceeds of Sale of Bonds.

The Proceeds of the sale of the Bonds to the Original Purchaser shall be paid to the Fiscal Agent, who shall forthwith set aside, pay over and deposit such Proceeds on the Closing Date as follows:
(A) Deposit in the Reserve Fund the amount of $___________, which constitutes the Reserve Requirement on the Closing Date; (B) Deposit in the Improvement Fund the amount of $___________; (C) Deposit in the Costs of Issuance Fund the amount of $___________; and Section 3.03. Improvement Fund.
(A) Establishment of Improvement Fund. There is hereby established, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 2020-1 of the City of San Bernardino 2022 Special Tax Bonds Improvement Fund.” Moneys in the Improvement Fund shall be held by the Fiscal Agent for the benefit of the City, and shall be disbursed, except as otherwise provided in subsection (D) of this Section 3.03, for the payment or reimbursement of the costs of the design, acquisition and construction of the Project. (B) Procedure for Disbursement. Disbursements from the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer’s Certificate which shall:
(i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid along with payment instructions; and
(ii) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer’s Certificate previously filed with the Fiscal Agent Packet Pg. 1998
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22 requesting disbursement, and that the amount being requested is an appropriate disbursement from the Improvement Fund.
(C) Investment. Moneys in the Improvement Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings with respect to the Improvement Fund shall be retained by the Fiscal Agent in such fund to be used for the purposes of such fund.
(D) Closing of Fund. Upon the filing of an Officer’s Certificate stating that the construction and acquisition of the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund, and further stating that moneys on deposit in the Improvement Fund are not needed to complete the Project or reimburse the cost thereof, the Fiscal Agent shall transfer the amount, if any, remaining in the Improvement Fund to the Principal Account of the Bond Fund to be used to pay the principal of the Bonds. (E) Officer’s Certificate. Upon receipt of an Officer’s Certificate delivered pursuant to this Section 3.03, the Fiscal Agent is authorized to act thereon without further inquiry and shall not be responsible for the accuracy of the statements made in such Officer’s Certificate or the application of the funds disbursed pursuant thereto, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.

Section 3.04. Special Tax Fund.
(A) Establishment of Special Tax Fund. There is hereby established, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 2020-1 of the City of San Bernardino 2022 Special Tax Bonds Special Tax Fund” to the credit of which the City shall deposit, as hereinafter provided, not later than ten (10) Business Days after receipt, all Special Tax Revenues received by the City. Moneys in the Special Tax Fund, and all accounts therein, shall be held in trust by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, shall be disbursed as provided below and, pending disbursement, shall be subject to a lien in favor of the Owners of the Bonds.

Notwithstanding the foregoing, any amounts received by the City which constitute Special Tax Prepayments shall be transferred by the City not later than ten (10) Business Days after receipt to the Fiscal Agent for deposit by the Fiscal Agent in the Special Tax Prepayments Account established pursuant to Section 4.02(A) hereof. (B) Disbursements. As soon as practicable after the receipt from the City of any Special Tax Revenues, but no later than ten (10) Business Days after such receipt, the Fiscal Agent shall withdraw from the Special Tax Fund and deposit in the Administrative Expense Fund an amount which is estimated by the City, in a written communication from an Authorized Officer delivered to the Fiscal Agent (upon which the Fiscal Agent may conclusively rely) to be sufficient, together with the amount then on deposit in the Administrative Expense Fund, to pay the Administrative Expenses during the current Fiscal Year (as determined by the City); provided, however, that the amount deposited in the Administrative Expense Fund prior to the deposits to the Interest Account and the Principal Account of the Bond Fund, as provided below, will not exceed $25,000 for each Fiscal Year. Thereafter, the Fiscal Agent shall deposit in the Interest Account and the Principal Account of the Bond Fund, as provided in Section 4.02(B). If, after Packet Pg. 1999
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23 such deposits are made to the Administrative Expense Fund, the Interest Account and the Principal Account, there are funds remaining on deposit in the Special Tax Fund, the City shall instruct the Fiscal Agent by an Officer’s Certificate (upon which the Fiscal Agent may conclusively rely) to transfer such amount from the Special Tax Fund to and deposit it in the Reserve Fund to the extent that the amount on deposit therein is less than the Reserve Requirement.

On September 2 of each year the amount, if any, on deposit in the Special Tax Fund, together with the amount then on deposit in the Bond Fund (including the Principal Account therein but not including, however, the Interest Account or the Special Tax Prepayments Account), as determined by the City, shall not exceed the greater of (i) one year’s earnings on such amounts, or (ii) one-twelfth (1/12th) of Annual Debt Service for the then current Bond Year. If on September 2 of any year the amount on deposit in the Special Tax Fund, together with the amount then on deposit in the Bond Fund (other than such excluded amounts), exceeds the maximum amount allowable pursuant to the preceding sentence, as determined by the City and communicated in writing by an Authorized Officer to the Fiscal Agent (upon which the Fiscal Agent may conclusively rely), moneys shall be transferred from the Special Tax Fund to the Administrative Expense Fund to pay any additional Administrative Expenses during the then current Fiscal Year, as directed in writing by the City. The Fiscal Agent shall have no obligation to monitor the City’s obligations as set forth in the foregoing sentence. Subject to the requirement described above, on each September 2, commencing September 2, 20__ any funds remaining in the Special Tax Fund which are not needed to pay principal of or interest on the Bonds then due and payable may be retained in the Special Tax Fund to reduce the Special Taxes levied in future years (subject to the limitations set forth in the Rate and Method of Apportionment). (C) Investment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained in the Special Tax Fund to be used for the purposes of such fund.

Section 3.05. Administrative Expense Fund.
(A) Establishment of Administrative Expense Fund. There is hereby established, as a separate account to be held by the Fiscal Agent, the “Community Facilities District No. 2020-1 of the City of San Bernardino 2022 Special Tax Bonds Administrative Expense Fund” to the credit of which deposits shall be made as required by Section 3.04(B) hereof. Moneys in the Administrative Expense Fund shall be held in trust by the Fiscal Agent for the benefit of the City, and shall be disbursed as provided below.
(B) Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn by the Fiscal Agent and paid to the City or its order upon receipt by the Fiscal Agent of an Officer’s Certificate stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense (or a Cost of Issuance) and the nature of such Administrative Expense (or Cost of Issuance).
(C) Investment. Subject to the provisions of subsection (B) above, moneys in the Administrative Expense Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent in the Administrative Expense Fund to be used for the purposes of such fund.

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24 Section 3.06. Costs of Issuance Fund.
(A) Establishment of Costs of Issuance Fund. There is hereby established, as a separate account to be held by the Fiscal Agent, the “Community Facilities District No. 2020-1 of the City of San Bernardino 2022 Special Tax Bonds Costs of Issuance Fund” to the credit of which a deposit shall be made as required by paragraph (B) of Section 3.02 hereof. Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance. (B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees, signed by an Authorized Officer and delivered to the Fiscal Agent concurrently with the delivery of the Bonds. The Fiscal Agent shall pay all Costs of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such requisition, or upon receipt of an Officer’s Certificate requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date. Each such invoice or Officer’s Certificate shall be sufficient evidence to the Fiscal Agent of the facts stated therein and the Fiscal Agent shall have no duty to confirm the accuracy of such facts. The Fiscal Agent shall maintain the Costs of Issuance Fund for a period of ninety (90) days from the Closing Date and shall then transfer and deposit any moneys remaining therein, including any Investment Earnings thereon, in the Improvement Fund.
(C) Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund.

ARTICLE IV
SPECIAL TAX REVENUES; BOND FUND; RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues.

The Bonds shall be secured by a pledge of and lien upon (which shall be effected in the manner and to the extent herein provided) all of the Special Tax Revenues (except the amount which will be deposited in the Administrative Expense Fund for each Fiscal Year pursuant to Section 3.04(B) hereof) and all moneys deposited in the Bond Fund and all moneys deposited in the Reserve Fund. The Bonds shall be equally secured by a pledge of and lien upon the Special Tax Revenues and such moneys without priority for number, date of Bond, date of execution or date of delivery; and the payment of the interest on and principal of the Bonds and any premium upon the redemption of any thereof shall be and is secured by a pledge of and lien upon the Special Tax Revenues and such moneys. The Special Tax Revenues and all moneys deposited into such accounts are hereby dedicated in their entirety to the payment of the principal of the Bonds, and interest and any premium on, the Bonds, as provided herein and in the Act, until all of the Bonds have been paid and retired or until moneys or Defeasance Securities have been set aside irrevocably for that purpose in accordance with Section 10.03 hereof.

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25 Section 4.02. Bond Fund.
(A) Deposits. There is hereby established, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 2020-1 of the City of San Bernardino 2022 Special Tax Bonds Bond Fund” to the credit of which deposits shall be made as required by Section 3.04(B) and Section 4.03(C) and (D) hereof and any other provision of this Agreement or the Act. There are hereby established in the Bond Fund, as separate accounts to be held by the Fiscal Agent, the “Interest Account” and the “Principal Account.” There is hereby also established in the Bond Fund, as a separate account to be held by the Fiscal Agent, the “Special Tax Prepayments Account” to the credit of which deposits shall be made as required by Section 3.04(A) hereof. Moneys in the Bond Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds.
(B) Disbursements. On or before each Interest Payment Date, the Fiscal Agent shall transfer from the Special Tax Fund and deposit into the following respective accounts in the Bond Fund, the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Special Tax Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
(1) Interest Account. On or before each Interest Payment Date, the Fiscal Agent shall deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on the Bonds on such date. No deposit need be made into the Interest Account on any Interest Payment Date if the amount on deposit therein is at least equal to the interest becoming due and payable on the Bonds on such date. All moneys in the Interest Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity).

All amounts on deposit in the Interest Account on the first day of any Bond Year, to the extent not required to pay any interest then having become due and payable on the Outstanding Bonds shall be withdrawn therefrom by the Fiscal Agent and transferred to the Special Tax Fund. (2) Principal Account. On or before each Interest Payment Date which occurs on September 1, the Fiscal Agent shall deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds becoming due and payable on such date pursuant to Section 2.02 hereof, or the redemption price of the Bonds (consisting of the principal amount thereof and any applicable redemption premium) required to be redeemed on such date pursuant to any of the provisions of Section 2.03 hereof. All moneys in the Principal Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of (i) paying the principal of the Bonds at the maturity thereof, or (ii) paying the principal of and premium (if any) on any Bonds upon the redemption thereof pursuant to Section 2.03 hereof. All amounts on deposit in the Principal Account on the first day of any Bond Year, to the extent not required to pay the principal of any Outstanding Bonds then having become due and payable, shall be withdrawn therefrom by the Fiscal Agent and transferred to the Special Tax Fund.

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26 In the event that moneys on deposit in the Special Tax Fund will be insufficient on any Interest Payment Date for the Fiscal Agent to deposit the required amounts in the Interest Account and the Principal Account, as provided above, the Fiscal Agent shall deposit the available funds first to the Interest Account up to the full amount required to cause the aggregate amount on deposit therein to equal the amount of interest becoming due and payable on the Bonds on the Interest Payment Date, and shall then deposit the remaining available funds in the Special Tax Fund to the Principal Account up to the full amount required to cause the aggregate amount on deposit therein to equal the amount, if any, of principal becoming due and payable on the Bonds on the Interest Payment Date. If, after making such deposits to the Interest Account and the Principal Account, and after transferring moneys from the Reserve Fund to such accounts, as provided in Section

4.03(B) hereof, the amount on deposit in the Principal Account is insufficient to pay the full amount of the principal of each of the Bonds which is due or is to be redeemed on the Interest Payment Date, the Fiscal Agent shall make a prorated payment of the principal of each of such Bonds as specified in an Officer’s Certificate provided to the Fiscal Agent. (C) Special Tax Prepayments Account Deposits and Disbursements. Within ten (10) Business Days after receiving a Special Tax Prepayment the City shall deliver the amount thereof to the Fiscal Agent, together with an Officer’s Certificate notifying the Fiscal Agent that the amount being delivered is a Special Tax Prepayment which is to be deposited in the Special Tax Prepayments Account. Upon receiving a Special Tax Prepayment from the City and such an Officer’s Certificate, the Fiscal Agent shall deposit the amount of the Special Tax Prepayment in the Special Tax Prepayments Account. Such an Officer’s Certificate may be combined with the Officer’s Certificate which the City is required to deliver to the Fiscal Agent pursuant to Section

4.03(F) hereof. Moneys on deposit in the Special Tax Prepayments Account shall be transferred by the Fiscal Agent to the Principal Account on the next date for which notice of the redemption of the Bonds can timely be given under Section 2.03(F) hereof and shall be used to redeem the Bonds on the redemption date selected in accordance with Section 2.03(B) hereof. Pending such transfer, the moneys on deposit in the Special Tax Prepayments Account shall be invested in Defeasance Securities, in accordance with Section 6.01 hereof, at such yield as, in the opinion of Bond Counsel, is necessary to preserve the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. Investment earnings on the moneys on deposit in the Special Tax Prepayments Account shall be retained in such account. The City shall provide direction in writing to the Fiscal Agent which shall include an exhibit of the Bond Counsel’s determination.
(D) Investment. Except as provided in subsection (C) above, moneys in the Bond Fund, including all accounts therein, shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained in the Bond Fund, except to the extent they are required to be deposited by the Fiscal Agent in the Rebate Fund in accordance with Section 6.02 hereof.

Amounts in the Bond Fund, including all accounts therein, shall also be withdrawn and deposited in the Rebate Fund as provided in Section 6.02 hereof.

Section 4.03. Reserve Fund.
(A) Establishment of Fund. There is hereby established, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 2020-1 of the City of San Packet Pg. 2003
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27 Bernardino 2022 Special Tax Bonds Reserve Fund” to the credit of which a deposit shall be made as required by paragraph (A) of Section 3.02 hereof, which deposit is equal to the Reserve Requirement, and to which deposits shall be made as provided in Section 3.04(B) hereof. Moneys in the Reserve Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of the principal of and interest and any premium on the Bonds and shall be subject to a lien in favor of the Owners of the Bonds. (B) Use of Fund. Except as otherwise provided in this Section, (i) all amounts on deposit in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Interest Account and the Principal Account of the Bond Fund in the event of any deficiency at any time in either of such accounts of the amount then required for payment of the principal of and interest and any premium on the Bonds or, in accordance with the provisions of subsection (E) of this Section 4.03, for the purpose of redeeming Bonds. (C) Transfer Due to Deficiency in Interest and Principal Accounts. Whenever transfer is made from the Reserve Fund to the Interest Account or the Principal Account due to a deficiency in either such account, the Fiscal Agent shall provide written notice thereof to the City. (D) Transfer of Excess of Reserve Requirement. Whenever, on any September 2, the amount in the Reserve Fund, less Investment Earnings resulting from the investment of the funds therein which pursuant to Section 6.02 hereof must be rebated to the United States, as previously directed by the City, exceeds the Reserve Requirement, as calculated by the City, the Fiscal Agent shall provide written notice to the City of the amount of the excess.

Upon receiving written direction from an Authorized Officer (upon which the Fiscal Agent may conclusively rely), the Fiscal Agent shall, subject to the requirements of Section 6.02 hereof, transfer an amount from the Reserve Fund which will reduce the amount on deposit therein to an amount equal to the Reserve Requirement to the Interest Account and the Principal Account, in the priority specified in Section 4.02(B)(1) and (2) hereof, to be used for the payment of the interest on and principal of the Bonds on the next succeeding Interest Payment Date in accordance with Section 4.02 hereof.
(E) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund is equal to or exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall, upon receiving written direction from an Authorized Officer (upon which the Fiscal Agent may conclusively rely), transfer the amount in the Reserve Fund to the Interest Account and the Principal Account, in the priority specified in Section

4.02(B)(1) and (2) hereof, to be applied, on the next succeeding Interest Payment Date, to the payment and redemption, in accordance with Section 2.03 and Section 4.02 hereof of all of the Outstanding Bonds. In the event that the amount available to be so transferred from the Reserve Fund to the Interest Account and the Principal Account exceeds the amount required to pay and redeem the Outstanding Bonds, the excess shall be transferred to the City to be used for any lawful purpose of the City.
(F) Transfers on Payment of Special Tax Obligations. Whenever the City receives a Special Tax Prepayment, the City shall by an Officer’s Certificate notify the Fiscal Agent thereof and of the amount by which the Reserve Fund is to be reduced and which is Packet Pg. 2004
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28 transferrable from the Reserve Fund to the Principal Account of the Bond Fund, which amount shall be specified in the Officer’s Certificate. Each such Officer’s Certificate shall be accompanied by a report of an Independent Financial Consultant verifying the accuracy of the calculation of the amount to be transferred from the Reserve Fund to the Principal Account (“Verification”). Upon receipt of each such Officer’s Certificate and Verification, upon which the Fiscal Agent may conclusively rely, the Fiscal Agent shall at such time as the amount of such Special Tax Prepayment will be used to redeem Bonds, as provided in Section 4.02(B)(2) hereof, transfer the amount specified in such Officer’s Certificate to the Principal Account and use such amount, together with the amount of such Special Tax Prepayment, to redeem Bonds, as provided in Section

4.02(B)(2) hereof. Notwithstanding the preceding provisions of this subsection, no amount shall be transferred from the Reserve Fund to the Principal Account if the amount on deposit in the Reserve Fund is, or as a result of such transfer would be, less than the Reserve Requirement following such redemption.
(G) Investment. Moneys on deposit in the Reserve Fund shall be invested in Permitted Investments which do not have maturities extending beyond five (5) years; provided, however, if the Reserve Fund is invested in an investment agreement (as defined in clause (vii) of the definition of Permitted Investments in Section 1.03 hereof) or a repurchase agreement (as defined in clause (xi) of such definition) such agreement may have a maturity longer than five (5) years if the Fiscal Agent is authorized by the provisions of such agreement to draw the full amount thereof, without penalty, if required for the purposes of the Reserve Fund. The City shall cause the Permitted Investments, other than such investment agreements, in which moneys on deposit in the Reserve Fund are invested to be valued at fair market value and at least once in each Fiscal Year. The Fiscal Agent’s pricing service, as reflected on its monthly statements, satisfies fair market value.

ARTICLE V

OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment. The City will punctually pay or cause to be paid the principal of and interest and any premium on the Bonds when and as due in strict conformity with the terms of this Agreement and any Supplemental Agreement to the extent that the Special Tax Revenues are available therefor, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Agreement and all Supplemental Agreements and of the Bonds.

Section 5.02. Special Obligation. The Bonds are special obligations of the City and the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund, the Reserve Fund and the Special Tax Fund.

Section 5.03. Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Agreement, except subject Packet Pg. 2005
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29 to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.

Section 5.04. Against Encumbrances. The City shall not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Agreement.

Section 5.05. Books and Accounts. The City shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Administrative Expense Fund. Such books of record and accounts shall at all times during business hours, upon reasonable notice, be subject to the inspection of the Owners of not less than ten percent (10%) of the aggregate principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.

Section 5.06. Protection of Security and Rights of Owners. The City will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by the City.

Section 5.07. Collection of Special Tax Revenues. The City shall comply with all requirements of the Act, including the enactment of necessary Ordinances, so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of the payment or collection of delinquent Special Taxes.

On or within five (5) Business Days of June 1 of each year, the Fiscal Agent shall provide the City with a notice stating the amount then on deposit in the Special Tax Fund, the Bond Fund and the Reserve Fund (including all accounts and sub-accounts therein), the monthly statements provided by the Fiscal Agent shall satisfy this notice requirement. The receipt of such notice by the City or the failure of the Fiscal Agent to give such notice shall in no way affect the obligations of the City under the following two paragraphs. The Fiscal Agent shall have no liability if it does not provide such notice to the City. Upon receipt of such notice, the City shall communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current Fiscal Year.

The City shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Act by August 10 of each year (or such later date as may be authorized by the Act or any amendment thereof) that the Bonds are Outstanding, such that the computation of the levy is complete before the final date on which the Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the tax roll for the Fiscal Year then beginning. Upon the completion of the computation of the amounts of the levy of the Special Taxes, the City shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the tax roll. Notwithstanding the preceding provisions of this paragraph, the City Council may elect, as permitted by the Act, to collect the Special Taxes to be levied for any Fiscal Year directly from the owners of the parcels of taxable property upon which the Special Taxes are levied rather than by transmitting the Special Packet Pg. 2006
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30 Taxes to the Auditor for collection on the tax roll; provided that, in such event, the City shall otherwise comply with the provisions of this Section 5.07.

The City shall fix and levy the amount of Special Taxes within the District required for the payment of the principal of and interest on any Outstanding Bonds becoming due and payable during the ensuing calendar year, including any necessary replenishment of the Reserve Fund, and the amount estimated to be sufficient to pay the Administrative Expenses during such calendar year. The Special Taxes so levied shall not exceed the authorized amounts for the District as provided in the proceedings for the establishment of the District.

The Special Taxes shall be payable and be collected (except in the event of judicial foreclosure proceedings pursuant to Section 5.11 hereof) in the same manner and at the same time and in the same installments as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property.

The City will not, in collecting the Special Taxes or in processing any such judicial foreclosure proceedings, exercise any authority which it has pursuant to Sections 53340, 53344.1, 53356.1 and 53356.5 of the California Government Code in any manner which would materially and adversely affect the interests of the Owners and, in particular, will not permit the tender of Bonds in full or partial payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant certifying that to accept such tender will not result in the City having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds and remaining Outstanding following such tender.

Section 5.08. Levy of Special Taxes for Administrative Expenses. The City covenants that, to the extent that it is legally permitted to do so, (a) it will levy the Special Taxes for the payment of the Administrative Expenses which are expected to be incurred in each Fiscal Year, and (b) it will not initiate proceedings under the Act to reduce the Maximum Special Tax rates (the “Maximum Rates”) on then existing Developed Property in the District below the amounts which are necessary to provide Special Tax Revenues in an amount equal to estimated Administrative Expenses for the then current Fiscal Year plus an amount equal to one hundred ten percent (110%) of Maximum Annual Debt Service on the Outstanding Bonds. For purposes of this Section, “Developed Property” has the meaning set forth in the Rate and Method of Apportionment.

The City further covenants that in the event an ordinance is adopted by initiative pursuant to Section 3 of Article XIII C of the California Constitution, which purports to reduce or otherwise alter the Maximum Rates, it will commence and pursue legal action seeking to preserve its ability to comply with its covenant contained in the preceding paragraph.

Section 5.09. Further Assurances. The City will adopt, make, execute and deliver any and all such further ordinances, resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in this Agreement.

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31 Section 5.10. Tax Covenants. The City covenants that:
(A) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of the initial issuance and delivery of the Bonds, would have caused any of the Bonds to be “arbitrage bonds” within the meaning of Section 103(b) and Section 148 of the Code;
(B) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would result in loss of exclusion from gross income for purposes of federal income taxation under Section 103(a) of the Code of interest paid with respect to the Bonds; (C) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would have caused any of the Bonds to be “private activity bonds” within the meaning of Section 141 of the Code;
(D) It will comply with the Rebate Certificate as a source of guidance for achieving compliance with the Code; and
(E) In order to maintain the exclusion from gross income for purposes of federal income taxation of interest paid with respect to the Bonds, it will comply with each applicable requirement of Section 103 and Sections 141 through 150 of the Code.

The covenants of the City contained in this Section 5.10 shall survive the payment, redemption or defeasance of Bonds pursuant to Section 10.03 hereof.

Section 5.11. Covenant to Foreclose. Pursuant to Section 53356.1 of the California Government Code, the City covenants with and for the benefit of the Owners of the Bonds that:
(i) it will order, and cause to be commenced, judicial foreclosure proceedings against properties in the District with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of the Fiscal Year in which such Special Taxes were due, and (ii) if the amount on deposit in the Reserve Fund is less than the Reserve Requirement it will commence judicial foreclosure proceedings against all properties in the District with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than ninety-five percent (95%) of the total Special Taxes levied, and diligently pursue to completion such foreclosure proceedings.

Section 5.12. Prepayment of Special Taxes. The City shall cause all applications of owners of property in the District to prepay and satisfy the Special Tax obligation for their property to be reviewed by the Tax Consultant and shall not accept any such prepayment unless such consultant certifies in writing that following the acceptance of the proposed prepayment by the City and the redemption of Bonds with such prepayment, the maximum amount of the Special Taxes that may be levied on all Taxable Property (as defined in the Rate and Method of Apportionment) in the District following such prepayment will be at least 1.10 times Maximum Annual Debt Service on the Bonds which will remain Outstanding following such redemption plus estimated Administrative Expenses.

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32 Section 5.13. Calculation of Prepayments. The City will cause all Special Tax Prepayments to be calculated to include the amount of the premium on the Outstanding Bonds that will be redeemed with the Special Tax Prepayment and negative arbitrage on the investment of the Special Tax Prepayment from the date of receipt until the Interest Payment Date upon which the Special Tax Prepayment and the amount to be transferred from the Reserve Fund to the Principal Account pursuant to Section 4.03(F) hereof will be used to redeem Outstanding Bonds pursuant to Section 2.03(B) hereof. The City will not include in any calculation of the amount of any Special Tax Prepayment for any parcel of taxable property in the District a proportionate amount of the amount then on deposit in the Reserve Fund, if at the time of such calculation the amount on deposit in the Reserve Fund is less than the Reserve Requirement.

Section 5.14. Continuing Disclosure. The City hereby covenants and agrees that they will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.

Section 5.15. Accountability Measures. The City shall comply with the requirements of Section 53410 of the California Government Code with respect to the deposit and expenditure of the Proceeds of the sale of the Bonds and shall cause the appropriate officer of the City to file a report with the City Council no later than January 31, 2019, and annually thereafter, which shall contain the information required by Section 53411 of the California Government Code with respect to the expenditure of the Proceeds.

ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;

LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds. Subject in all respects to the provisions of Section 6.02 hereof, moneys in any fund or account created or established by this Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer’s Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments. In the absence of any such Officer’s Certificate, the Fiscal Agent shall hold funds uninvested. The Fiscal Agent shall not have any responsibility for determining the legality of any Permitted Investments. The Fiscal Agent shall have no obligation to pay additional interest or maximize investment income on any funds held by it. Neither the City nor the Owners of the Bonds shall have any claim of any kind against the Fiscal Agent in connection with investments properly made pursuant to this Section 6.01. Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account, subject, however, to the requirements of this Agreement for transfer of Investment Earnings in funds and accounts.

The Fiscal Agent and its affiliates may act as sponsor, advisor, depository, principal or agent in the holding, acquisition or disposition of any investment. The Fiscal Agent shall not incur any liability for losses arising from any investments made pursuant to this Section 6.01. For purposes of determining the amount on deposit in any fund or account held hereunder, all Permitted Investments or investments credited to such fund or account shall be valued at the cost thereof (excluding accrued interest and brokerage commissions, if any).

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33 Subject in all respects to the provisions of Section 6.02 hereof, investments in any and all funds and accounts may be commingled in a single fund for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent hereunder, provided that the Fiscal Agent shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Agreement.

The Fiscal Agent shall sell or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited, and the Fiscal Agent shall not be liable or responsible for any loss resulting from the acquisition or disposition of any such investment security in accordance herewith.

The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City or the District the right to receive brokerage confirmations of securities transactions as they occur, the City for itself and the District specifically waives receipt of such confirmations to the extent permitted by law. The Fiscal Agent shall furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Fiscal Agent hereunder.

The Fiscal Agent may make any investments hereunder through its own bond or investment department or trust investment department, or those of its parent or any affiliate.

Section 6.02. Rebate Fund; Rebate to the United States. There is hereby created, to be held by the Fiscal Agent, as a separate account distinct from all other funds and accounts held by the Fiscal Agent under this Agreement, the Rebate Fund. The Fiscal Agent shall, in accordance with written directions received from an Authorized Officer, deposit into the Rebate Fund moneys transferred by the City to the Fiscal Agent pursuant to the Rebate Certificate or moneys transferred by the Fiscal Agent from the Reserve Fund. The Rebate Fund shall be held either uninvested or invested only in Federal Securities at the written direction of the City. Moneys on deposit in the Rebate Fund shall be applied only to payments made to the United States, to the extent such payments are required by the Rebate Certificate. The Fiscal Agent shall, upon written request and direction of the City, make such payments to the United States.

The Fiscal Agent may rely conclusively upon the City’s determinations, calculations and certifications required by this Section. The Fiscal Agent shall have no responsibility to independently make any calculation or determination or to review the City’s calculations hereunder. The Fiscal Agent’s sole responsibilities under this Section 6.02 are to follow the written instructions of the City pertaining hereto. The City shall be responsible for any fees and expenses incurred by the Fiscal Agent pursuant to this Section 6.02.

The Fiscal Agent shall, upon written request and direction from the City, transfer to or upon the order of the City any moneys on deposit in the Rebate Fund in excess of the amount, if any, required to be maintained or held therein in accordance with the Rebate Certificate.

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34 Section 6.03. Liability of City. The City shall not incur any responsibility in respect of the Bonds or this Agreement other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful default. The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the Fiscal Agent herein or of any of the documents executed by the Fiscal Agent in connection with the Bonds.

In the absence of bad faith, the City may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City and conforming to the requirements of this Agreement. The City shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts.

No provision of this Agreement shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations hereunder, or in the exercise of and of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

The City may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.

Whenever in the administration of its duties under this Agreement the City shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the City, be deemed to be conclusively proved and established by a certificate of the Fiscal Agent, and such certificate shall be full warranty to the City for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the City may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.

Section 6.04. Employment of Agents by City. In order to perform its duties and obligations hereunder, the City may employ such persons or entities as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.

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35 ARTICLE VII

THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent. U.S. Bank Trust Company, National Association is hereby appointed Fiscal Agent, registrar and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Fiscal Agent.

Any company into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the following paragraph of this Section 7.01, shall be the successor to the Fiscal Agent without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.

The City may, upon a 30-day notice of removal, remove the Fiscal Agent initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank, national banking association, corporation or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000, and subject to supervision or examination by federal or state authority. If such bank, national banking association, corporation or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 7.01, combined capital and surplus of such bank, national banking association or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent.

If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section 7.01 within forty-five (45) days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent, at the expense of the City, or any Owner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.

Section 7.02. Liability of Fiscal Agent. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City and the District, and the Fiscal Agent assumes no responsibility for the correctness of the same, nor makes any representations as to the validity or sufficiency of this Agreement or of the Bonds, nor shall the Fiscal Agent incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it.

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36 The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds.

In the absence of bad faith, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of this Agreement. Except as provided above in this paragraph, the Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument.

The Fiscal Agent shall not be liable for any error of judgment made in good faith by the Fiscal Agent unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.

No provision of this Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers.

The Fiscal Agent shall not be responsible for accounting for, or paying to, any party to this Agreement, including, but not limited to the City and the Owners, any returns on or benefit from funds held for payment of unredeemed Bonds or outstanding checks and no calculation of the same shall affect, or result in any offset against, fees due to the Fiscal Agent under this Agreement.

The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent.

All indemnification and releases from liability granted herein to the Fiscal Agent shall extend to the directors, officers and employees of the Fiscal Agent.

The Fiscal Agent shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Agreement and delivered using Electronic Means (“Electronic Means” shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Fiscal Agent, or another method or system specified by the Fiscal Agent as available for use in connection with its services hereunder); Packet Pg. 2013
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37 provided, however, that the City shall provide to the Fiscal Agent an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the City whenever a person is to be added or deleted from the listing. If the City elects to give the Fiscal Agent Instructions using Electronic Means and the Fiscal Agent in its discretion elects to act upon such Instructions, the Fiscal Agent’s understanding of such Instructions shall be deemed controlling. The City understands and agrees that the Fiscal Agent cannot determine the identity of the actual sender of such Instructions and that the Fiscal Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Fiscal Agent have been sent by such Authorized Officer. The City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Fiscal Agent and that the City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the City. The Fiscal Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Fiscal Agent’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The City agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Fiscal Agent, including without limitation the risk of the Fiscal Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Fiscal Agent and that there may be more secure methods of transmitting Instructions than the method(s) selected by the City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Fiscal Agent immediately upon learning of any compromise or unauthorized use of the security procedures.

The permissive right of the Fiscal Agent to do things enumerated in this Agreement shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct.

The Fiscal Agent may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, affiliates, or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder, and the Fiscal Agent shall not be answerable for any willful misconduct or negligence on the part of any attorney, agent or receiver selected by it with reasonable care.

Section 7.03. Information. The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall reasonably request, including, but not limited to, quarterly statements reporting funds held and transactions by the Fiscal Agent.

Section 7.04. Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the advice or opinion Packet Pg. 2014
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38 of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Fiscal Agent hereunder in good faith and in accordance therewith.

Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate shall be full warranty to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.

Section 7.05. Compensation, Indemnification. The City shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges, fees and other disbursements, including those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under this Agreement, and the Fiscal Agent shall have a first priority lien therefor on any funds at any time held by it in the Administrative Expense Fund, and the Fiscal Agent shall pay and reimburse all expenses, charges, fees and other disbursements, including those of its attorneys, agents and employees, incurred in connection therewith from the funds held by it in the Administrative Expense Fund. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents, harmless against any liabilities, costs, claims, expenses or charges of any kind whatsoever (including fees and expenses of its attorneys) which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. The obligation of the City under this Section 7.05 shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement.

Section 7.06. Books and Accounts. The Fiscal Agent shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions made by it to the expenditure of amounts disbursed from the Bond Fund, the Special Tax Fund, the Administrative Expense Fund, the Reserve Fund and the Costs of Issuance Fund. Such books of record and accounts shall, upon reasonable notice, at all times during business hours be subject to the inspection of the City and the Owners of not less than ten percent (10%) of the aggregate principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.

ARTICLE VIII

MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted.
(A) This Agreement and the rights and obligations of the District and the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of the Owners, or with the written consent, without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of Packet Pg. 2015
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39 the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04 hereof.

No such modification or amendment shall (i) extend the maturity of any Bond or the time for paying interest thereon, or otherwise alter or impair the obligation of the City on behalf of the District to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation of any pledge of or lien upon the Special Tax Revenues, or the moneys on deposit in the Special Tax Fund, the Bond Fund or the Reserve Fund, superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California and this Agreement), (iii) reduce the percentage of Bonds required for the amendment hereof, or (iv) reduce the principal amount of or redemption premium on any Bond or reduce the interest rate thereon. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent. The Fiscal Agent shall be furnished an opinion of counsel that any such Supplemental Agreement entered into by the City and the Fiscal Agent complies with the provisions of this Section 8.01 and the Fiscal Agent may conclusively rely on such opinion. (B) This Agreement and the rights and obligations of the District and the City and the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:
(1) to add to the covenants and agreements of the City and the District in this Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the City and the District; (2) to make modifications not adversely affecting any Outstanding Bonds in any material respect;
(3) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provisions of this Agreement, or in regard to questions arising under this Agreement, as the City and the Fiscal Agent may deem necessary or desirable and not inconsistent with this Agreement, and which shall not adversely affect the rights of the Owners;
(4) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of moneys to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations; or
(5) to provide for the issuance of Parity Bonds to pay and discharge the indebtedness of a portion of the Outstanding Bonds pursuant to Section 2.13 and Section 10.03 hereof.

Section 8.02. Owners’ Meetings. The City may at any time call a meeting of the Owners.

In such event, the City is authorized to fix the time and place of any such meeting and to provide for the giving of notice thereof and to fix and adopt rules and regulations for the conduct of the meeting.

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40 Section 8.03. Procedure for Amendment with Written Consent of Owners. The City and the Fiscal Agent may at any time enter into a Supplemental Agreement amending the provisions of the Bonds or of this Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by Section 8.01(A) hereof, to take effect when and as provided in this Section 8.03. A copy of the Supplemental Agreement, together with a request to Owners for their consent thereto, shall be mailed by first class mail, postage prepaid, by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of the Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided.

Such a Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 10.04 hereof. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed.

After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the documents required by this Section 8.03 to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article VIII) upon the City, the District and the Owners of all Bonds then Outstanding at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty (60)-day period.

Section 8.04. Disqualified Bonds. Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article VIII, and shall not be entitled to vote upon, consent to, or participate in any action provided for in this Article VIII. Upon request of the Fiscal Agent, the City shall specify to the Fiscal Agent those Bonds disqualified pursuant to this Section and the Fiscal Agent may conclusively rely on such certificate.

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41 Section 8.05. Effect of Supplemental Agreement. From and after the time any Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes.

Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments. The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and upon presentation of his Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond. The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for like Bonds then Outstanding, upon surrender of such Bonds.

Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds.

ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES
Section 9.01. Events of Default. Any one or more of the following events shall be an Event of Default:
(a) failure to pay any installment of principal of any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption or otherwise;
(b) failure to pay any installment of interest on any Bonds when and as the same shall become due and payable; or
(c) other than as referred to in subsection (a) or (b), failure by the City, for and on behalf of the District, to observe or perform any covenant, condition, agreement or provision in this Agreement on its part to be observed or performed for a period of thirty (30) days after written notice, specifying such failure and requesting that it be remedied, has been given to the City by the Fiscal Agent or the Owners of 25% in aggregate principal amount of the Outstanding Bonds ; except that, if such failure can be remedied but not within such thirty (30) day period and if the City has taken all action reasonably possible to remedy such failure within such thirty (30) day period, such failure shall not become an Event of Default for so long as the City shall diligently proceed to remedy same.

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42 Section 9.02. Remedies of Owners. Upon the occurrence and continuance of an Event of Default, the Owners shall have the right to exercise all remedies contemplated under this Agreement as follows:
(a) by mandamus or other action, suit, or proceeding at law or in equity to enforce the Owner's rights against the City, and its members, officers and employees, and to compel the City, and its members, officers and employees perform and carry out their duties under the Act and the agreements and covenants with the Owner contained herein; (b) by suit in equity to enjoin any acts or things that are unlawful or violate the rights of the Owners; or
(c) by suit, action or proceeding in any court of competent jurisdiction, to require the City and its officers and employees, acting for and on behalf of the District, to account as if it and they were the trustees of an express trust.

Section 9.03. Application of Special Taxes and Other Funds After Default. If an Event of Default shall occur and be continuing, all Special Taxes, including any penalties, costs, fees and other charges accruing under the Act, and any other funds then held or thereafter received by the Fiscal Agent under any of the provisions of this Agreement shall be applied by the Fiscal Agent as follows and in the following order:

First, to the payment of any expenses necessary in the opinion of the Fiscal Agent to protect the interests of the Owners of the Bonds and payment of reasonable fees, charges, and expenses of the Fiscal Agent (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Agreement; Second, to the payment of the principal of and interest then due with respect to the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Agreement, as follows:
(a) to the payment of all installments of interest then due in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, without any discrimination or preference; and (b) to the payment of the unpaid principal of any Bonds which shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective Bonds on the date of maturity or redemption, and, if the amount available shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date, without any discrimination or preference.

Section 9.04. Restoration of Positions. In case any proceedings taken by the Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Owners, then in every such case the City and the Owners, subject to any determination in such proceedings, shall be restored to their former positions and Packet Pg. 2019
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43 rights hereunder, severally and respectively, and all rights, remedies, powers, and duties of the City and the Owners shall continue as though no such proceedings had been taken.

Section 9.05. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 9.06. Delay or Omission Not Waiver. No delay or omission of any Owners to exercise any right or remedy accruing upon an Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Agreement or by law to the Owners of the Bonds may be exercised from time to time, and as often as may be deemed expedient, by the Owners.

ARTICLE X

MISCELLANEOUS
Section 10.01. Benefits of Agreement Limited to Parties. Nothing in this Agreement, expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and the Owners, any right, remedy or claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.

Section 10.02. Successor is Deemed Included in All References to Predecessor. Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the City or the Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.

Section 10.03. Discharge of Agreement.

If the City shall pay and discharge the indebtedness on all or a portion (a “Partial Discharge”) of the Outstanding Bonds in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of and interest and any premium on such Bonds, as and when the same become due and payable; (B) by depositing with the Fiscal Agent, in trust, at or before maturity, an amount of money which, together with the amounts then on deposit in the Bond Fund (including all accounts therein), the Special Tax Fund and the Reserve Fund, or in the event of a Partial Discharge, the appropriate portion of such amounts, as determined by the City, is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums, if any; or (C) by irrevocably depositing with the Fiscal Agent, in trust, cash or noncallable Defeasance Securities in such amount as the City shall determine, as confirmed by an Packet Pg. 2020
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44 Independent Financial Consultant, will, together with the interest to accrue thereon and amounts then on deposit in the Bond Fund (including all accounts therein), the Special Tax Fund and the Reserve Fund, or in the event of a Partial Discharge, the appropriate portion of such amounts, as determined by the City and confirmed by an Independent Financial Consultant, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any such Bonds shall not have been surrendered for payment, the pledge of the Special Tax Revenues and other funds provided for in this Agreement and all other obligations of the City and the District under this Agreement with respect to such Bonds shall cease and terminate, except the obligation of the City to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon, the obligation of the City to pay all amounts owing to the Fiscal Agent pursuant to Section 7.05 hereof, and the obligations of the City pursuant to the covenants contained in Section 5.10 hereof; and thereafter Special Taxes shall not be payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent. The satisfaction and discharge of this Agreement as to all of the Outstanding Bonds shall be without prejudice to the rights of the Fiscal Agent to charge and be reimbursed by the City for the expenses which it shall thereafter incur in connection herewith.

Any funds held by the Fiscal Agent to pay and discharge the indebtedness on such Bonds, upon payment of all fees and expenses of the Fiscal Agent, which are not required for such purpose, shall be paid over to the City.

Section 10.04. Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing.

Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such a request, declaration or other instrument, or of a writing appointing such an attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such a notary public or other officer.

Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registration books maintained by the Fiscal Agent pursuant to Section 2.08 hereof.

Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Fiscal Agent in good faith and in accordance therewith.

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45 Section 10.05. Waiver of Personal Liability. No member, officer, agent or employee of the City or the District shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law.

Section 10.06. Notices to and Demands on City and Fiscal Agent. Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the City may be given or served by being deposited postage prepaid (first class, registered or certified) in a post office letter box addressed (until another address is filed by the City with the Fiscal Agent) as follows:

City of San Bernardino
290 North “D” Street
San Bernardino, CA 92401
Attn:

Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Fiscal Agent may be given or served by being deposited postage prepaid (first class, registered or certified) in a post office letter box addressed (until another address is filed by the Fiscal Agent with the City) as follows:

U.S. Bank Trust Company, National Association
633 West 5th Street
Los Angeles, CA 90071
Attn: Vice President
Section 10.07. Partial Invalidity. If any section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held by a court of competent jurisdiction to be illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it would have executed and delivered this Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or unenforceable.

Section 10.08. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the payment of such principal, interest and premium have become payable, if such moneys were held by the Fiscal Agent at such date, shall be paid by the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Owners of such Bonds shall look only to the City for the payment of the principal of, and interest and any premium on, their Bonds.

Section 10.09. Applicable Law. This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California.

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46 Section 10.10. Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Act as in effect on the Closing Date, the provision of the Act shall prevail over the conflicting provision of this Agreement.

Section 10.11. Conclusive Evidence of Regularity. Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes.

Section 10.12. Payment on Business Day. In any case where the date of the payment of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption is other than a Business Day, the payment of interest or principal (and premium, if any) need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required, and no interest shall accrue for the period from and after such date.

Section 10.13. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.
(Signature page follows)
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IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name on behalf of the District, and the Fiscal Agent, in acknowledgment of its acceptance of the trusts created hereunder, has caused this Agreement to be executed in its name, all as of _________ 1, 2022.

CITY OF SAN BERNARDINO, for and on behalf
of COMMUNITY FACILITIES DISTRICT NO.
2020-1 (RANCHO PALMA) OF THE CITY OF

SAN BERNARDINO, COUNTY OF SAN

BERNARDINO, STATE OF CALIFORNIA
By:

Assistant City Manager/
Administrative Services Director
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Fiscal Agent
By:

Authorized Officer
-Signature PageFiscal Agent Agreement
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EXHIBIT A

FORM OF BOND

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE

DEPOSITORY (AS DEFINED IN THE AGREEMENT) TO THE FISCAL AGENT FOR

REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND AUTHENTICATED AND DELIVERED IS REGISTERED IN THE NAME OF CEDE & CO.

OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED

REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED

REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE

HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

No. $

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

COUNTY OF SAN BERNARDINO
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA)

OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BOND
INTEREST RATE MATURITY DATE DATED DATE CUSIP NO.
____________, 2022
REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: DOLLARS
The City of San Bernardino (the “City”), for and on behalf of Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino, County of San Bernardino, State of California (the “District”), for value received, hereby promises to pay, from the Special Taxes (as hereinafter defined) to be collected in the District or amounts in certain of the funds and accounts held under the Agreement (as hereinafter defined) to the registered owner named above, or registered assigns, on the maturity date specified above, the principal amount specified above, and to pay interest on such principal amount from ____________, 2022, or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually on March 1 and September 1, commencing _________ 1, 2022 (“Interest Payment Dates”), at the interest rate specified above, until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable by check to the registered owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of U.S. Bank Trust Company, National Association (the “Fiscal Agent”). Interest on this Bond shall be paid by check of the Fiscal Agent mailed by first class mail, postage prepaid, Packet Pg. 2025
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on each Interest Payment Date to the registered owner hereof as of the close of business on the fifteenth (15th) day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such registered owner’s address as it appears on the registration books maintained by the Fiscal Agent; except that at the written request of the owner of at least $1,000,000 in aggregate principal amount of outstanding Bonds filed with the Fiscal Agent prior to the Record Date preceding any Interest Payment Date, interest on such Bonds shall be paid to such owner on such Interest Payment Date by wire transfer of immediately available funds to an account in the United States of America designated in such written request.

This Bond is one of a duly authorized issue of bonds approved by the qualified electors of the District pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Chapter

2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code (the “Mello-Roos Act”), for the purpose, among others, of financing the construction and acquisition of certain public facilities within and for the District, and is one of the series of Bonds designated “Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds (the “Bonds”), in the aggregate principal amount of $___________. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City ____________, 2022 (the “Resolution”), and the Fiscal Agent Agreement, dated as of _________ 1, 2022, between the City and the Fiscal Agent (the “Agreement”), and this reference incorporates the Resolution and the Agreement herein, and by acceptance hereof the owner of this Bond assents to the terms and conditions of the Resolution and the Agreement. The Resolution is adopted under, the Agreement is executed under, this Bond is issued under, and all are to be construed in accordance with, the laws of the State of California.

Pursuant to the Mello-Roos Act, the Agreement and the Resolution, the principal of and interest on the Bonds are payable from the annual levy of Special Taxes authorized under the Mello-Roos Act to be collected within the District (the “Special Taxes”) and are secured by a pledge of and first lien upon the revenues derived therefrom and certain funds held by the Fiscal Agent pursuant to the Agreement.

Interest on this Bond shall be payable from the Interest Payment Date next preceding the date of its authentication, unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from ____________, 2022; provided, however, that if at the time of authentication of this Bond, interest is in default hereon, this Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment hereon, or from ____________, 2022 if no interest has previously been paid or made available for payment hereon.

Any tax for the payment hereof shall be limited to the Special Taxes, except to the extent that provision for payment has been made by the City as may be permitted by law. The Bonds do not constitute obligations of the City for which the City is obligated to levy or pledge, or has levied or pledged, general or special taxation other than as described hereinabove.

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The City has covenanted for the benefit of the owners of the Bonds that (i) it will order, and cause to be commenced, judicial foreclosure proceedings against properties in the District with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of the Fiscal Year in which such Special Taxes were due, and (ii) if the amount on deposit in the Reserve Fund is less than the Reserve Requirement it will commence judicial foreclosure proceedings against all properties in the District with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than ninety-five percent (95%) of the total Special Taxes levied, and diligently pursue to completion such foreclosure proceedings.

The Bonds are subject to redemption prior to their stated maturity dates at the option of the City on September 1, 20__, or any Interest Payment Date thereafter, from such maturities as selected by the City (and by lot within any one maturity), in integral multiples of $5,000, at the option of the City from moneys derived by the City from any source, at a redemption price (expressed as a percentage of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption, as follows:

Redemption Dates Redemption Price
September 1, 20__ and March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and each Interest Payment Date thereafter 100 The Bonds are subject to mandatory redemption prior to their stated maturity dates on any Interest Payment Date, as selected among maturities by the City (and by lot within any one maturity), in integral multiples of $5,000, from moneys derived by the City from Special Tax Prepayments, at redemption prices (expressed as percentages of the principal amounts of the Bonds to be redeemed), together with accrued interest to the date of redemption, as follows:

Notice of redemption with respect to the Bonds to be redeemed shall be given to the registered owners thereof, in the manner and to the extent provided in the Agreement.

From and after the date fixed for redemption, if funds available for the payment of the redemption prices of the Bonds selected for redemption shall have been deposited in the Bond Fund, such Bonds shall cease to be entitled to any benefit under the Agreement other than the right Packet Pg. 2027
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to receive payment of the redemption price, and interest shall cease to accrue on the Bonds to be redeemed on the redemption date specified in the notice of redemption.

This Bond shall be registered in the name of the owner hereof, as to both principal and interest.

Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by it for that purpose and authenticated by the manual signature of an authorized signatory of the Fiscal Agent upon the certificate of authentication endorsed hereon.

No transfer or exchange hereof shall be valid for any purpose unless made by the registered owner or his duly authorized attorney, by execution of the form of assignment endorsed hereon, and authenticated as herein provided, and the principal hereof and interest hereon shall be payable only to the registered owner or to such owner’s order.

The Fiscal Agent shall require the registered owner requesting transfer or exchange hereof to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange.

The Agreement and the rights and obligations of the City and the District thereunder may be modified or amended as set forth therein.

This Bond shall not become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been dated and manually signed on behalf of the Fiscal Agent.

IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed, happened and been performed in due time, form and manner as required by law.

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IN WITNESS WHEREOF, the City of San Bernardino, for Community Facilities District No. 2020-1 (Rancho Palma) thereof, has caused this Bond to be dated ____________, 2022, and to be signed by the facsimile signature of the Mayor of the City and countersigned by the facsimile signature of the City Clerk.

ATTEST:

CITY OF SAN BERNARDINO for and on
behalf of COMMUNITY FACILITIES
DISTRICT NO. 2020-1 (RANCHO PALMA)

OF THE CITY OF SAN BERNARDINO,

COUNTY OF SAN BERNARDINO, STATE

OF CALIFORNIA
City Clerk of the City of San Bernardino Mayor of the City of San Bernardino Packet Pg. 2029
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CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-defined Agreement.

Dated: ____________, 2022
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, Fiscal Agent
By:

Authorized Signatory
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ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto ______________________________________________________________________________ (Name, Address and Tax Identification or
_____________________________________________________________________________, Social Security Number of Assignee)
the within registered Bond and hereby irrevocably constitute(s) and appoint(s) _________________________________ attorney, to transfer said Bond on the books of the Fiscal Agent, with full power of substitution in the premises.

Dated: ____________________
NOTE: The signature(s) on this assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any
change whatsoever.

Signature Guaranteed:

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

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1 $_______
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BONDS

BOND PURCHASE AGREEMENT
________, 2022
City of San Bernardino
Community Facilities District No. 2020-1
(Rancho Palma) of the City of San Bernardino
290 North “D” Street
San Bernardino, CA 92401
Ladies and Gentlemen:

The undersigned, Hilltop Securities Inc., as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the City of San Bernardino (the “City”) for its Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino (the “Community Facilities District”), which upon acceptance will be binding upon the Underwriter and the City. The agreement of the Underwriter to purchase the Bonds (as hereinafter defined) is contingent upon the City satisfying all of the obligations imposed upon it under this Purchase Agreement. This offer is made subject to the City’s acceptance by the execution of this Purchase Agreement and its delivery to the Underwriter at or before 11:59 p.m., California time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the City. All capitalized terms used herein, which are not otherwise defined herein, shall have the respective meanings provided for such terms in a Fiscal Agent Agreement, dated as of August 1, 2022 (the “Fiscal Agent Agreement”) between the City, for and on behalf of the Community Facilities District, and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”).

1. Purchase, Sale and Delivery of the Bonds.

Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase from the City and the City hereby agrees to sell to the Underwriter all (but not less than all) of the $_______ aggregate principal amount of the City of San Bernardino Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds (the “Bonds”), dated the Closing Date (as hereinafter defined), bearing interest at the rates and maturing on the dates and in the principal amounts set forth in Exhibit A hereto. The Bonds shall be subject to redemption as set forth in the Fiscal Agent Agreement. The purchase price for the Bonds shall be $_____ (being 100% of the aggregate principal amount thereof less a net original issue discount of $______ and less an Underwriter’s discount of $______).

The Underwriter agrees to make a bona fide initial public offering of all of the Bonds in compliance with federal and state securities laws, at a price not in excess of the initial offering prices Packet Pg. 2032
2 (or yields) set forth in Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the offering of the Bonds, without any requirement of prior notice, provided that the Underwriter shall not change the interest rates set forth in Exhibit A.

The Bonds may be offered and sold to certain dealers at prices lower than such initial offering prices.

The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from the Special Tax Revenues and certain other amounts as provided in the Fiscal Agent Agreement and the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the “Community Facilities District Act”). The issuance of the Bonds has been duly authorized by the City pursuant to Resolution No. _____ (the “Resolution”), adopted by its City Council of the City (the “City Council”), on _______, 2022.

The proceeds of the Bonds shall be used to (i) finance the construction and acquisition of public facilities needed with respect to the development within the Community Facilities District, (ii) fund a reserve fund securing the Bonds and (iii) pay costs of issuance of the Bonds.

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

The City acknowledges and agrees that: (i) the primary role of the Underwriter, as an underwriter, is to purchase securities for resale to investors in an arm’s-length commercial transaction between the City and the Underwriter and that the Underwriter has financial and other interests that differ from those of the City and the Community Facilities District; (ii) the Underwriter is not acting as a municipal advisor, financial advisor or fiduciary to the City, or any other person or entity and has not assumed any advisory or fiduciary responsibility to the City with respect to the transaction contemplated hereby and the discussions, undertakings and proceedings leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City on other matters); (iii) the only obligations the Underwriter has to the City with respect to the transaction contemplated hereby expressly are set forth in this Purchase Agreement, except as otherwise provided by applicable rules and regulations of the Securities and Exchange Commission or the rules of the Municipal Securities Rulemaking Board (the “MSRB”); and (iv) the City has consulted its own legal, accounting, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate in connection with the transaction contemplated herein. The City acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the MSRB.

B. Pursuant to the authorization of the City, the Underwriter has distributed copies of the Preliminary Official Statement dated _______, 2022, relating to the Bonds, which, together with the cover page, inside cover page and appendices thereto is herein called the “Preliminary Official Statement.” By its acceptance of this Purchase Agreement, the City hereby consents to and ratifies the use and distribution by the Underwriter of the Preliminary Official Statement, and the City agrees to execute a final official statement relating to the Bonds (the “Official Statement”) which will consist of the Preliminary Official Statement with such changes as may be made thereto, with the approval of Best Best & Krieger LLP, Bond Counsel and Disclosure Counsel (herein called “Bond Packet Pg. 2033
3 Counsel”), and the Underwriter, and to provide copies thereof to the Underwriter as set forth in Section 2(T) hereof. The City hereby authorizes and requires the Underwriter to use and promptly distribute, in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official Statement and any supplement or amendment thereto. The City further authorizes the Underwriter to use and distribute, in connection with the offer and sale of the Bonds, the Fiscal Agent Agreement, this Purchase Agreement and all information contained herein, and all other documents, certificates and statements furnished by or on behalf of the City to the Underwriter in connection with the transactions contemplated by this Purchase Agreement. The Preliminary Official Statement and/or the Official Statement may be delivered and printed in a “designated electronic format” as defined in the MSRB’s Rule G-32 and as may be agreed to by the City and the Underwriter. The City confirms that it does not object to distribution of the Preliminary Official Statement or the Official Statement in electronic form. A copy of the most recent Preliminary Official Statement sent to a potential purchaser shall be sent by first class mail or electronically (or other equally prompt means) not later than the first business day following the day upon which each such request is received.

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

D. Except as the Underwriter and the City may otherwise agree, the City will deliver to the Underwriter, at the offices of Bond Counsel in Riverside, California, or at such other location as may be mutually agreed upon by the Underwriter and the City, the documents hereinafter mentioned on the Closing Date (defined below); and the City will deliver to the Underwriter through The Depository Trust Company’s (“DTC”) FAST delivery system, the Bonds, in definitive form (all Bonds bearing CUSIP® numbers printed thereon), duly executed by the City and authenticated by the Fiscal Agent in the manner provided for in the Fiscal Agent Agreement and the Community Facilities District Act at 8:00 a.m. California time, on ______, 2022 (the “Closing Date”), and the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in paragraph (A) of this Section by wire transfer, payable in federal or other immediately available funds (such delivery and payment being herein referred to as the “Closing”). The Bonds shall be in fully registered book-entry form (which may be typewritten) and shall be registered in the name of Cede & Co., as nominee of DTC, which will act as securities depository for the Bonds, and the specimen Bonds will be made available for checking by the Underwriter not less than 2 days prior to the Closing.

2. Representations, Warranties and Covenants of the City. The City represents, warrants and covenants to the Underwriter that:

A. The City is a public body, corporate and politic, duly organized and validly existing pursuant to the Constitution and laws of the State of California (the “State”), and has duly authorized the formation of the Community Facilities District pursuant to resolutions duly adopted by the City Council (the “Community Facilities District Formation Resolutions” and, together with the Resolution, the “Community Facilities District Resolutions”) and the Act. The City Council, as the legislative body of the Community Facilities District, has duly adopted the Community Facilities Packet Pg. 2034
4 District Formation Resolutions, has duly adopted the Resolution and an ordinance levying the Special Taxes within the Community Facilities District (the “Ordinance”), and has caused to be recorded in the real property records of San Bernardino County, a notice of special tax lien (the “Notice of Special Tax Lien”) (the Community Facilities District Formation Resolution, the Ordinance, and the Notice of Special Tax Lien being collectively referred to herein as the “Formation Documents”), and the City Council has duly adopted the Resolution. Each of the Formation Documents remains in full force and effect as of the date hereof and has not been amended. The Community Facilities District is duly organized and validly existing as a community facilities district under the laws of the State. The City has, and at the Closing Date will have, as the case may be, full legal right, power and authority: (i) to execute, deliver and perform its obligations under this Purchase Agreement and the Fiscal Agent Agreement and to carry out all transactions on its part contemplated by each of such agreements; (ii) to enter into the Continuing Disclosure Certificate; and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents, the Fiscal Agent Agreement, this Purchase Agreement and the Official Statement.

This Purchase Agreement, the Fiscal Agent Agreement and the Continuing Disclosure Certificate are collectively referred to herein as the “City Documents.” B. By all necessary official action of the City, the City has duly authorized and approved the execution and delivery by the City of, and the performance by the City of, the obligations on its part contained in, the City Documents and has approved the use and distribution by the Underwriter of the Preliminary Official Statement and the execution, use and distribution by the Underwriter of the Official Statement, and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered by the parties thereto, the City Documents will constitute the legally valid and binding obligations of the City, on its own behalf and on behalf of the Communities Facilities District, enforceable upon the City and the Community Facilities District in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally. To the City’s knowledge, the City has complied, and will at the Closing Date be in compliance in all respects, with the terms of the City Documents.

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

D. Up to and including 25 days after the End of the Underwriting Period (as defined below), the City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The City will advise Packet Pg. 2035
5 the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise materially affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Bonds are delivered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives written notice to the contrary to the City, the End of the Underwriting Period shall be deemed to be the Closing Date.

Any notice delivered pursuant to this provision shall be delivered to the City at or prior to the Closing Date and shall specify a date (other than the Closing Date) to be deemed the “End of the Underwriting Period.” If in the opinion of the Underwriter any such event or proceedings requires the preparation and distribution of a supplement or amendment to the Official Statement, the City shall prepare and furnish to the Underwriter, at the Community Facilities District’s expense, such number of copies of the supplement or amendment to the Official Statement, in (i) a “designated electronic format” consistent with the requirements of the MSRB’s Rule G-32 and (ii) a printed format form in substance mutually agreed upon by the City and the Underwriter as the Underwriter may reasonably request. If such amendment or supplement to the Official Statement shall be made subsequent to the Closing Date, the City also shall furnish, or cause to be furnished, such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably deem necessary to evidence the truth and accuracy of any such supplement or amendment to the Official Statement.

E. As of the time of acceptance hereof and as of the Closing Date, the City and the Community Facilities District, as applicable, have each complied, and will at the Closing Date be in compliance in all material respects, with the Formation Documents and the City Documents, and any immaterial noncompliance by the City or the Community Facilities District, if any, will not impair the ability of the City or the Community Facilities District, as applicable, to carry out, give effect to or consummate the transactions on their part contemplated by the foregoing. From and after the date of issuance of its Bonds, the City will continue to comply with the covenants of the City contained in the City Documents and it shall cause the Community Facilities District to continue to comply with the covenants of the Community Facilities District contained in the City Documents.

F. Except as described in the Preliminary Official Statement, neither the City nor the Community Facilities District is, and as of the Closing Date, neither will be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City or the Community Facilities District, as the case may be, is a party or is otherwise subject or bound; and, to the City’s knowledge, no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument which breach, default or event could have a materially adverse effect on the City’s ability to perform its obligations under the City Documents; and as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the City Documents and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed by the City pursuant to this Purchase Agreement, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or Packet Pg. 2036
6 other instrument to which the City is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the City of its obligations under the City Documents or the performance of the conditions precedent to be performed by the City pursuant to this Purchase Agreement. The City has received all licenses, permits or other regulatory approvals required, if any, for the pledge, collection and/or application by the Community Facilities District of the Special Taxes (as defined in the Fiscal Agent Agreement) and other moneys pledged to the payment of the principal of and interest on the Bonds under the Fiscal Agent Agreement.

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

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

I. The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter and at the expense of the Underwriter as the Underwriter may reasonably request in order: (i) to qualify the Bonds for offer and sale under the “blue sky” or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate; and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the City will not be required to execute a special or general consent to service of Packet Pg. 2037
7 process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction.

J. The City Documents conform as to form and tenor to the descriptions thereof contained in the Preliminary Official Statement. The City represents that the Bonds, when issued, executed and delivered in accordance with the Fiscal Agent Agreement and sold to the Underwriter as provided herein, will be validly issued and outstanding obligations of the City, for and on behalf of the Community Facilities District, entitled to the benefits of the Fiscal Agent Agreement. The Fiscal Agent Agreement creates a valid pledge of, first lien upon and security interest in, the Special Tax Revenues, and in the moneys in the Special Tax Fund established pursuant to the Fiscal Agent Agreement, on the terms and conditions set forth in the Fiscal Agent Agreement. The Fiscal Agent Agreement creates a valid pledge of the moneys in certain funds and accounts established pursuant to the Fiscal Agent Agreement, subject in all cases to the provisions of the Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein.

K. Except as disclosed in the Preliminary Official Statement, there are, to the City’s knowledge, no entities with outstanding assessment liens against any of the properties within the Community Facilities District which are senior to or on a parity with the lien of the Special Taxes.

L. The issuance and sale of the Bonds is not subject to any transfer or other documentary stamp taxes of the State or any political subdivision thereof.

M. The City shall not knowingly take or omit to take any action that, under existing law, may adversely affect the exclusion from gross income for federal income tax purposes, or the exemption from State of California personal income tax, of the interest on the Bonds. The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer whose arbitrage certifications may not be relied upon.

N. Any certificate signed by an authorized officer or employee of the City and delivered to the Underwriter in connection with the issuance of the Bonds shall be deemed a representation and covenant of the City to the Underwriter as to the statements made therein.

O. The City will apply the proceeds of the Bonds in accordance with the Fiscal Agent Agreement and as described in the Official Statement.

P. At or prior to the Closing, the City will have duly authorized, executed and delivered the Continuing Disclosure Certificate in substantially the form under Appendix E to the Official Statement. Based on a review of its prior undertakings with respect to Rule 15c2-12, and except as disclosed in the Preliminary Official Statement and Official Statement, the City has not failed to comply in any material respect with a continuing disclosure undertaking under Rule 15c2-12 during the previous five years.

Q. Between the date of this Purchase Agreement and the date of Closing, the City will not offer or issue any bonds, notes or other obligations for borrowed money not previously disclosed to the Underwriter and the City shall not create, assume or guarantee any indebtedness payable from, or pledge or otherwise encumber, the Special Taxes or other assets, properties, funds or interests that will be pledged as security for the Bonds pursuant to the City Documents.

Packet Pg. 2038
8 R. Until such time as moneys have been set aside in an amount sufficient to pay or defease all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the City will faithfully perform and abide by all of the covenants, undertakings and provisions on its part contained in the Fiscal Agent Agreement.

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

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

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

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

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

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

B. At the Closing Date, except as was described in the Preliminary Official Statement, the City shall not be, in any respect material to the Bonds, the City Documents or the transactions Packet Pg. 2039
9 referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, and the performance by the City of its obligations under the Bonds, the City Documents, the Community Facilities District Resolutions, this Purchase Agreement and any other instruments contemplated by any of such documents, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America or of any department, division, agency or instrumentality of either thereof or under any applicable court or administrative decree or order or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the City of its obligations under the City Documents, the Bonds or the Community Facilities District Resolutions.

C. The information contained in the Official Statement (other than statements pertaining to the Insurer, the Insurance Policy, the book-entry system, as to which no view is expressed) is, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant hereto, true and correct in all material respects and does not, as of the Closing Date or as of the date of any supplement or amendment thereto, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

D. The Underwriter shall have the right to cancel its obligation to purchase the Bonds and to terminate this Purchase Agreement by written notice to the City if, between the date of this Purchase Agreement and the Closing Date, in the Underwriter’s sole and reasonable judgment any of the following events shall occur (each a “Termination Event”):

1. Between the date hereof and the Closing Date, the market price or marketability, at the initial offering prices set forth on the cover page of the Official Statement, of the Bonds, or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall have been materially adversely affected, in the reasonable judgment of the Underwriter (evidenced by a written notice to the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
a. Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or the legislature of the State or recommended to the Congress by the President of the United States of America or a member of the President’s Cabinet, the Department of the Treasury, the Internal Revenue Service or any member of Congress or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America, the Internal Revenue Service or other federal or State authority with appropriate jurisdiction, with the purpose or effect, directly or indirectly, of imposing federal or State income taxation upon such interest as would be received by any owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; Packet Pg. 2040
10 b. Legislation introduced in or enacted (or resolution passed) by the Congress, or shall have been favorably reported out of committee or be pending in committee, or shall have been recommended to the Congress for passage by the President of the United States of America or a member of the President’s Cabinet, or an order, decree, injunction or decision issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, the Resolution or the City Documents, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Fiscal Agent Agreement is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities laws as amended and then in effect;
c. A general suspension of trading in securities on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction;
d. There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis;
e. Except as disclosed in or contemplated by the Official Statement, any material adverse change in the affairs of the City or the Community Facilities District shall have occurred;

2. The introduction, proposal or enactment of any amendment to the federal or California Constitution or any action by any federal or State court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the City or the Community Facilities District, their property, income, securities (or interest thereon), or the validity or enforceability of Special Taxes;

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

4. A general banking moratorium shall have been declared by federal, State of New York or State of California officials authorized to do so or a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; Packet Pg. 2041
11 5. Any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation in interest rates) or the extension of credit by, or a charge to the net capital requirements of, underwriters shall have been established by the New York Stock Exchange, the Comptroller of the Currency, the Securities and Exchange Commission or any other federal or State agency or the Congress of the United States of America, or by Executive Order;

6. A decision by a court of the United States of America shall be rendered, or a stop order, release, regulation or no-action letter by or on behalf of the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act of 1933, the Securities Exchange Act of 1934 and the Trust Indenture Act of 1939;

7. Any amendment is made to the Official Statement that in the Underwriter’s reasonable judgment will materially adversely affect the marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;

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

9. The commencement of an Action described in Section 2(H); Upon the occurrence of a Termination Event and the termination of this Purchase Agreement by the Underwriter, all obligations of the City, the Community Facilities District, and the Underwriter under this Agreement shall terminate, without further liability, except that the City and the Underwriter shall pay their respective expenses as set forth in Section 5 below.

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

1. Official Statement. The Official Statement and each supplement or amendment, if any thereto, executed by an authorized officer of the City;

2. Fiscal Agent Agreement. The Fiscal Agent Agreement, duly executed and delivered by the City and the Fiscal Agent;

3. Resolutions. Certifications by the City Clerk with respect to each resolution and ordinance of the City Council, for the City or as the legislative body of the Community Facilities District, relating to the City Documents, the transactions contemplated thereby, formation of the Community Facilities District and issuance of the Bonds;

4. City Continuing Disclosure Certificate. The Continuing Disclosure Certificate executed by the City;
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12 5. Bond Counsel Opinion. An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the City, of Bond Counsel in substantially the form included as Appendix E to the Official Statement; together with a letter of Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such opinion addressed to the City may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it;

6. Supplemental Opinion. A supplemental opinion or opinions, dated the Closing Date and addressed to the Underwriter, of Bond Counsel, to the effect that:
(i) this Purchase Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, constitutes the legal, valid and binding agreement of the City and is enforceable in accordance with its terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on legal remedies against public agencies in the State; (ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Fiscal Agent Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended;
(iii) the information contained in the Official Statement on the cover and under the captions “THE FINANCING PLAN,” “THE BONDS,” “SOURCES OF PAYMENT FOR THE BONDS,” “LEGAL MATTERS – Tax Exemption” and in Appendices D and F to the Official Statement (excluding any financial, statistical and economic data, forecasts, numbers, charts, graphs, estimates, projections, and assumptions and any information regarding The Depository Trust Company and the book-entry system as to which Bond Counsel need express no opinion or view, and further, excluding any material that may be treated as included under such captions by cross-reference), are accurate insofar as such statements purport to summarize certain provisions of the Bonds, the Fiscal Agent Agreement, Bond Counsel’s final approving opinion and the Community Facilities District Act; and
(iv) the Community Facilities District has been duly formed, and the Special Taxes have been duly and validly levied in accordance with the provisions of the Community Facilities District Act and, except to the extent prohibited by moratorium, bankruptcy, reorganization, fraudulent conveyance or transfer, insolvency or other similar laws affecting creditors’ rights generally, a lien to secure payment of the Special Taxes has been imposed on taxable property in the Community Facilities District;

7. Letter of Disclosure Counsel. A letter, dated the Closing Date and addressed to the Underwriter and the City, of Best Best & Krieger LLP, acting as Disclosure Counsel, to the effect that no facts have come to the attention of the attorneys in such firm rending legal services in connection with the Bonds that cause them to believe that the Preliminary Official Statement as of its date and as of the date of this Purchase Agreement and the Official Statement, as of its date or as of the Closing Date, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statement made therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any appendices, CUSIP numbers, financial, accounting, statistical, economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, Packet Pg. 2043
13 assumptions or expressions of opinion, any determinations regarding valuation, real estate, and environmental matters, or any basis therefor; information about the Underwriter, underwriting; statements relating to the treatment of the Bonds or the interest, discount or premium related thereto for tax purposes under the laws of any jurisdiction and statements contained in the Official Statement under the caption CONCLUDING INFORMATION – Tax Matters,” any information about the Depository Trust Company or the book-entry system).

8. City Attorney Opinion. An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney, in substantially the form attached hereto as Exhibit B;

9. Closing Certificate of the City. A certificate, dated the Closing Date, and signed by an authorized officer of the City substantially in the form of Exhibit C hereto, together with such additional certifications as Bond Counsel may require;

10. Fiscal Agent Incumbency Certificate. Certified copies of the general resolution of the Fiscal Agent authorizing the execution and delivery of certain documents by certain officers of the Fiscal Agent which resolution authorizes the execution of the Fiscal Agent Agreement and the authentication of the Bonds;

11. Fiscal Agent ’s Certificate. A certificate or certificates of the Fiscal Agent, dated the Closing Date, in form and substance acceptable to the Underwriter and Bond Counsel;

12. Fiscal Agent ’s Counsel Opinion. An opinion or opinions of counsel to the Fiscal Agent dated the Closing Date and addressed to the City and the Underwriter to the effect that the Fiscal Agent has duly authorized the execution and delivery of the Fiscal Agent Agreement and is a valid and binding obligation of the Fiscal Agent enforceable in accordance with its terms;

13. Opinion of Underwriter’s Counsel. An opinion of Kutak Rock LLP, counsel to the Underwriter, dated the date of the Closing, addressed to the Underwriter, in form and substance acceptable to the Underwriter;

14. Special Tax Consultant Certificate. A certificate, dated the Closing Date from Spicer Consulting Group, LLC (the “Special Tax Consultant”) substantially in the form attached as Exhibit D hereto;

15. Specimen Bonds. Copies of the Specimen Bonds;

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

17. Form 8038-G. An Information Return for Tax-Exempt Bond Issues (Internal Revenue Service Form 8038-G), in a form satisfactory to Bond Counsel for filing, executed by a duly authorized officer of the City, together with evidence that such Form 8038-G has been mailed;
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14 18. CDIAC Statements. Copies of filings with the California Debt and Investment Advisory Commission relating to the issuance of the Bonds;

19. Blanket Letter of Representations. A copy of the Blanket Letter of Representations to DTC relating to the Bonds signed by the City;

20. Certificates Regarding Preliminary Official Statement. Prior to and in connection with printing and distribution of the Preliminary Official Statement, (i) an executed certificate of the City deeming the Preliminary Official Statement final within the meaning of the Rule, and (ii) an executed certificate of TH Rancho Palma, LLC, a Delaware limited liability company (the “Property Owner”), substantially in the form under Exhibit F hereto;

21. Property Owner Continuing Disclosure Certificate. An executed copy of the Property Owner Continuing Disclosure Certificate in the form included as an appendix to the Official Statement;

22. Property Owner Bring-Down Certificate. An executed bring-down certificate from the Property Owner, dated as of the Closing Date, substantially in the form set forth in Exhibit G hereto;

23. Property Owner Counsel Opinion. The opinions of counsel to the Property Owner addressed to the City and the Underwriter, dated as of the Closing Date, in form and substance acceptable to the City and the Underwriter;

24. Appraiser Closing Certificate. A certificate in form and substance as set forth in Exhibit H hereto of Kitty Siino & Associates, Inc., Tustin, California, the appraiser of the property within the Community Facilities District, dated as of the Closing Date; and

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

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

4. Representations and Agreements of the Underwriter. The Underwriter represents to and agrees with the City that, as of the date hereof and as of the date of the Closing:

Packet Pg. 2045
15 A. The Underwriter is duly authorized to execute and deliver this Purchase Agreement and to take any action under the Purchase Agreement required to be taken by it.

B. The Underwriter is in compliance with MSRB Rule G-37 with respect to the City and the Community Facilities District, and is not prohibited thereby from acting as underwriter with respect to securities of the City and the Community Facilities District. The Underwriter is in compliance with MSRB Rule G-17 with respect to the City and the Community Facilities District.

C. The Underwriter has, and has had, no financial advisory relationship with the City or the Community Facilities District with respect to the Bonds, and no investment firm controlling, controlled by or under common control with the Underwriter has or has had any such financial advisory relationship, within the meaning of California Government Code Section 53590, or otherwise.

D. The Underwriter has not paid or agreed to pay, nor will it pay or agree to pay, any entity, company, firm or person (including, but not limited to, the City’s financial consultants, or any officer, agent or employee thereof), other than a bona fide officer, agent or employee working for the Underwriter, any compensation, fee, gift or other consideration contingent upon or resulting from the award of or entering into this Purchase Agreement.

E. The Underwriter has reasonably determined that the City’s undertaking in the Continuing Disclosure Certificate to provide continuing disclosure with respect to the Bonds is sufficient to effect compliance with the Rule.

5. Expenses.

A. Whether or not the Underwriter accepts delivery of and pays for the Bonds as set forth herein, it shall be under no obligation to pay, and the City shall pay out of the proceeds of the Bonds or any other legally available funds of the City, all expenses incidental to the performance of the City’s obligations hereunder, including but not limited to the cost of printing and delivering the Bonds to the Underwriter; the costs of printing and shipping the Preliminary Official Statement and the Official Statement; the fees and disbursements of the City, the Community Facilities District, the Fiscal Agent, Bond Counsel, Disclosure Counsel, accountants and any other experts or consultants retained by the City or the Community Facilities District in connection with the issuance and sale of the Bonds; and any other expenses not specifically enumerated in paragraph (B) of this Section incurred in connection with the issuance and sale of the Bonds.

B. Whether or not the Bonds are delivered to the Underwriter as set forth herein, the City shall be under no obligation to pay, and the Underwriter shall be responsible for and pay, CUSIP® and CDIAC fees and expenses to qualify the Bonds for sale under any “blue sky” laws; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds not specifically enumerated in paragraph (A) of this Section, including the fees and disbursements of its counsel.

6. Undertakings of the City. The City agrees: (a) to inform the Underwriter, from time to time, upon the reasonable request of the Underwriter, of the amount then on deposit in the Reserve Fund; and (b) to make available to the Underwriter, upon reasonable request of the Underwriter, at the expense of the City, sufficient copies of its audited financial statements, if any, and any resolutions of the City Council with respect to the Community Facilities District Resolutions, the Packet Pg. 2046
16 Bonds, the Fiscal Agent Agreement, the Official Statement, any amendments or supplements thereto, and other documents relating to the Bonds and pertaining to the City or the Community Facilities District adopted or executed, as the case may be, after the Closing Date, to the extent that such documents are publicly available.

7. Establishment of Issue Price.

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

With respect to Bonds of those maturities as to which at least 10% of the Bonds of the maturity has been sold to the public (defined in paragraph (f) below) at a single price (the “10% test”), based on reporting by the Underwriter to the City on the date hereof and prior to the execution of this Purchase Agreement, which maturities are indicated in Exhibit A attached hereto as having satisfied the 10% test (the “10% Test Maturities”), the City will treat the first price at which 10% of each such maturity of the Bonds was sold to the public as the issue price of that maturity. With respect to Bonds of those maturities as to which the 10% test has not been satisfied, based on reporting by the Underwriter to the City on the date hereof and prior to the execution of this Purchase Agreement, which maturities are indicated in Exhibit A attached hereto as being subject to the “holdthe-offering-price rule,” defined below (the “Hold-the-Offering-Price Maturities”), the Underwriter and the City agree that the rules in paragraph (c) below shall apply. For purposes of this section, for Bonds maturing on the same date but having different interest rates, each separate group of Bonds having a different interest rate is subject to the 10% test or paragraph (c) below, as the case may be, as if such separate group of Bonds was a separate maturity.

The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (each an “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, identified under the columns (X) “10% Test Satisfied,” (Y) “10% Test Not Satisfied,” and (Z) “Subject to Hold-the-Offering-Price-Rule Used,” as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (based on the assumption that the orders aggregating more than 10% of a maturity will be confirmed by the close of the business day immediately following the date of this Purchase Agreement) (see clause (X) above, which will be checked), or (ii) the 10% test has not been satisfied and for which the City and the Underwriter agree that the restrictions set forth in the next sentence shall apply (see clauses (Y) and (Z) above, both of which will be checked) , which will allow the City to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:

1. the close of the fifth (5th) business day after the sale date; or Packet Pg. 2047
17 2. the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

The Underwriter shall promptly advise the City, after the close of the fifth (5th) business day, whether it has sold at least 10% of each Hold-the-Offering-Price maturity to the public at a price that is no higher than the initial offering price to the public of that maturity, if such sale has occurred prior to the close of the fifth (5th) business day after the sale date.

The Underwriter confirms that:
(i) any selling group agreement and any retail or other third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such retail or other third-party distribution agreement, as applicable:
(A) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or brokerdealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a retail or other third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such retail or other third-party distribution agreement to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.
(e) The City acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a retail or other third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the retail or other third-party distribution agreement and the related pricing wires.

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

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

8. Notices. Any notice or other communication to be given to the City pursuant to this Bond Purchase Agreement may be given by delivering the same in writing to such entity, at the addresses set forth on the cover page hereof. Any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Hilltop Securities Inc., 2533 South Coast Highway 101, Suite 250, Cardiff by the Sea, California 92007, Attention: Public Finance. All such notices, requests or other communications may be made by telephone, personal or courier delivery, registered or certified mail, facsimile transmission or electronic communication, provided that delivery by facsimile transmission or electronic communication must be confirmed by the sender. The City and the Underwriter may, by notice given as aforesaid, specify a different address for any such notices, requests or other communications.

9. Parties In Interest. This Purchase Agreement is made solely for the benefit of the City and the Underwriter (including any successors or assignees of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. The City and the Underwriter may not assign this Agreement. The term “successor” shall not include any holder of any Bonds merely by virtue of such holding.

10. Survival of Representations and Warranties. The representations and warranties of the City under this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing and regardless of any investigations made by or on Packet Pg. 2049
19 behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the City or the Community Facilities District and regardless of delivery of and payment for the Bonds.

11. Severability. If any provision of this Purchase Agreement is, or is held or deemed to be, invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, because it conflicts with any provisions of any constitution, statute, rule of public policy or for any other reason, such circumstances shall not make the provision in question invalid, inoperative or unenforceable in any other case or circumstance, or make any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever.

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

13. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understanding between the parties hereto in relation to the sale of the Bonds by the City.

14. Governing Law. This Purchase Agreement shall be governed by the laws of the State applicable to contracts made and performed in the State. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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20 15. Effective Date. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and enforceable as of the time of such acceptance.

Very truly yours,
HILLTOP SECURITIES INC.

By:

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

CITY OF SAN BERNARDINO, for and on
behalf of COMMUNITY FACILITIES
DISTRICT NO. 2020-1 (Rancho Palma) of
the City of San Bernardino
By:

Authorized Representative
Time of Execution: _____________ p.m. California time
[EXECUTION PAGE OF BOND PURCHASE AGREEMENT – COMMUNITY FACILITIES DISTRICT NO. 2020-1 (RANCHO PALMA) OF THE CITY OF SAN BERNARDINO 2022 SPECIAL TAX BONDS]
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A-1

EXHIBIT A

MATURITY SCHEDULE
____________
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-TheOffering-Price
Rule (marked
if used)
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
20__(T)
20__(T)
20__(T)
_________________
(T) Term Bond.
(C) Priced to optional call at [par] on September 1, 20__. *At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement.

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EXHIBIT B

FORM OF CITY ATTORNEY OPINION
[Closing Date]
Hilltop Securities Inc.

Cardiff by the Sea, CA
City of San Bernardino
San Bernardino, CA
Re: Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds
Ladies and Gentlemen:

I serve as City Attorney to the City of San Bernardino (the “City”). This opinion is addressed to you in connection with the issuance by the City of its Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds (the “Bonds”) in the principal amount of $______. The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of August 1, 2022 (the “Fiscal Agent Agreement”), between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent ”) and sold pursuant to the Bond Purchase Agreement dated [BPA Date] (the “Purchase Agreement”), between the City and Hilltop Securities Inc., as underwriter (the “Underwriter”). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Fiscal Agent Agreement or, if not defined in the Fiscal Agent Agreement, in the Purchase Agreement.

In rendering this opinion, I have made the assumption that all documents submitted to or reviewed by me are accurate and complete and, if not originals, are true and correct copies of originals. As to questions of fact material to this opinion letter, I have relied upon representations and information supplied to me by the City and its officers, employees, and representatives and upon representations and certificates of various public officials. In the course of my representation, nothing has come to my attention that caused me to believe that any of the factual representations upon which I have relied are not true, but I have made no other factual investigations.

When used herein, the phrase “to my current actual knowledge” means that, during the course of my representation of the City, no information that would give me current actual knowledge of the inaccuracy of such statements has come to my attention. However, I have not undertaken any independent investigation or inquiry to determine the accuracy of such statements other than inquiries of officers of the City. Any limited inquiry undertaken by me during the preparation of this opinion letter should not be regarded as such an investigation. No inference as to my knowledge of any matters bearing on the accuracy of any such statement should be drawn from the fact of my representation of the City, either past or present.

For the purpose of rendering the opinions set forth below, I have assumed that the Bonds have been issued in compliance with the provisions of the Mello-Roos Community Facilities Act of 1982 of the State of California (being §§53311 et seq., of the California Government Code), that the Bonds have been issued in accordance with the requirements of the Fiscal Agent Agreement, and that Packet Pg. 2053
B-2
such issuance does not result in the violation of any constitutional, statutory, or other limitation relating to the amount of indebtedness that may be incurred by the City.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, I am of the opinion that:

1. The City is a public body, corporate and politic, duly organized and existing under and by virtue of the laws of the State of California.

2. The meetings of the City relating to the proceedings taken in connection with the issuance of the Bonds were duly called and held and the Resolution was duly adopted or enacted and is in full force and effect and has not been amended, modified or supplemented in any way.

3. The Purchase Agreement, the Fiscal Agent Agreement, the Continuing Disclosure Certificate and the Bonds have been duly authorized and executed by the City and, assuming the due authorization, execution, and delivery of the Purchase Agreement, Continuing Disclosure Certificate, and the Fiscal Agent Agreement by and their enforceability against the other parties thereto, the Purchase Agreement, Continuing Disclosure Certificate, the Fiscal Agent Agreement and the Bonds are legal, valid, binding agreements of the City for the District enforceable against the City in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium, or other laws relating to or affecting the enforcement of creditors’ rights generally; by the application of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith, and fair dealing, regardless of whether considered in a proceeding in equity or at law; the possible unavailability of specific performance or injunctive relief; and by the limitations imposed on actions against governmental entities in the State of California.

4. The adoption of the Resolution and the execution and delivery by the City of the Purchase Agreement, the Fiscal Agent Agreement, Continuing Disclosure Certificate, and the Bonds and compliance with the provisions thereof by the City do not violate any applicable law, regulation or, to the best of my current actual knowledge, judgment, order or decree of any court or any public or governmental agency or authority of the State of California or the federal government of the United States of America and, to the best of my current actual knowledge, do not result in the breach of any of the provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the City is a party or by which it is otherwise subject.

5. To my current actual knowledge, the City is not violating any applicable law or administrative regulation of the State of California or the United States, is not violating or in breach of any applicable judgment or decree, and is not in breach of or default under any loan agreement, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, which violation, breach, or default would materially adversely affect the transactions contemplated by the Purchase Agreement, the Fiscal Agent Agreement, or the Bonds.

The opinions set forth above are further qualified as follows:
(a) My opinions are limited to the matters expressly set forth herein and no opinion is to be implied or may be inferred beyond the matters expressly so stated; Packet Pg. 2054
B-3
(b) I am licensed to practice law in the State of California; accordingly, the foregoing opinions only apply insofar as the laws of the State of California and the United States may be concerned, and I express no opinion with respect to the laws of any other jurisdiction; (c) I express no opinion as to the enforceability under certain circumstances of contractual provisions respecting various summary remedies without notice or opportunity for hearing or correction, especially if their operation would work a substantial forfeiture or impose a substantial penalty upon the burdened party;
(d) I express no opinion as to the effect or availability of any specific remedy provided for in the Fiscal Agent Agreement under particular circumstances, except that I believe such remedies are, in general, sufficient for the practical realization of the rights intended thereby; (e) I express no opinion as to the enforceability of any indemnification, contribution, choice of law, choice of forum, or waiver provisions contained in the Fiscal Agent Agreement or the Purchase Agreement;
(f) I express no opinion concerning the application to or compliance with federal securities law, including but not limited to the Securities Act of 1933, as amended, and the Trust Indenture Act of 1939, as amended, any state securities or “Blue Sky” law, or any federal, state or local tax law, of the Bonds or the issuance and sale thereof; (g) I disclaim any obligation to update this opinion for events occurring after the date hereof or any new facts or information that may become known to me after the date of this opinion; I hereby confirm to you that, to my current actual knowledge, there are no actions, suits, proceedings, inquiries or investigations, at law or in equity, before or by any court, governmental agency, public board or body that are pending and have been served, or overtly threatened in writing against the City, contesting the titles of its officers to their respective offices, or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Resolution, or the Fiscal Agent Agreement, or the collection or application of the Special Taxes and the interest thereon to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Resolution, the Fiscal Agent Agreement, the Continuing Disclosure Certificate, or the powers of the City or its authority with respect to the Bonds, the Resolutions, the Fiscal Agent Agreement, the Continuing Disclosure Certificate, the Purchase Agreement or any action on the part of the City contemplated by any of said documents.

As counsel to the City in this matter, I have not rendered financial advice to the City and do not represent, by this opinion or otherwise, that I have reviewed or made any assessment about, nor do I offer any opinion about, the financial condition of the City, past, present or future, including any financial information contained in the documents; nor have I reviewed the financial feasibility of this transaction or those projects that the proceeds of the Bonds will fund or any of their components, and, accordingly, I offer no opinion whatsoever regarding such financial feasibility.

This letter is furnished by me as City Attorney. No attorney-client relationship has existed or exists between me and the Underwriter in connection with the Bonds or by virtue of this letter. This letter is delivered to the Underwriter solely for their benefit in connection with the transactions covered by the first paragraph of this letter and may not be relied upon or used by, circulated, quoted or referred to, nor may copies hereof be delivered to, any other person or for any other purpose Packet Pg. 2055
B-4
without my prior written approval; provided, however, that copies of this opinion may be included in the closing transcripts for the transactions covered by the first paragraph of this letter. This letter is not intended to be relied upon by owners of Bonds.

Very truly yours,
Packet Pg. 2056
C-1

EXHIBIT C
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BONDS

CLOSING CERTIFICATE OF THE CITY
I, the undersigned, hereby certify that I am the ________ of the City of San Bernardino (the “City”), the City Council of the City (the “City Council”) of which is the legislative body for Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino (the “Community Facilities District”), a community facilities district duly organized and existing under the laws of the State of California (the “State”) and I am authorized to execute this Certificate on behalf of the City in connection with the issuance of the above-captioned bonds (the “Bonds”). All capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Bond Purchase Agreement (the “Bond Purchase Agreement”), dated [BPA Date], by and between the City and Hilltop Securities Inc.

I further certify on behalf of the City that:
(i) The representations, warranties and covenants of the City contained in the Bond Purchase Agreement are true and correct in all material respects on and as of the date hereof as if made on the date hereof;
(ii) The Community Facilities District Resolutions, Formation Documents and the City Documents are in full force and effect and have not been amended, modified or supplemented; (iii) Except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation at law or in equity, or by any court or regulatory agency, public board or body pending, with respect to which the City or the Community Facilities District has been served with process, or to the knowledge of the City, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the City or the Community Facilities District, or the titles of their officers to their respective offices, (b) enjoin or restrain the issuance, sale and delivery of the Bonds, the levy or collection of the Special Taxes or any other moneys or property pledged or to be pledged under the Fiscal Agent Agreement, or the pledge thereof, (c) in any way question or affect any of the rights, powers, duties or obligations of the City or the Community Facilities District with respect to the Special Taxes or moneys and assets pledged or to be pledged to pay the principal of, premium, if any, or interest on the Bonds, (d) in any way question or affect any authority for the issuance of the Bonds, or the validity or enforceability of the Bonds or the proceedings relating to the issuance of the Bonds, or (e) in any way question or affect the Bond Purchase Agreement or the transactions contemplated thereby, the Official Statement or the City Documents;
(iv) The information in the Preliminary Official Statement (other than statements pertaining to the book-entry system, as to which no view is expressed) as of its date was and as of the date hereof is, and in the Official Statement (other than statements pertaining to the book-entry system, as to which no view is expressed) as of its date was and as of the date hereof is, true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
Packet Pg. 2057
C-2
(v) The City has complied with all agreements and covenants, and satisfied all conditions, on its part to be complied with or satisfied under the Bond Purchase Agreement and under the Community Facilities District Resolutions, the Formation Documents, the City Documents and the Official Statement at or prior to the date hereof; (vi) No event has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the date hereof any statement or information contained in the Preliminary Official Statement or the Official Statement (other than statements pertaining to the book-entry system as to which no view is expressed) or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect; and
(vii) The use of and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offer and sale of the Bonds is hereby ratified.

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth below.

Dated: [Closing Date] CITY OF SAN BERNARDINO
By:

Its:

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D-1

EXHIBIT D
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BONDS

CERTIFICATE OF SPECIAL TAX CONSULTANT
The undersigned hereby states and certifies:

1. That the undersigned is an authorized officer of Spicer Consulting Group, LLC (the “Special Tax Consultant”) and as such is familiar with the facts herein certified and is authorized and qualified to certify the same.

2. That the Special Tax Consultant has reviewed and is familiar with the Rate and Method of Apportionment of Special Tax (the “Rate and Method”) as set forth in Appendix A to the Official Statement dated [BPA Date], for Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino (the “Community Facilities District”) 2022 Special Tax Bonds.

Capitalized terms not otherwise defined herein shall be defined as provided in the Rate and Method or the Fiscal Agent Agreement, dated as of August 1, 2022, between the City of San Bernardino (the “City”) and U.S. Bank Trust Company, National Association, as Fiscal Agent .

3. That the Special Taxes, if levied in accordance with the Rate and Method and collected will annually yield sufficient revenue to make timely payments of the Annual Debt Service on the Bonds, and annual Administrative Expenses related to the levy and collection of the Special Taxes and the expenses of the Fiscal Agent for the Bonds (no representation is made as to the actual amounts that will be collected in future years).

4. That the Special Tax, if collected in the maximum amounts permitted pursuant to the Rate and Method on the Closing Date, after payment of annual Administrative Expenses related to the levy and collection of the Special Taxes and the expenses of the Fiscal Agent for the Bonds, would annually generate at least 110% of the Annual Debt Service payable with respect to the Bonds payable from such Special Taxes assuming the debt service schedule shown in the Official Statement is true and correct.

5. That all information supplied by the Special Tax Consultant for use in the Official Statement is true and correct, as of the date of the Official Statement and as of the date hereof.

6. That, as of the dates of the Preliminary Official Statement and the Official Statement and as of the date hereof, the information contained in those portions of the Official Statement entitled “THE DISTRICT” and “APPENDIX A,” including the tables sourced to the Special Tax Consultant, and the other data provided by the Special Tax Consultant and included in the Official Statement, do not, to our knowledge, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.

7. The City, Hilltop Securities Inc., Best Best & Krieger LLP and all the professionals involved in the financing are entitled to rely on this Certificate.

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Dated: [Closing Date] SPICER CONSULTING GROUP, LLC
By:

Authorized Representative
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EXHIBIT E
$________
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BONDS

FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Hilltop Securities Inc. (“Hilltop”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”).

1. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.

2. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) Issuer means City of San Bernardino.
(c) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(d) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.

The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly.

The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Hilltop’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder.

The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in a Certificate as to Arbitrage and Tax Compliance Procedures for the Bonds and with respect to compliance with the federal income tax rules affecting the Bonds, and by Best Best & Krieger LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.

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Dated: [Closing Date] HILLTOP SECURITIES INC.

By:

Title:
-Signature PageIssue Price Certificate
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SCHEDULE A

SALE PRICES OF THE GENERAL RULE MATURITIES
(To be attached)
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EXHIBIT F
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BONDS

CERTIFICATE OF

TH RANCHO PALMA, LLC
[POS Date]
City of San Bernardino
Community Facilities District No. 2020-1
(Rancho Palma) of the City of San Bernardino
290 North “D” Street
San Bernardino, CA 92401
Hilltop Securities, Inc.
2533 South Coast Highway 101, Suite 250
Cardiff, CA 92007
Reference is made to the Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino, 2022 Special Tax Bonds (the “Bonds”) and to the Bond Purchase Agreement (the “Bond Purchase Agreement”) to be entered into by and between the City of San Bernardino (the “City”), for and on behalf of Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino (the “Community Facilities District”), and Hilltop Securities, Inc., as underwriter (the “Underwriter”). This Certificate of TH Rancho Palma, LLC (the “Certificate”) is delivered pursuant to and in satisfaction of Section 3(E)(20) of the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Bond Purchase Agreement.

As used in this Certificate, the phrase “Actual Knowledge of the Undersigned” means, as of the date of this Certificate, the actual knowledge (as opposed to constructive) that the undersigned currently has or has obtained through (i) interviews with such current officers and responsible employees of the Property Owner as the undersigned has reasonably determined are likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in this Certificate, and/or (ii) review of documents reasonably available to the undersigned and which the undersigned reasonably deemed necessary for the undersigned to obtain knowledge of the matters set forth in this Certificate. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Property Owner’s current business and operations. The undersigned has not contacted individuals who are no longer employed by the Property Owner.

As used in this Certificate, the term “Relevant Entity” means, with respect to the Property Owner, any other Person (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Property Owner, and (ii) for whom information, including financial information or operating data, concerning such Person is material to an evaluation of the Bonds (i.e. such person or entity’s assets or funds Packet Pg. 2064
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would materially affect the Property Owner’s ability to develop the Property (defined below) as described in the Preliminary Official Statement or to pay its Special Taxes on the Property to the extent the responsibility of the Property Owner) prior to delinquency). As used in this Certificate, the term “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof. For purposes hereof, the term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

As used in this Certificate, the term “Property” means the real property currently owned by the Property Owner within Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino (the “Community Facilities District”), as further described in the Preliminary Official Statement.

The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of TH Rancho Palma, LLC, a Delaware limited liability company (the “Property Owner”), and the undersigned, on behalf of the Property Owner, further certifies as follows:
(1) The Property Owner is duly organized and validly existing under the laws of the State of Delaware, is authorized to transact business in and is in good standing under the laws of the State of California, and has or will have prior to the Closing, all requisite limited liability company right, power and authority:
(i) to execute and deliver this Certificate;
(ii) to own and develop the Property, as described in the Preliminary Official Statement;
(iii) to execute and deliver the Property Owner Continuing Disclosure Certificate at Closing;
(iv) to perform its obligations under the Property Owner Continuing Disclosure Certificate; and
(v) to carry on its business as described in the Preliminary Official Statement. (2) The Property Owner agrees to execute at Closing the Property Owner Continuing Disclosure Certificate substantially in the form attached as an appendix to the Preliminary Official Statement, with such additional changes as may be agreed upon by the Underwriter, Bond Counsel and the Property Owner.
(3) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the Property Owner is not aware of any material failures by it or any Relevant Entity to comply in all material respects with any previous continuing disclosure undertaking in a written certificate or agreement executed by it or its Relevant Entities to provide periodic continuing disclosure reports or notices of listed events with Packet Pg. 2065
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respect to community facilities districts or assessment districts in California within the past five years..
(4) To the Actual Knowledge of the Undersigned, (a) the Property Owner and its Relevant Entities are not in breach of or in default under any applicable judgment or decree or any loan agreement, line of credit, option agreement, development agreement, indenture, fiscal agent agreement, bond or note (collectively, the “Material Agreements”) to which the Property Owner or its Relevant Entities are a party or otherwise subject, which breach or default could reasonably be expected to materially and adversely affect the ability of the Property Owner:
(i) to own and develop the Property, as described in the Preliminary Official Statement;
(ii) to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency;
(iii) to carry on its business as described in the Preliminary Official Statement; or
(iv) to perform its obligations under the Property Owner Continuing Disclosure Certificate.
(5) Except as described in the Preliminary Official Statement, the Property Owner has no loans outstanding and unpaid and no lines of credit that are secured by the Property.
(6) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, neither the Property Owner nor any of its Relevant Entities is currently in default in, or, in the last five (5) years, has ever defaulted to any material extent in, the payment of special taxes or assessments in connection with the Community Facilities District or any other community facilities districts or assessment districts in California that resulted in a foreclosure action being commenced in a court of law against the delinquent Property Owner or Relevant Entity.
(7) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, there is no litigation, inquiry, investigation or administrative proceeding, by or before any court, regulatory agency, public board or body, pending against the Property Owner (with service of process to the Property Owner having been accomplished), or to the Actual Knowledge of the Undersigned, overtly threatened in writing against the Property Owner, or to the Actual Knowledge of the Undersigned, pending against any Relevant Entity (with service of process to such Relevant Entity having been accomplished), or to the Actual Knowledge of the Undersigned, overtly threatened in writing against any Relevant Entity, in each case which, if successful, could reasonably be expected to:
(i) materially and adversely affect the ability of the Property Owner to own and develop the Property, as described in the Preliminary Official Statement; Packet Pg. 2066
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(ii) materially and adversely affect the ability of the Property Owner to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency;
(iii) materially and adversely affect the ability of the Property Owner to carry on its business as described in the Preliminary Official Statement; (iv) materially adversely affect the ability of the Property Owner to perform its obligations under the Property Owner Continuing Disclosure Certificate; (v) challenge, question the validity or enforceability of, or restrain or enjoin the performance of, the Special Taxes, the Bonds, the Resolution, the Fiscal Agent Agreement, the Property Owner Continuing Disclosure Certificate or the Bond Purchase Agreement; or
(vi) restrain or enjoin collection of Special Taxes or other sums to be pledged to pay the principal of and interest on the Bonds.
(8) Except as disclosed in the Preliminary Official Statement or in this Certificate:
(i) the Property Owner and, to the Actual Knowledge of the Undersigned, its Relevant Entities, are able to pay their respective bills as they become due; (ii) neither the Property Owner nor, to the Actual Knowledge of the Undersigned, any of its Relevant Entities, has filed for bankruptcy or been declared bankrupt in the last ten (10) years; and
(iii) to the Actual Knowledge of the Undersigned, there are no proceedings pending against the Property Owner (with service of process to the Property Owner having been accomplished) or overtly threatened in writing in which the Property Owner or any of its Relevant Entities may be adjudicated as bankrupt, become the debtor in a bankruptcy proceeding, be discharged from any or all of its respective debts or obligations, be granted an extension of time to pay its respective debts or obligations, or be granted a reorganization or readjustment of its respective debts or obligations.
(9) As of the date of the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the information contained therein solely with respect to the Property Owner, its Relevant Entities, the proposed development of the Property, ownership of the Property, the Property Owner’s development plan, the Property Owner’s financing plan, the RAH Property Owner’s lenders (if any), and contractual arrangements of the Property Owner or any Relevant Entities (including, if material to the Property Owner’s development plan or the Property Owner’s financing plan, loans of the Property Owner or such Relevant Entities) as set forth under the sections of the Preliminary Official Statement captioned “THE DISTRICT—General Description of the District” and “—Trumark” and “CONTINUING DISCLOSURE—Developer Continuing Disclosure” (but in all ases under all captions excluding therefrom (i) information regarding the Appraisal Report, market value ratio and annual special tax rates and ratios, and (ii) information which is identified as having been Packet Pg. 2067
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provided by a source other than the Property Owner) is true and correct in all material respects, and did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(10) Except as disclosed in the Preliminary Official Statement, the Property Owner has not submitted an application for, nor received actual notice of:
(i) the formation or authorization of any other assessment district or community facilities district that would include any portion of the Property, or (ii) the authorization or issuance of any debt secured by an assessment or another special tax to be levied on any portion of the Property, other than the Special Tax.
(11) Except as set forth in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, there are no claims, disputes, lawsuits, actions or contingent liabilities of or against the Property Owner or its Relevant Entities, or among, by or between the Property Owner and any contractors working on the development of the Property, which could reasonably be expected to materially and adversely affect:
(i) the ability of the Property Owner to own and develop the Property, as described in the Preliminary Official Statement;
(ii) the ability of the Property Owner to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency; (iii) the ability of the Property Owner to carry on its business as described in the Preliminary Official Statement; or
(iv) the ability of the Property Owner to perform its obligations under the Property Owner Continuing Disclosure Certificate.
(12) The Property Owner covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Property Owner will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, that in any way:
(i) seeks to challenge or overturn the formation of the Community Facilities District;
(ii) seeks to challenge the adoption of the ordinance levying Special Taxes within the Community Facilities District;
(iii) seeks to invalidate the Community Facilities District or any of the Bonds or any refunding obligations relating thereto; or
(iv) seeks to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating thereto.

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The foregoing covenant shall not prevent the Property Owner in any way from bringing any other action, suit, proceeding, inquiry or investigation at law or in equity relating to the following:
(a) a claim that the Special Tax has not been levied in accordance with the Rate and Method;
(b) the application or use of the Special Taxes levied and collected; or (c) the enforcement of the obligations of the City or the Community Facilities District under the Fiscal Agent Agreement or any agreements among the Property Owner and it Relevant Entities, the City and/or the Community Facilities District or to which the Property Owner or its Relevant Entities is a party or beneficiary. (13) The Property Owner has received a copy of the Rate and Method containing the prepayment formula. The Property Owner acknowledges that any prepayment of the Special Taxes may only be made in accordance with the Rate and Method. (14) The Property Owner intends to comply with the provision of the Mello-Roos Community Facilities Act of 1982, as amended, relating to the Notice of Special Tax described in California Government Code Section 53341.5 in connection with the sale of the Property.
(15) Based upon its current development plans, including, without limitation, its current budget and subject to economic conditions and risks generally inherent in the development of real property, including, but not limited to, the risks described in the Preliminary Official Statement under the sections “RISK FACTORS” and “THE DISTRICT,” the Property Owner anticipates that it will have sufficient funds to develop and sell the Property as described in the Preliminary Official Statement and pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency.

However, no assurance can be given that sources of financing available to the Property Owner will be sufficient to complete the property development and home construction as currently anticipated and as described in the Preliminary Official Statement. While the Property Owner 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 the Property Owner nor any of its Relevant Entities has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of the Property Owner to provide internal financing in the past, the Property Owner 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 the Property Owner’s planned development in the Community Facilities District and other financing by the Property Owner is not put into place, there could be a shortfall in the funds required to complete the proposed development by the Property Owner and portions of the Property may not be developed. (16) The Property Owner consents to the issuance of the Bonds. The Property Owner acknowledges and agrees that the proceeds of such Bonds will be used for the acquisition and construction of the improvements described in the Preliminary Official Statement. The Property Owner acknowledges that the costs to acquire and construct such improvements are estimates, and that any increase in costs in excess of the estimated costs Packet Pg. 2069
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relating to improvements will reduce the improvements which may be financed by the City, and neither the City, nor the Community Facilities District has any obligation to provide moneys to pay for any such costs.
(17) If between the date of this Certificate and the Closing Date, any event relating to or affecting such Property Owner, its Relevant Entities, or the ownership, development or sale of the Property shall occur of which the undersigned has actual knowledge and which the undersigned believes would cause the information under the sections of the Preliminary Official Statement indicated in Paragraph 9 hereof (and subject to the limitations and exclusions contained in Section 9 of this Certificate) to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, Property Owner shall notify the City and the Underwriter and if, in the opinion of counsel to the City or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Preliminary Official Statement, the Property Owner shall reasonably cooperate with the City in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the City and to the Underwriter.
(18) the Property Owner agrees to deliver a Bring-Down Certificate, dated the Closing Date, in substantially the form attached as Appendix G to the Bond Purchase Agreement. If any event related to or affecting the Property Owner, its Relevant Entities or the ownership, development or sale of the Property occurs, as a result of which it is necessary to modify the form of Bring-Down Certificate, the Property Owner agrees to deliver at the time of issuance of the Bonds a new form of Bring-Down Certificate revised to reflect such event.
(19) The Property Owner acknowledges and agrees that:
(i) in connection with the purchase and sale of the Bonds under the Bond Purchase Agreement, and with the discussions, undertakings and procedures leading up to the consummation of the purchase and sale of the Bonds under the Bond Purchase Agreement, the Underwriter is and has been acting solely as principal and is not acting as the agent or fiduciary of the Property Owner; (ii) the Underwriter has not assumed a fiduciary responsibility in favor of the Property Owner with respect to (a) the offering of the Bonds contemplated hereby or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Property Owner on other matters), or (b) any other obligation to the Property Owner with respect to the offering contemplated by the Bond Purchase Agreement; and (iii) the Property Owner has consulted its own legal, financial and other advisors to the extent it has deemed appropriate in connection with the offering contemplated by the Bond Purchase Agreement.
(20) On behalf of the Property Owner, I have reviewed the contents of this Certificate and consulted with counsel regarding the meaning of its contents. The Property Owner acknowledges and understands that a variety of state and federal laws, including but Packet Pg. 2070
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not limited to the Securities Act of 1933, as amended, and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, as amended, may apply to the Property Owner, and that under some circumstances certification as to the matters set forth in this Certificate, without additional disclosures or other action, may not fully discharge all duties and obligations of the Property Owner under such laws.
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The undersigned has executed this Certificate solely in his or her capacity as an authorized officer or representative of Property Owner and he or she will have no personal liability arising from or relating to this Certificate. Any liability arising from or relating to this Certificate may only be asserted against the Property Owner.

TH RANCHO PALMA, LLC,
a Delaware limited liability company
By:___________________________________________
Richard P. Douglas,
Authorized Agent
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EXHIBIT G
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BONDS

BRING-DOWN CERTIFICATE OF

TH RANCHO PALMA, LLC
[Closing Date]
City of San Bernardino
Community Facilities District No. 2020-1
(Rancho Palma) of the City of San Bernardino
290 North “D” Street
San Bernardino, CA 92401
Hilltop Securities, Inc.
2533 South Coast Highway 101, Suite 250
Cardiff, CA 92007
Reference is made to the Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino, 2022 Special Tax Bonds (the “Bonds”) and to the Bond Purchase Agreement, dated [BPA Date] (the “Bond Purchase Agreement”), entered in connection therewith.

This Bring-Down Certificate of TH Rancho Palma, LLC (the “Bring-Down Certificate”) is delivered by TH Rancho Palma, LLC, a Delaware limited liability company (the “Property Owner”) pursuant to Section 3(E)(22) of the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Certificate of TH Rancho Palma, LLC (the “Certificate”), dated [POS Date] delivered by the Property Owner in connection with the distribution of the Preliminary Official Statement relating to the Bonds.

The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of the Property Owner, and the undersigned, on behalf of the Property Owner, further certifies as follows:
(1) The undersigned has received the final Official Statement relating to the Bonds, dated [OS Date] (the “Final Official Statement”). Each statement made in the Certificate is affirmed and restated as if made on the date hereof; except that all references therein to the Preliminary Official Statement shall be deemed to be references to the Final Official Statement. (2) To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Official Statement that has, in any material way, adversely affected the statements and information described in Paragraph 9 of the Certificate (and subject to the limitations and exclusions contained in Paragraph 9 of the Certificate) relating to the Property Owner and its Relevant Entities, the Property, the Property Owner’s development and financing plans, and the Property Owner’s contractual arrangements (but excluding any information cited as coming from a source other than the Property Owner), which should be disclosed in the Final Official Statement for Packet Pg. 2073
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the purposes for which it is to be used in order to make such statements and information contained in the Final Official Statement not misleading in any material respect. (3) For a period of 25 days after the Closing Date, if the undersigned has actual knowledge of any event relating to or affecting the Property Owner, its Relevant Entities, or the ownership development or sale of the Property which could cause the information under the captions of the Final Official Statement indicated in Paragraph 9 of the Certificate (and subject to the limitations and exclusions contained in Paragraph 9 of the Certificate) to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Property Owner shall notify the City and the Underwriter and if, in the opinion of counsel to the City or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Final Official Statement, the Property Owner shall reasonably cooperate with the City in the preparation of an amendment or supplement to the Final Official Statement in form and substance satisfactory to counsel to the City and to the Underwriter.
(4) The Property Owner has duly executed and delivered the Property Owner Continuing Disclosure Certificate, and the Property Owner Continuing Disclosure Certificate constitutes the legal, valid and binding obligation of the Property Owner, enforceable against the Property Owner in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance, and other similar laws relating to or affecting the rights of creditors and certain equitable, legal, or statutory principles affecting the enforcement of contractual rights generally, regardless of whether such enforcement is considered in a proceeding in equity or at law.
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The undersigned has executed this Bring-Down Certificate solely in his or her capacity as an authorized officer or representative of Property Owner and he or she will have no personal liability arising from or relating to this Bring-Down Certificate. Any liability arising from or relating to this Bring-Down Certificate may only be asserted against the Property Owner.

TH RANCHO PALMA, LLC,
a Delaware limited liability company
By:___________________________________________
Richard P. Douglas,
Authorized Agent
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EXHIBIT H
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BONDS

CERTIFICATE OF APPRAISER
The undersigned hereby states and certifies:

1. That he or she is an authorized principal of Kitty Siino &Associates, Inc., Tustin, California (the “Appraiser”) and as such is familiar with the facts herein certified and is authorized and qualified to certify the same.

2. That the Appraiser has prepared an appraisal report dated _______, 2022, with a date of value as of May 1, 2022 (the “Appraisal Report”), on behalf the Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino (the “Community Facilities District”) and in connection with the Official Statement dated [BPA Date] (“Official Statement”), concerning Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds (the “Bonds”).

3. That the Appraiser hereby consents to the reproduction and use of the Appraisal Report appended to the Preliminary Official Statement and the Official Statement. The Appraiser also consents to the references to the Appraiser and the Appraisal made in the Preliminary Official Statement and the Official Statement.

4. In the opinion of the Appraiser the assumptions made in the Appraisal Report are reasonable.

5. That the Official Statement has been reviewed on behalf of the Appraiser and to the best knowledge of the Appraiser the statements concerning the Appraisal Report and the value of the property contained under the captions “THE DISTRICT – Appraisal Report,” and “APPENDIX B – APPRAISAL REPORT” are true, correct and complete in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

6. Each of the parcels appraised by the Appraiser is encompassed within the Community Facilities District as set forth in the boundary map of the Community Facilities District and the Appraisal Report fairly and accurately described, as of the stated date of value, the market values of the properties in the Community Facilities District that are subject to the special taxes.

7. That, as of the date of the Official Statement and as of the date hereof, the Appraisal Report appended to the Official Statement, to the best of my knowledge and belief, and subject to all of the Limiting Conditions and Major Assumptions set forth in the Appraisal Report, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading, and no events or occurrences have been ascertained by us or have come to our attention that would materially and adversely affect the conclusions as to the market value of the Packet Pg. 2076
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appraised property stated in the Appraisal Report. However, we have not performed any procedures since the date of value of the Appraisal Report to obtain knowledge of such events or occurrences nor are we obligated to do so in the future.

8. The Appraisal Report complies with the Appraisal Standards for Land-Secured Financings issued by the California Debt and Investment Advisory Commission dated July, 2004.

The City and Hilltop Securities Inc., as underwriter, are entitled to rely on the Certificate.

Dated: [Closing Date]
KITTY SIINO &ASSOCIATES, INC.

By:

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PRELIMINARY OFFICIAL STATEMENT DATED ________, 2022

NEW ISSUE - BOOK-ENTRY ONLY NO RATING
In the opinion of Best Best & Krieger, LLP, Riverside, California (“Bond Counsel”), subject to certain qualifications described in this Official Statement, under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income tax. See “LEGAL MATTERS — Tax Exemption.” $3,480,000
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BONDS
Dated: Date of Delivery Due: September 1, as shown on the inside front cover page The Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds (the “Bonds”) are being issued and delivered to (i) finance the construction and acquisition of public facilities needed with respect to the development within Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino (“City”), County of San Bernardino (“County”), State of California (the “District”), (ii) fund a reserve fund securing the Bonds, and (iii) pay costs of issuance of the Bonds. The District has been formed by the City and is located in the City and County.

The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California), and pursuant to a Fiscal Agent Agreement, dated as of __________ 1, 2022 (the “Fiscal Agent Agreement”), by and between the City, for and on behalf of the District, and U.S. Bank Trust Company, National Association as fiscal agent (the “Fiscal Agent”). The Bonds are special obligations of the City and the District and are payable solely from revenues derived from certain annual Special Taxes (as defined in this Official Statement) to be levied on and collected from the owners of certain taxable land within the District and from certain other funds pledged under the Fiscal Agent Agreement, all as further described in this Official Statement. The Special Taxes are to be levied according to the rate and method of apportionment for the District approved by the City Council of the City and the qualified electors within the District. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The City Council of the City is the legislative body of the District.

The Bonds are issuable in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Individual purchases may be made in integral multiples of $5,000 and will be in book-entry form only. Purchasers of Bonds will not receive certificates representing their beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable except for transfer to another nominee of DTC or as otherwise described in this Official Statement. Interest on the Bonds will be payable semiannually on each March 1 and September 1, commencing March 1, 2023. Principal of and interest on the Bonds will be paid by the Fiscal Agent to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the Bonds. See “THE BONDS — General Provisions,” “— Book-Entry Only System” and APPENDIX G — “INFORMATION CONCERNING DTC.” Neither the faith and credit nor the taxing power of the City, the County, the State of California or any political subdivision of such entities is pledged to the payment of the Bonds. Except for the Special Tax Revenues (as defined herein), no other taxes are pledged to the payment of the Bonds. The Bonds are special obligations of the City and the District payable solely from Special Tax Revenues and certain other amounts held under the Fiscal Agent Agreement as more fully described in this Official Statement.

The Bonds are subject to optional redemption, mandatory redemption prior to maturity from special tax prepayments and mandatory sinking fund redemption as described in this Official Statement. See “THE BONDS — Redemption.” Investment in the Bonds involves risks that are not appropriate for certain investors. Certain events could affect the ability of the City to pay the principal of and interest on the Bonds when due. See the section of this Official Statement entitled “RISK FACTORS” for a discussion of certain risk factors that should be considered, in addition to the other matters set forth in this Official Statement, in evaluating the investment quality of the Bonds.

This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. ____________________

MATURITY SCHEDULE
(See Inside Cover Page)
____________________
The Bonds are offered when, as and if issued and accepted by Hilltop Securities, Inc., the Underwriter, subject to approval as to their legality by Best Best & Krieger LLP, Riverside, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the City and the District by the City Attorney and by Best Best & Krieger LLP, Riverside, California, as Disclosure Counsel, for the Underwriter by Kutak Rock, LLP, Irvine, California, as counsel to the Underwriter, and for the Fiscal Agent by its counsel. It is anticipated that the Bonds in book-entry form will be available for delivery to DTC in New York, New York, on or about ___________, 2022.
[UNDERWRITER LOGO]
Dated: __________, 2022
 Preliminary, subject to change.

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

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MATURITY SCHEDULE
$3,480,000
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BONDS
Base CUSIP No.† ______
Maturity Date
(September1)
Principal
Amount Interest Rate Yield Price CUSIP†©
$ % % %
$__________ ____% Term Bonds due September 1, 20__ Yield: ____% Price: __________ CUSIP No.† ___ $__________ ____% Term Bonds due September 1, 20__ Yield: ____% Price: __________ CUSIP No.† ___ 
Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, which as of March 1, 2022, is owned by FactSet Research Systems Inc. (“FactSet”). FactSet will manage the CUSIP system on behalf of the American Bankers Association.

This information is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services Bureau. CUSIP numbers have been assigned by an independent company not affiliated with the City, the District or the Underwriter and are included solely for the convenience of the registered owners of the applicable Bonds. None of the City, the District or the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the applicable Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

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CITY OF SAN BERNARDINO
San Bernardino, California

MEMBERS
John Valdivia, Mayor
Theodore Sanchez; First Ward
Sandra Ibarra; Second Ward, Mayor Pro Tem
Juan Figueroa; Third Ward
Fred Shorett; Fourth Ward
Ben Reynoso; Fifth Ward
Kimberly Calvin; Sixth Ward
Damon L. Alexander; Seventh Ward
STAFF
Robert D. Field, City Manager
Barbara Whitehorn, Finance Director
Genoveva Rocha, City Clerk
Sonia R. Carvalho, City Attorney

SPECIAL SERVICES
Bond and Disclosure Counsel
Best Best & Krieger LLP
Riverside, California
Fiscal Agent
U.S. Bank Trust Company, National Association
Los Angeles, California
Municipal Advisor
Columbia Capital Management, LLC
Carlsbad, California
Special Tax Consultant
Spicer Consulting Group, LLC
Temecula, California
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Except where otherwise indicated, all information contained in this Official Statement has been provided by the City and the District. No dealer, broker, salesperson or other person has been authorized by the City, the District, the Fiscal Agent or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City, the District, the Fiscal Agent or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement, deemed final by the City and the District, is not to be construed as a contract with the purchasers or Owners of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described in this Official Statement, are intended solely as such and are not to be construed as representations of fact. This Official Statement, including any supplement or amendment to this Official Statement, is intended to be deposited with the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at www.emma.msrb.org.

The information set forth in this Official Statement which has been obtained from third party sources is believed to be reliable but is not guaranteed as to accuracy or completeness by the City or the District. The information and expressions of opinion in this Official Statement are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or the District or any other parties described in this Official Statement since the date of this Official Statement. All summaries of the Fiscal Agent Agreement or other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is made by this Official Statement to such documents on file with the City for further information. While the City maintains an Internet website for various purposes, none of the information on that website is incorporated by reference in this Official Statement or intended to assist investors in making any investment decision or to provide any continuing information with respect to the Bonds or any other bonds or obligations of the City. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded.

The Underwriter has provided the following sentence for inclusion in this Official Statement:

The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

Certain statements included or incorporated by reference in this Official Statement constitute “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption “THE DISTRICT.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH

FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND

OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED

TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO

ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR

EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

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TABLE OF CONTENTS
-iINTRODUCTORY ..............................................................1 General ...........................................................................1 The District.....................................................................1 Sources of Payment for the Bonds .................................3 City CFD Administrative Policies and
Practices ...................................................................4 Description of the Bonds................................................4 Redemption ....................................................................4 Tax Matters.....................................................................4 Professionals Involved in the Offering...........................5 Continuing Disclosure....................................................5 Bond Owners’ Risks.......................................................5 Forward Looking Statements .........................................6 Other Information...........................................................6 THE FINANCING PLAN....................................................6 Estimated Sources and Uses of Funds............................7 THE BONDS........................................................................7 General Provisions .........................................................7 Authority for Issuance....................................................8 Redemption ....................................................................8 Registration, Transfer and Exchange ...........................11 Book-Entry Only System .............................................11 Debt Service Schedule..................................................11 SOURCES OF PAYMENT FOR THE BONDS ...............12
Limited Obligations......................................................12 Special Taxes................................................................13 Special Tax Fund..........................................................18 Bond Fund ....................................................................19 Reserve Fund................................................................20 No Superior Obligations; No Parity Bonds
Except for Refunding .............................................21 THE DISTRICT .................................................................21 General Description of the District ..............................22 Description of Authorized Facilities ............................22 The Developer ..............................................................23 The Development .........................................................23 Overlapping Community Facilities Districts................28 Estimated Direct and Overlapping
Indebtedness...........................................................28 Expected Tax Burden ...................................................29 Appraisal Report...........................................................30 Estimated Value-to-Lien Ratio.....................................31 Delinquency History.....................................................34 City’s Collection Practices ...........................................34 RISK FACTORS................................................................34 Risks of Real Estate Secured Investments
Generally ................................................................34 Tax Cuts and Jobs Act..................................................34 Limited Obligations......................................................35 Insufficiency of Special Taxes .....................................35 Special Tax Delinquencies ...........................................36 Climate Change ............................................................37 Natural Disasters ..........................................................37 Drought.........................................................................37 Wind .............................................................................38 Hazardous Substances ..................................................38 Parity Taxes and Special Assessments.........................39 Disclosures to Future Purchasers .................................39 Non-Cash Payments of Special Taxes..........................39 Payment of the Special Tax Is Not a Personal
Obligation of the Owners .......................................40 Concentration of Ownership ........................................40 Land Values..................................................................40 Increasing Mortgage Interest Rates..............................41 FDIC/Federal Government Interests in
Properties................................................................41 Bankruptcy and Foreclosure.........................................42 No Acceleration Provision ...........................................43 Loss of Tax Exemption ................................................43 Limitations on Remedies..............................................43 Limited Secondary Market...........................................44 Voter Initiatives............................................................44 IRS Audit of Tax-Exempt Bond Issues........................45 Ballot Initiatives ...........................................................45 Recent Case Law Related to the Mello-Roos
Act ..........................................................................45 Potential Early Redemption of Bonds from
Prepayments or Assessment Bond
Proceeds .................................................................46 Legal Requirements......................................................46 COVID-19 Outbreak ....................................................46 Cyber Security..............................................................47 CONTINUING DISCLOSURE .........................................47 City Continuing Disclosure..........................................47 Developer Continuing Disclosure ................................47 LEGAL MATTERS ...........................................................48 Tax Exemption .............................................................48 Legal Opinion...............................................................49 Litigation ......................................................................49 No Rating .....................................................................49 Underwriting ................................................................49 Municipal Advisor........................................................49 Financial Interests.........................................................50 Pending Legislation......................................................50 Additional Information.................................................50

APPENDIX A RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAX................A-1
APPENDIX B APPRAISAL REPORT............................B-1

APPENDIX C SUPPLEMENTAL

INFORMATION CONCERNING CITY

OF SAN BERNARDINO AND COUNTY
OF SAN BERNARDINO .........................................C-1

APPENDIX D SUMMARY OF FISCAL
AGENT AGREEMENT ...........................................D-1

APPENDIX E FORM OF CONTINUING

DISCLOSURE CERTIFICATES OF THE
CITY AND THE DEVELOPER...............................E-1

APPENDIX F PROPOSED FORM OF BOND
COUNSEL OPINION ...............................................F-1

APPENDIX G INFORMATION
CONCERNING DTC ...............................................G-1 Packet Pg. 2082
[DISTRICT LOCATION MAP]
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[AERIAL PHOTO]
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1 OFFICIAL STATEMENT
$3,480,000
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN BERNARDINO
2022 SPECIAL TAX BONDS

INTRODUCTORY
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement. A full review should be made of the entire Official Statement. The sale and delivery of Bonds to potential investors is made only by means of the entire Official Statement. All capitalized terms used in this Official Statement and not defined shall have the meaning set forth in APPENDIX D — “SUMMARY OF FISCAL AGENT AGREEMENT — DEFINITIONS” or APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.”
General
The purpose of this Official Statement (the “Official Statement”) is to provide certain information concerning the issuance of the $3,480,000* Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds (the “Bonds”). The proceeds of the Bonds will be used to (i) finance the construction and acquisition of public facilities needed with respect to the development within Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino, County of San Bernardino, State of California (the “District”), (ii) fund a reserve fund securing the Bonds, and (iii) pay costs of issuance of the Bonds.

The District
The District contains approximately 28.34 gross acres or approximately 17.68 net taxable acres, located in the southwestern portion of the County and in the northwestern portion of the City. Specifically, the District is located at the northeast corner of Little League Drive and Magnolia Avenue, north of Interstate 215, in the Verdemont neighborhood of the City. The District encompasses Tract Map No. 20006 (the “Property”) and is planned for 119 single family homes at buildout.

TH Rancho Palma, LLC, a Delaware limited liability company (the “Developer”) acquired the property in the District on April 2, 2020. As of the May 1, 2022 date of value (the “Date of Value”) of the Appraisal Report (as defined below), 53 of the 119 planned single family residential homes had been completed and conveyed to individual homeowners. Of the remaining 66 residential lots, the Developer owned six completed model homes (none of which were in escrow), 12 homes which were over 95% completed (all of which were in escrow), 28 homes under construction but less than 95% completed (all of which were in escrow) and 20 finished lots (without any vertical home construction thereon (none of which were in escrow), as of the Date of Value. Between May 2, 2022 and June 7, 2022, an additional 12 homes closed escrow to individual homeowners, resulting in 65 homes conveyed to individual homeowners. Of the remaining 54 residential lots owned by the Developer, there were  Preliminary, subject to change.

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2 six completed model homes (none of which were in escrow), 34 homes under construction (all of which were in escrow), and 14 finished lots without any vertical home construction thereon (none of which were in escrow) as of June 7, 2022. Homes under contract may not result in closed escrows as sales contracts are subject to cancellation by the homebuyers.

Homes within the District are being constructed in two product lines called “Navarra” and “Rioja.” The Navarra neighborhood is planned to consist of 64 single family homes with three floor plans (“Plan 1,” “Plan 2” and “Plan 3”) ranging in size from approximately 2,000 square feet to approximately 2,506 square feet, with homes constructed in ten phases. The Rioja neighborhood is planned to consist of 55 single family homes with three floor plans (“Plan 4,” “Plan 5” and “Plan 6”) ranging in size from approximately 2,522 square feet to approximately 3,179 square feet, with homes constructed in nine phases.

As of June 7, 2022, the Developer had obtained building permits for 109 of the 119 residential lots within the District. Based on the number of building permits obtained for lots within the District as of June 7, 2022, 109 lots will be classified as Developed Property under the Rate and Method (as defined below) for the Fiscal Year 2022-23 Special Tax levy. See “THE DISTRICT — General Description of the District” and APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.”
Formation Proceedings. The District was formed by the City pursuant to the Act. The Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State of California (the “State”). Any local agency (as defined in the Act) may establish a community facilities district under the Act to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a district and may levy and collect a special tax within such district to repay such indebtedness.

Pursuant to the Act, the City Council of the City (the “City Council”), acting as the legislative body of the District, adopted the necessary resolutions stating its intent to establish the District, to authorize the levy of Special Taxes (defined below) on taxable property within the boundaries of the District, and to have the District incur bonded indebtedness to fund water system facilities, including capacity in existing facilities, and sewer system facilities, including capacity in existing facilities and sewage treatment and disposal capacity, storm drain improvements and transportation improvements, including street and traffic improvements of the City and such other improvements authorized by the Act (the “City Facilities”). Following public hearings conducted pursuant to the provisions of the Act, the City Council adopted resolutions establishing the District and calling special elections to submit the levy of the special taxes and the incurring of bonded indebtedness to the qualified voters of the District. On August 5, 2020, at a special election held pursuant to the Act, the Developer, as the sole landowner in the District and therefore the only qualified voter of the District, authorized the District to incur bonded indebtedness within the District in an aggregate principal amount not to exceed $5,000,000 and the levy of Special Taxes (as defined below) to repay such bonded indebtedness in accordance with the Rate and Method of Apportionment for the District (the “Rate and Method”). The Rate and Method is attached hereto as APPENDIX A.

The Assigned Special Tax (as defined in the Rate and Method) is the special tax that will be levied to pay debt service on the Bonds. The Assigned Special Tax is referred to in this Official Statement as the “Special Tax” or the “Special Taxes.”
Appraisal Report. Kitty Siino & Associates, Inc. (the “Appraiser”) has conducted an appraisal dated June 23, 2022 of the land within the District subject to the Special Tax (the “Appraisal Report”). The Appraisal Report sets forth an estimate of the market value of the fee simple interest of the taxable land and improvements within the District. The Appraiser is of the opinion that, based upon the assumptions and conditions contained in the Appraisal Report, the aggregate value of the property within the District, as of the May 1, 2022, Date of Value, was $47,976,884. This estimate of value results in an overall District-wide appraised value-to-lien ratio of Packet Pg. 2086
3 approximately 13.79* to 1 for the District based on the estimated amount of land secured debt allocated to parcels within the District. See “THE DISTRICT — Appraisal Report,” APPENDIX B — “APPRAISAL REPORT” and “RISK FACTORS — Parity Taxes and Special Assessments.”
Sources of Payment for the Bonds
Special Taxes. The Special Tax is that tax which has been authorized to be levied against certain land within the District pursuant to the Act and in accordance with the Rate and Method to satisfy the Special Tax Requirement (as defined in the Rate and Method). “Special Tax Revenues” are defined in the Fiscal Agent Agreement to mean the proceeds of the Special Taxes received by the City, including any scheduled payments, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes in the amount of said lien and interest and penalties thereon. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” Under the Fiscal Agent Agreement, the District has pledged to repay the Bonds from the Special Tax Revenues (subject to the deposit of certain amounts in the Administrative Expense Fund for each Fiscal Year) and amounts on deposit in the Bond Fund and the Reserve Fund established under the Fiscal Agent Agreement.

Reserve Fund. The Fiscal Agent Agreement establishes a Reserve Fund for the Bonds to be maintained at the Reserve Requirement. The Fiscal Agent Agreement provides that the Reserve Requirement shall, as of the date of calculation, equal the lesser of: (i) 10% of the original issue price of the Bonds calculated in accordance with Treasury Regulations Section 1.148-2(f)(1); (ii) Maximum Annual Debt Service on the Bonds; or (iii) 125% of average Annual Debt Service on the Bonds (the “Reserve Requirement”). The initial Reserve Requirement for the Bonds is an amount equal to $______. The ability of the City Council to increase the annual Special Taxes levied in the District to replenish the Reserve Fund is subject to the maximum annual amounts of Special Taxes authorized for the District and certain limitations in the Act. The moneys in the Reserve Fund will be used only for payment of the principal of, and interest and any redemption premium on, the Bonds, and, at the direction of the City, for deposit in the Rebate Fund. See “SOURCES OF PAYMENT FOR THE BONDS — Reserve Fund.” The Special Tax Revenues are the primary security for the repayment of the Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Fiscal Agent in the Bond Fund and the Reserve Fund, to the limited extent described in the Fiscal Agent Agreement. See “SOURCES OF PAYMENT FOR THE BONDS — Reserve Fund.” Foreclosure Proceeds. The City will covenant in the Fiscal Agent Agreement, for the benefit of the owners of the Bonds, that it will order, and cause to be commenced, judicial foreclosure proceedings against properties in the District with delinquent Special Taxes in excess of $5,000 by October 1 following the close of the Fiscal Year in which such Special Taxes were due, and if the amount on deposit in the Reserve Fund is less than the Reserve Requirement, it will commence judicial foreclosure proceedings against all properties in the District with delinquent Special Taxes by October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Taxes levied, and diligently pursue to completion such foreclosure proceedings. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.”
There is no assurance that the property within the District can be sold for the appraised value or assessed values described in this Official Statement, or for a price sufficient to pay the principal of and interest on the Bonds in the event of a default in payment of Special Taxes by the current or future property owners within the District. See “RISK FACTORS — Land Values” and APPENDIX B — “APPRAISAL REPORT.”

EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY OR THE DISTRICT, *
Preliminary, subject to change.

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4 BUT ARE SPECIAL OBLIGATIONS OF THE CITY AND THE DISTRICT PAYABLE SOLELY FROM

SPECIAL TAX REVENUES AND AMOUNTS HELD UNDER THE FISCAL AGENT AGREEMENT AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.

No Superior Obligations; No Parity Bonds Except for Refunding. The District and the City covenant in the Fiscal Agent Agreement that they will not issue any other obligations payable, as to principal or interest, from the Special Tax Revenues which have, or purport to have, any lien upon the Special Tax Revenues superior to or on a parity with the lien of the Bonds, except with respect to the redemption prior to maturity of any Bonds subject to call and redemption and payment of said Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State of California, which shall be payable from and have a lien upon the Special Tax Revenues on a parity with the Bonds to be outstanding following the issuance of such refunding bonds. See “SOURCES OF PAYMENT FOR THE BONDS — No Superior Obligations; No Parity Bonds Except for Refunding.” City CFD Administrative Policies and Practices
The City adopted its Local Goals and Policies for all community facilities districts of the City on May 20, 2020. These policies address, among other things, when community facilities district bonds can be issued by the City including the terms and conditions of the community facilities district bonds. Additionally, the City retains a third party community facilities districts administrator to monitor delinquencies and annually prepare the special tax rolls.

Description of the Bonds
The Bonds will be issued and delivered in the form of a single, fully registered Bonds for each maturity, registered in the name of The Depository Trust Company, New York, New York and its successors and assigns, as nominee (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in integral multiples of $5,000, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants. Beneficial Owners will not be entitled to receive physical delivery of the Bonds.

In the event that the book-entry only system described in this Official Statement is no longer used with respect to the Bonds, the Bonds will be registered and transferred in accordance with the Fiscal Agent Agreement. See APPENDIX G — “INFORMATION CONCERNING DTC.”
Principal of, premium, if any, and interest on the Bonds is payable by the Fiscal Agent to DTC, as the registered Owner of the Bonds. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry only system is no longer used with respect to the Bonds, principal, interest and redemption premium, if any, shall be paid to the registered Owner thereof in accordance with the Fiscal Agent Agreement. See “THE BONDS — Book-Entry Only System” and see APPENDIX G — “INFORMATION CONCERNING DTC.”
Redemption
The Bonds are subject to optional redemption, mandatory redemption and mandatory sinking fund redemption as described in this Official Statement. For a more complete description of the Bonds and the documentation pursuant to which they are being sold and delivered, see “THE BONDS” and APPENDIX D — “SUMMARY OF FISCAL AGENT AGREEMENT.”
Tax Matters
In the opinion of Bond Counsel, subject to certain qualifications described in this Official Statement, under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal Packet Pg. 2088
5 alternative minimum tax. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income tax. For a more complete discussion of such opinion and certain other tax consequences incident to the ownership of the Bonds, including certain exceptions to the tax treatment of interest, see “LEGAL MATTERS — Tax Exemption.”
Professionals Involved in the Offering
U.S. Bank Trust Company, National Association will act as Fiscal Agent under the Fiscal Agent Agreement. Hilltop Securities, Inc. is the Underwriter of the Bonds. Certain proceedings in connection with the issuance and delivery of the Bonds are subject to the approval of Best Best & Krieger LLP, Riverside, California (“Bond Counsel”). Certain legal matters will be passed on for the City and the District by the City Attorney’s Office and by Best Best & Krieger LLP, Riverside, California (“Disclosure Counsel”), and for the Underwriter by Kutak Rock, Irvine, California as Underwriter’s Counsel. Other professional services have been performed by Spicer Consulting Group, LLC, Temecula, California, as Special Tax Consultant, Columbia Capital Management, LLC, Carlsbad, California, as Municipal Advisor and Kitty Siino & Associates, Tustin, California, as Appraiser. At times, Bond Counsel and Disclosure Counsel represent the Underwriter in matters unrelated to the Bonds.

For information concerning the respects in which certain of the above-mentioned professionals, advisors, counsel and agents may have a financial or other interest in the offering of the Bonds, see “LEGAL MATTERS — Financial Interests.”
Continuing Disclosure
Pursuant to a Continuing Disclosure Certificate to be executed by the City (the “City Continuing Disclosure Certificate”), the City will agree to provide, or cause to be provided, on an annual basis, to the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board (the “MSRB”), which can be found at www.emma.msrb.org (“EMMA”), certain financial information and operating data. The City will further agree to provide notice to EMMA of certain enumerated events. These covenants are being made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) (the “Rule”) adopted by the Securities and Exchange Commission (the “SEC”).

Although the Underwriter does not consider the Developer to be an obligated party under the Rule, the Developer will agree to provide or cause to be provided to EMMA, pursuant to a Continuing Disclosure Certificate to be executed by the Developer (the “Developer Continuing Disclosure Certificate”), certain semi-annual information with respect to itself and its development within the District and notice of certain listed events to assist the Underwriter in marketing the Bonds. The Developer’s obligations under the Developer Continuing Disclosure Certificate will terminate when the Developer and its Affiliates (as defined in the Developer Continuing Disclosure Certificate) own fewer than 24 residential lots within the District.

See “CONTINUING DISCLOSURE” and APPENDIX E for a description of the specific nature of the annual reports and notices of listed events to be filed by the City, on behalf of the District, under the City Continuing Disclosure Certificate, and semi-annual reports and notices of listed events to be provided by the Developer under the Developer Continuing Disclosure Certificate.

Bond Owners’ Risks
Certain events could affect the timely repayment of the principal of and interest on the Bonds when due.

See the section of this Official Statement entitled “RISK FACTORS” for a discussion of certain factors which should be considered, in addition to other matters set forth in this Official Statement, in evaluating an investment in the Bonds. The Bonds are not rated by any nationally recognized rating agency.

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6 Forward Looking Statements
Certain statements included or incorporated by reference in this Official Statement constitute “forwardlooking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption “THE DISTRICT.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN

SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,

UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE

OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,

PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

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

Brief descriptions of the Bonds and the Fiscal Agent Agreement are included in this Official Statement.

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

Copies of the Fiscal Agent Agreement, the City Continuing Disclosure Certificate and other documents and information referred to in this Official Statement are available for inspection and (upon request and payment to the City of a charge for copying, mailing and handling) for delivery from the City at 290 North “D” Street, San Bernardino, CA 92401, Attention: City Manager.

THE FINANCING PLAN
A portion of the Bond proceeds will be used by the District to design, construct and/or acquire certain authorized City Facilities. See “THE DISTRICT — Description of Authorized Facilities” for a description of the public facilities authorized to be financed with the proceeds of the Bonds.

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7 Estimated Sources and Uses of Funds
The following table sets forth the expected sources and uses of Bond proceeds:

Sources of Funds
Principal Amount of Bonds
Plus Net Original Issue Premium
Total Sources $
Uses of Funds
Improvement Fund
Reserve Fund
Costs of Issuance Fund(1)
Underwriter’s Discount
Total Uses $
(1) Costs of Issuance include legal fees, printing costs, Appraisal Report costs, Municipal Advisor fees, Special Tax Consultant fees, and Fiscal Agent fees, in addition to other miscellaneous costs incidental to Bond issuance.

THE BONDS
General Provisions
The Bonds will be dated their date of delivery and will bear interest at the rates per annum set forth on the inside cover page, payable semiannually on each March 1 and September 1, commencing on March 1, 2023 (each, an “Interest Payment Date”), and will mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. The Bonds will be issued in fully registered form in integral multiples of $5,000.

See “— Book-Entry Only System.”
Interest shall be calculated on the basis of a 360-day year composed of twelve 30 day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from __________, 20__; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon or from __________, 20__, if no interest has previously been paid or made available for payment thereon.

Interest on the Bonds is payable by check of the Fiscal Agent mailed by first class mail, postage prepaid, on each Interest Payment Date, to the registered Owner thereof at such registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date. The principal of the Bonds and any premium on the Bonds are payable in lawful money of the United States of America by check of the Fiscal Agent upon surrender of such Bonds at the Principal Office of the Fiscal Agent; provided, however, that at the written request of the Owner of at least $1,000,000 in aggregate principal amount of Outstanding Bonds filed with the Fiscal Agent prior to any Record Date, interest on such Bonds shall be paid to such Owner on each succeeding Interest Payment Date by wire transfer of immediately available funds to an account in the United States of America designated in such written request.

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8 Authority for Issuance
The Bonds are issued pursuant to the Act and the Fiscal Agent Agreement. As required by the Act, the City Council has taken the following actions with respect to establishing the District and the Bonds:

Resolutions of Intention and Resolution of Necessity. On July 1, 2020, the City Council adopted a resolution stating its intention to establish the District and to authorize the levy of a special tax therein, and a resolution declaring the necessity to have the District incur bonded indebtedness in an amount not to exceed $5,000,000.

Resolutions of Formation. Following a noticed public hearing conducted on August 5, 2020, the City Council adopted on August 5, 2020, resolutions which established the District, authorized the levy of a special tax within the District, and determined the necessity for the District to incur bonded indebtedness in a maximum aggregate principal amount of $5,000,000.

Resolution Calling Election. The resolutions adopted by the City Council on August 5, 2020, also called for a consolidated special election by the landowners in the District on the issues of the levy of the Special Tax, the incurring of bonded indebtedness within the District, and the establishment of an appropriations limit.

Landowner Election and Declaration of Results. On August 5, 2020, an election was held at which the landowners within the District approved ballot propositions authorizing the issuance of up to $5,000,000 of bonds to finance water system facilities, including capacity in existing facilities, and sewer system facilities, including capacity in existing facilities and sewage treatment and disposal capacity, storm drain improvements and transportation improvements, including street and traffic improvements of the City and such other improvements authorized by the Act, the levy of the Special Tax and the establishment of an appropriations limit for the District.

The landowners within the District approved ballot propositions authorizing the District to issue bonds in an aggregate principal amount not to exceed $5,000,000 for financing public facilities. On August 5, 2020, the City Council adopted a resolution approving the canvass of the votes and declaring the District to be fully formed with the authority to levy the Special Taxes, to incur the bonded indebtedness, and to have the established appropriations limit.

Special Tax Lien and Levy. The Notice of Special Tax Lien for the District was recorded in the Office of the County Recorder of the County on August 19, 2020, as Document No. 2020-0293007, reflecting a continuing lien against the taxable property within the District (the “Notice of Special Tax Lien”).

Ordinance Levying Special Taxes. On August 19, 2020, the City Council adopted Ordinance No. MC1540 (the “Ordinance”), which authorized the levy of Special Taxes within the District.

Resolution Authorizing Issuance of the Bonds. On __________, 2022, the City Council adopted a resolution approving issuance of the Bonds.

Issuance of Additional Bonds. The City’s bonding authorization for the District is $5,000,000. Following the issuance of the Bonds, no additional bonds can be issued on a parity basis with the Bonds, with the exception of refunding bonds.

Redemption
Optional Redemption. The Bonds are subject to redemption prior to their stated maturity dates at the option of the City on September 1, 20__, or any Interest Payment Date thereafter, from such maturities as selected by the City (and by lot within any one maturity), in integral multiples of $5,000, at the option of the City from moneys derived by the City from any source, at a redemption price (expressed as a percentage of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption, as follows:

Packet Pg. 2092
9 Redemption Dates Redemption Prices
September 1, 20__ and March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100 Mandatory Redemption From Special Tax Prepayments. The Bonds are subject to mandatory redemption prior to their stated maturity dates on any Interest Payment Date, as selected among maturities by the City (and by lot within any one maturity), in integral multiples of $5,000, from moneys derived by the City from Special Tax Prepayments, at redemption prices (expressed as percentages of the principal amounts of the Bonds to be redeemed), together with accrued interest to the date of redemption, as follows:

Redemption Dates Redemption Prices
Any Interest Payment Date through March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100 See the caption “RISK FACTORS—Potential Early Redemption of Bonds from Prepayments or Assessment Bond Proceeds” for a discussion of the potential for a lower than expected yield on the Bonds as a result of a special mandatory redemption from prepayment of Special Taxes.

Mandatory Sinking Fund Redemption. The Outstanding Bonds maturing on September 1, 20__ and September 1, 20__ are subject to mandatory sinking fund redemption, in part, on September 1, 20__ and September 1, 20__, respectively and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, and from sinking payments as follows:

Bonds Maturing on September 1, 20__
Redemption Date
(September 1) Sinking Payments
(Maturity)
Bonds Maturing on September 1, 20__
Redemption Date
(September 1) Sinking Payments
(Maturity)
The amounts in the foregoing schedules shall be reduced by the City pro rata among redemption dates, in order to maintain substantially level Debt Service, as a result of any prior or partial optional or mandatory redemption. The City shall provide the Fiscal Agent with a revised sinking fund schedule.

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10 Purchase of Bonds. In lieu of payment at maturity or redemption under the Fiscal Agent Agreement, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase. In such event, the City shall, as may be appropriate, provide to the Fiscal Agent a revised maturity schedule or a revised mandatory sinking fund schedule for the Bonds, or both.

Notice to Fiscal Agent. An Authorized Officer shall give the Fiscal Agent written notice of the City’s intention to redeem Bonds not less than 45 days prior to the applicable redemption date specifying the principal amounts and maturities of the Bonds to be redeemed. The requirement to provide such notice to the Fiscal Agent shall not apply to mandatory sinking fund redemption of the Bonds.

Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, or electronically submitted, to the Securities Depositories and to one or more Information Services selected by an Authorized Officer, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books maintained by the Fiscal Agent at its Principal Office; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds. The Fiscal Agent shall also cause notice of any redemption to be mailed, in such manner and within such time, to the Underwriter.

Any notice of optional redemption of the Bonds delivered in accordance with the Fiscal Agent Agreement may be conditional and if any condition stated in the notice of redemption shall not have been satisfied on or prior to the redemption date, said notice shall be of no force and effect and the District shall not be required to redeem such Bonds and the redemption shall not be made and the Fiscal Agent shall within a reasonable time thereafter give notice, to the persons and in the manner in which the notice of redemption was given, that such condition or conditions were not met and that the redemption was cancelled.

In the event of a mandatory redemption pursuant to the Fiscal Agent Agreement, the City shall transfer or cause to be transferred to the Fiscal Agent for deposit in the Bond Fund moneys in an amount equal to the redemption price of the Bonds being redeemed on or before the 15th day of the month preceding the Interest Payment Date upon which such Bonds are to be redeemed.

If less than all the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and, in selecting portions of such Bonds for redemption, the Fiscal Agent shall treat each such Bond as representing the number of Packet Pg. 2094
11 Bonds of $5,000 denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by $5,000.

Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the Bonds of a maturity or any given portion thereof, the Fiscal Agent shall select the Bonds of such maturity to be redeemed, from all Bonds of such maturity or such given portion thereof not previously called for redemption, by lot within a maturity in any manner which the Fiscal Agent in its sole discretion shall deem appropriate.

Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the Owner, at the expense of the District, a new Bond or Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds.

Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption prices of the Bonds called for redemption shall have been deposited in the Bond Fund, such Bonds shall cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and interest shall cease to accrue on the Bonds to be redeemed on the redemption date specified in the notice of redemption.

All Bonds redeemed and purchased by the Fiscal Agent pursuant to the Fiscal Agent Agreement shall be cancelled by the Fiscal Agent.

Registration, Transfer and Exchange
Registration. The Fiscal Agent will keep sufficient books for the registration and transfer of the Bonds.

The ownership of the Bonds will be established by the Bond registration books held by the Fiscal Agent.

Transfer or Exchange. Whenever any Bond is surrendered for registration of transfer or exchange, the Fiscal Agent will authenticate and deliver a new Bond or Bonds of the same maturity, for a like aggregate principal amount of authorized denominations; provided that the Fiscal Agent will not be required to register transfers or make exchanges of (i) Bonds for a period of 15 days next preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with respect to Bonds selected for redemption.

Book-Entry Only System
The Bonds will be issued in book-entry form, and The Depository Trust Company of New York, New York (“DTC”) will act as securities depository. So long as the Bonds are held in book-entry form, principal of, premium, if any, and interest on the Bonds will be paid by the Fiscal Agent directly to DTC for distribution to the beneficial owners of the Bonds in accordance with procedures adopted by DTC. See APPENDIX G — “INFORMATION CONCERNING DTC.”
Debt Service Schedule
The following table presents the annual debt service on the Bonds (including sinking fund redemptions), assuming there are no optional redemptions or mandatory redemptions from Special Tax Prepayments pursuant to the Rate and Method. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and “THE BONDS — Redemption.”
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12 ANNUAL DEBT SERVICE SCHEDULE
Bond Year Ending
September 1 Principal Interest
Total Annual
Debt Service
Total
Source: Underwriter.

SOURCES OF PAYMENT FOR THE BONDS
Limited Obligations
The Bonds are special, limited obligations of the City and the District payable only from amounts pledged under the Fiscal Agent Agreement and from no other sources.

The Special Tax Revenues are the primary security for the repayment of the Bonds. Under the Fiscal Agent Agreement, the City and the District have pledged to repay the Bonds from the Special Tax Revenues (which are the proceeds of the Special Taxes received by the City, including any scheduled payments, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes in the amount of said lien and interest and penalties thereon) (subject to the deposit of certain amounts in the Administrative Expense Fund for each Fiscal Year) and all moneys deposited in the Bond Fund and the Reserve Fund.

In the event that the Special Tax Revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Fiscal Agent in the Bond Fund and the Reserve Fund for the exclusive benefit of the Owners of the Bonds.

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13 Neither the faith and credit nor the taxing power of the City, the County, the State of California or any political subdivision thereof is pledged to the payment of the Bonds. Except for the Special Tax Revenues, no other taxes are pledged to the payment of the Bonds. The Bonds are not general obligations of the City or the District, but are Special Obligations of the City and the District payable solely from Special Taxes and amounts held under the Fiscal Agent Agreement as more fully described in this Official Statement.

Special Taxes
Authorization and Pledge. In accordance with the provisions of the Act, the City Council established the District on August 5, 2020, for the purpose of financing the City Facilities. At a special election held on August 5, 2020, the owner of the property within the District authorized the District to incur indebtedness in an amount not to exceed $5,000,000 and approved the Rate and Method which authorizes the Special Tax to be levied to repay District indebtedness, including the Bonds. On August 19, 2020, the Board adopted Ordinance No. MC-1540, which authorized the levy of Special Taxes in the District.

The District will covenant in the Fiscal Agent Agreement that each year it will levy Special Taxes up to the maximum rates permitted under the Rate and Method in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay the principal of and interest on any Outstanding Bonds, to replenish the Reserve Fund and to pay the estimated Administrative Expenses. Notwithstanding the foregoing, pursuant to Section 53321(d) of the Act, under no circumstances will the Special Taxes levied against any Assessor’s Parcel used as a private residence be increased as a consequence of delinquency or default by the owner of any other Assessor’s Parcel or Assessor’s Parcels within the District by more than 10%.

The Special Taxes levied in any Fiscal Year may not exceed the maximum rates authorized pursuant to the Rate and Method. See APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” There is no assurance that the Special Tax proceeds will, in all circumstances, be adequate to pay the principal of and interest on the Bonds when due. See “RISK FACTORS — Insufficiency of Special Taxes.” Rate and Method of Apportionment of Special Tax. All capitalized terms used in this section shall have the meaning set forth in APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.”
Under the Rate and Method, each Fiscal Year, each parcel in the District will be classified as Taxable Property or Exempt Property. In addition, each Assessor’s Parcel of Taxable Property will be classified as Developed Property, Approved Property, Undeveloped Property or Provisional Undeveloped Property.

Assessor’s Parcels of Developed Property shall further be classified as Residential Property or Non-Residential Property. Each Assessor’s Parcel of Residential Property shall further be classified as a Single Family Residential Property or Multifamily Property. Each Assessor’s Parcel of Single Family Residential Property shall be further assigned to a Land Use Category based on its Building Square Footage.

The Maximum Special Tax for each Assessor’s Parcel of Single Family Residential Property for Developed Property will be the greater of (a) the Assigned Special Tax or (b) the Backup Special Tax. The Maximum Special Tax for each Assessor’s Parcel of Non-Residential Property and Multifamily Property for Developed Property shall be the applicable Assigned Special Tax described in the Rate and Method.

Each Fiscal Year, each Assessor’s Parcel of Single Family Residential Property, Multifamily Property or Non-Residential Property shall be subject to an Assigned Special Tax. In some instances an Assessor’s Parcel of Developed Property may contain more than one Land Use Type. The Maximum Special Tax levied on an Assessor’s Parcel shall be the sum of the Maximum Special Tax for each Taxable Unit for all Land Use Categories located on the Assessor’s Parcel.

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14 The total amount of the Backup Special Tax for an Assessor’s Parcel within a Final Map classified as Single Family Residential Property is equal to the product of Maximum Special Tax per Acre of Undeveloped Property in accordance with the Rate and Method of Apportionment and the Acreage of Single Family Residential Property that exists or is expected to exist in such Final Map at the time of calculation, as determined by the Administrator divided by the number of Assessor’s Parcels of Single Family Residential Property expected to exist after build out in such Final Map at the time of calculation, as determined by the Administrator.

In the event any portion of the Final Map is changed or modified, the Backup Special Tax for all Assessor’s Parcels within such changed or modified area shall be $16,490 per Acre. For the purposes of the Back Up Special Tax, the net taxable acreage in the District is calculated at 17.68 acres. Notwithstanding the foregoing, the Backup Special Tax for an Assessor’s Parcel of Developer Property for which a certificate of occupancy has been granted may not be revised. In the event any superseding Final Map is recorded as a Final Map within the boundaries of the District the Backup Special Tax for all Assessor’s Parcels within such Final Map shall be $16,490 per Acre. The Backup Special Tax shall not apply to Multifamily Residential Property or Non-Residential Property.

The Maximum Special Tax for each Assessor's Parcel of Approved Property expected to be classified as Single Family Property shall be the Backup Special Tax computed pursuant to the Rate and Method. The Maximum Special Tax for each Assessor's Parcel of Approved Property expected to be classified as Multifamily Residential Property or Non-Residential Property is $16,490 per Acre. The Maximum Special Tax for each Assessor's Parcel of Undeveloped Property and Provisional Undeveloped Property is $16,490 per Acre.

Each Fiscal Year, the City Council shall levy Special Taxes on all Taxable Property in accordance with the following steps:

Step One: 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 rates in the Rate and Method to satisfy the Special Tax Requirement.

Step Two: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Approved Property at up to 100% of the Maximum Special Tax applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement.

Step Three: If additional moneys are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Annual Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property up to 100% of the Maximum Special Tax applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement.

Step Four: If additional moneys are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to 100% of the Backup Special Tax as needed to satisfy the Special Tax Requirement.

Step Five: If additional moneys are needed to satisfy the Special Tax Requirement after the first four steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Provisional Undeveloped Property up to 100% of the Maximum Special Tax applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement.
“Special Tax Requirement” means the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount required to establish or replenish any reserve funds established under the Indenture in association with Packet Pg. 2098
15 the Bonds to the extent that replenishment has not been included in the computation of the Special Tax Requirement in a previous Fiscal Year, (v) to cure any delinquencies in the amount of principal or interest on the Bonds that occurred in a previous Fiscal Year, and (vi) the collection or accumulation of funds for the acquisition or construction of facilities authorized by CFD No. 2020-1 provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on Undeveloped Property as set forth in the Rate and Method, less (vii) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to the Indenture.

However, pursuant to Section 53321(d) of the Act, notwithstanding the above, under no circumstances will the Special Tax levied against any taxable parcel of private residential property within the District be increased by more than 10% as a consequence of a delinquency or default by the owner of any other parcel within the District.

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16 The District intends to size the Bonds so that, assuming no delinquencies, Special Taxes, levied in accordance with the Rate and Method, will generate in each Fiscal Year beginning in Fiscal Year 2022-23 not less than 110% of debt service payable with respect to the Bonds in the calendar year that begins in that Fiscal Year, plus Administrative Expenses. See Table 1 below. The Special Tax Levy for Fiscal Year 2022-23 will be 110% of the expected bond debt service for Fiscal Year 2022-23. Surplus special tax collection in Fiscal Year 2022-23 will be applied to unfunded projects costs or other costs allowable under the Ordinance. In future years the City intends to levy special taxes sufficient to only cover bond debt service and administrative costs. In the event of delinquencies, future special tax levies can then be increased up to 10% to cover delinquencies.

TABLE 1

CITY OF SAN BERNARDINO
COMMUNITY FACILITIES DISTRICT NO. 2020-1 (RANCHO PALMA) SPECIAL TAX RATES FOR FISCAL YEAR 2022-23
Land Use Type
Taxable
Unit
Residential Floor
Area
(Sq. Ft.)
Assigned
Tax Rates
Fiscal Year
2022-23(1)
Special Tax
Levy Rates
Fiscal Year
2022-23
Percent of
Maximum/
Assigned Rate
No. of
Units
Aggregate
Estimated Special
Taxes Fiscal Year
2022-23(2)(3)
Percent of
Total
Single Family Residential Property RU Less than 2,100 $ 1,880.00 $1,880.00 100.00% 17 $ 31,960.00 13.2% Single Family Residential Property RU 2,101 - 2,399 2,080.00 2,080.00 100.00 18 37,440.00 15.4 Single Family Residential Property RU 2,400 - 2,699 2,185.00 2,185.00 100.00 35 76,475.00 31.6 Single Family Residential Property RU 2,700 - 2,999 2,420.00 2,420.00 100.00 19 45,980.00 19.0 Single Family Residential Property RU Greater than 2,999 2,525.00 2,525.00 100.00 20 50,500.00 20.8 Approved Property RU N/A 2,435.82 0.00 0.00 10 0.00 0.00 Multifamily Property Acre N/A 16,490.00 0.00 0.00 0 0.00 0.00 Non-Residential Property Acre N/A 16,490.00 0.00 0.00 0 0.00 0.00 Total 119 $242,355.00 100.00%
(1) Maximum Special Tax Rate for Land Use Type Approved Property and Undeveloped Property. (2) Includes estimated administrative expenses of $25,000.00. (3) Estimated Special Tax may include rounding.

Source: Spicer Consulting Group, LLC.

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17 Prepayment of Special Taxes. The City Council may allow property owners to fully or partially prepay the obligation of parcels of Taxable Property to pay the Special Taxes with respect to the Special Tax Requirement.

Additionally, the City will covenant in the Fiscal Agent Agreement that the City shall cause all applications of owners of property in the District to prepay and satisfy the Special Tax obligation for their property to be reviewed by the Tax Consultant and shall not accept any such prepayment unless such consultant certifies in writing that following the acceptance of the proposed prepayment by the City and the redemption of Bonds with such prepayment, the maximum amount of the Special Taxes that may be levied on all Taxable Property in the District following such prepayment will be at least 1.10 times Maximum Annual Debt Service on the Bonds which will remain Outstanding following such redemption plus estimated Administrative Expenses. See APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” and “THE BONDS — Redemption — Mandatory Redemption from Special Tax Prepayments.” Collection and Application of Special Taxes. The Special Taxes are collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes. The District may, however, collect the Special Taxes at a different time or in a different manner if necessary to meet its financial obligations.

Covenants to Protect Special Tax Rates. The City will make certain covenants in the Fiscal Agent Agreement for the purpose of ensuring that the current maximum Special Tax rates and method of collection of the Special Taxes are not altered in a manner that would impair the District’s ability to collect sufficient Special Taxes to pay debt service on the Bonds and Administrative Expenses when due. The City will covenant that it will not initiate proceedings under the Act to reduce the Maximum Special Tax rates (the “Maximum Rates”) on then existing Developed Property in the District below the amounts which are necessary to provide Special Tax Revenues in an amount equal to estimated Administrative Expenses for the then current Fiscal Year plus an amount equal to 110% of Maximum Annual Debt Service on the Outstanding Bonds. For purposes of such calculation, “Developed Property” has the meaning set forth in the Rate and Method. See “RISK FACTORS — Voter Initiative.” The City will further covenant that in the event an ordinance is adopted by initiative pursuant to Section 3 of Article XIII C of the California Constitution, which purports to reduce or otherwise alter the Maximum Rates, it will commence and pursue legal action seeking to preserve its ability to comply with the covenant described above.

The City will covenant not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant certifying that accepting such tender will not result in the City having insufficient Special Tax Revenues to pay the principal of and interest on the Outstanding Bonds following such tender. See “RISK FACTORS — Non-Cash Payments of Special Taxes.” Although the Special Taxes constitute liens on taxable parcels within the District, they do not constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners in the District. See “RISK FACTORS — Parity Taxes and Special Assessments.” There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so, all as more fully described in the section of this Official Statement entitled “RISK FACTORS.” Proceeds of Foreclosure Sales. The net proceeds received following a judicial foreclosure sale of land within the District resulting from a landowner’s failure to pay the Special Taxes when due are included within the Special Tax Revenues pledged to the payment of principal of and interest on the Bonds under the Fiscal Agent Agreement.

Pursuant to Section 53356.1 of the Government Code, the City will covenant in the Fiscal Agent Agreement with and for the benefit of the Owners of the Bonds that (i) it will order, and cause to be commenced, Packet Pg. 2101
18 judicial foreclosure proceedings against properties in the District with delinquent Special Taxes in excess of $5,000 by October 1 following the close of the Fiscal Year in which such Special Taxes were due, and (ii) if the amount on deposit in the Reserve Fund is less than the Reserve Requirement it will commence judicial foreclosure proceedings against all properties in the District with delinquent Special Taxes by October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than ninety-five percent (95%) of the total Special Taxes levied, and diligently pursue to completion such foreclosure proceedings. See APPENDIX D — “SUMMARY OF FISCAL AGENT AGREEMENT.”
If foreclosure is necessary and other funds (including amounts in the Reserve Fund) have been exhausted, debt service payments on the Bonds could be delayed until the foreclosure proceedings have ended with the receipt of any foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the City and the District. See “RISK FACTORS — Bankruptcy and Foreclosure.” Moreover, 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. See “RISK FACTORS — Land Values.” Although the Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the District or the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes.

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

Special Tax Fund
Pursuant to the Fiscal Agent Agreement, there will be established, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 2020-1 of the City of San Bernardino 2022 Special Tax Bonds Special Tax Fund” (the “Special Tax Fund”) to the credit of which the City will deposit, not later than 10 Business Days after receipt, all Special Tax Revenues received by the City.

Moneys in the Special Tax Fund and all accounts therein will be held by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, will be disbursed as provided below and, pending disbursement, will be subject to a lien in favor of the Owners of the Bonds. Notwithstanding the foregoing, any amounts received by the City which constitute Special Tax Prepayments will be transferred by the City not later than 10 business days after receipt to the Fiscal Agent for deposit by the Fiscal Agent in the “Special Tax Prepayments Account” established pursuant to the Fiscal Agent Agreement.

As soon as practicable after the receipt from the City of any Special Tax Revenues, but no later than 10 Business Days after such receipt, the Fiscal Agent will withdraw from the Special Tax Fund and deposit in the Administrative Expense Fund, an amount which is estimated by the City, in a written communication from an Authorized Officer delivered to the Fiscal Agent (upon which the Fiscal Agent may conclusively rely) to be sufficient, together with the amount then on deposit in the Administrative Expense Fund, to pay the Administrative Expenses during the current Fiscal Year; provided, however, that the amount deposited in the Administrative Expense Fund prior to the deposits to the Interest Account and the Principal Account of the Bond Fund, as provided below, will not exceed $25,000 for each Fiscal Year. Thereafter, the Fiscal Agent shall deposit in the Interest Account and the Principal Account of the Bond Fund the amounts required by the Fiscal Agent Agreement, as described under “— Bond Fund” below. If after such deposits are made to the Administrative Expense Fund, the Interest Account and the Principal Account there are funds remaining on deposit in the Special Packet Pg. 2102
19 Tax Fund, the City shall instruct the Fiscal Agent by an Officer’s Certificate (upon which the Fiscal Agent may conclusively rely) to transfer such amount from the Special Tax Fund to the Reserve Fund to the extent that the amount on deposit therein is less than the Reserve Requirement.

On September 2 of each year, the amount, if any, on deposit in the Special Tax Fund, together with the amount then on deposit in the Bond Fund (including the Principal Account therein but excluding the Interest Account and the Special Tax Prepayments Account), as determined by the City, shall not exceed the greater of (i) one year’s earnings on such amounts, or (ii) 1/12th of Annual Debt Service for the then current Bond Year. If on September 2 of any year the amount on deposit in the Special Tax Fund, together with the amount then on deposit in the Bond Fund (other than such excluded amounts), exceeds the maximum amount allowable pursuant to the preceding sentence, as determined by the City and communicated in writing by an Authorized Officer to the Fiscal Agent (upon which the Fiscal Agent may conclusively rely), moneys shall be transferred from the Special Tax Fund to the Administrative Expense Fund to pay any additional Administrative Expenses during the then current Fiscal Year, as directed in writing by the City. The Fiscal Agent shall have no obligation to monitor the City’s obligations as set forth in the foregoing sentence. Subject to the requirement described above, on each September 2, commencing September 2, 20__, any funds remaining in the Special Tax Fund which are not needed to pay principal and/or interest on the Bonds then due and payable may be retained in the Special Tax Fund to reduce the Special Taxes levied in future years (subject to the limitations set forth in the Rate and Method).

Moneys in the Special Tax Fund will be invested and deposited in accordance with the Fiscal Agent Agreement. Investment Earnings will be retained in the Special Tax Fund to be used for the purposes of such fund to the extent set forth in the Fiscal Agent Agreement. See APPENDIX D — “SUMMARY OF FISCAL AGENT AGREEMENT.”
Bond Fund
Pursuant to the Fiscal Agent Agreement, there will be established, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 2020-1 of the City of San Bernardino 2022 Special Tax Bonds Bond Fund” (the “Bond Fund”) and within the Bond Fund, an Interest Account, a Principal Account and a Special Tax Prepayments Account. Moneys in the Bond Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds.

On or before each Interest Payment Date, the Fiscal Agent shall transfer from the Special Tax Fund and deposit into the following respective accounts in the Bond Fund, the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Special Tax Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:

Interest Account. On or before each Interest Payment Date, the Fiscal Agent shall deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on the Bonds on such date. No deposit need be made into the Interest Account on any Interest Payment Date if the amount on deposit therein is at least equal to the interest becoming due and payable on the Bonds on such date. All moneys in the Interest Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity). All amounts on deposit in the Interest Account on the first day of any Bond Year, to the extent not required to pay any interest then having become due and payable on the Outstanding Bonds, shall be withdrawn therefrom by the Fiscal Agent and transferred to the Special Tax Fund.

Principal Account. On or before each Interest Payment Date which occurs on September 1, the Fiscal Agent shall deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Packet Pg. 2103
20 Principal Account to equal the principal amount of the Bonds becoming due and payable on such date, or the redemption price of the Bonds (consisting of the principal amount thereof and any applicable redemption premium) required to be redeemed on such date pursuant to the Fiscal Agent Agreement. All moneys in the Principal Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of (i) paying the principal of the Bonds at the maturity thereof, or (ii) paying the principal of and premium (if any) on any Bonds upon the redemption thereof pursuant to the Fiscal Agent Agreement. All amounts on deposit in the Principal Account on the first day of any Bond Year, to the extent not required to pay the principal of any Outstanding Bonds then having become due and payable, shall be withdrawn therefrom by the Fiscal Agent and transferred to the Special Tax Fund.

In the event that moneys on deposit in the Special Tax Fund will be insufficient on any Interest Payment Date for the Fiscal Agent to deposit the required amounts in the Interest Account and the Principal Account, as provided above, the Fiscal Agent shall deposit the available funds first to the Interest Account up to the full amount required to cause the aggregate amount on deposit therein to equal the amount of interest becoming due and payable on the Bonds on the Interest Payment Date, and shall then deposit the remaining available funds in the Special Tax Fund to the Principal Account up to the full amount required to cause the aggregate amount on deposit therein to equal the amount, if any, of principal becoming due and payable on the Bonds on the Interest Payment Date. If, after making such deposits to the Interest Account and the Principal Account, and after transferring moneys from the Reserve Fund to such accounts, as provided in the Fiscal Agent Agreement, the amount on deposit in the Principal Account is insufficient to pay the full amount of the principal of each of the Bonds which is due or is to be redeemed on the Interest Payment Date, the Fiscal Agent shall make a prorated payment of the principal of each of such Bonds as specified in an Officer’s Certificate provided to the Fiscal Agent.

Reserve Fund
In order to secure further the payment of principal of and interest on the Bonds, the District will, upon delivery of the Bonds, deposit in the Reserve Fund and thereafter to maintain in the Reserve Fund an amount equal to the Reserve Requirement. The Fiscal Agent Agreement provides that the amount in the Reserve Fund shall equal the lesser of: (i) 10% of the original issue price of the Bonds calculated in accordance with Treasury Regulations Section 1.148-2(f)(1); (ii) Maximum Annual Debt Service on the Bonds; or (iii) 125% of average Annual Debt Service on the Bonds. Moneys in the Reserve Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of the principal of and interest and any premium on the Bonds and shall be subject to a lien in favor of the Owners of the Bonds.

Subject to the limits on the maximum annual Special Tax which may be levied within the District, as described in the Rate and Method, the City will covenant to levy Special Taxes in an amount that is anticipated to be sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the Reserve Fund at the Reserve Requirement. The ability of the legislative body of the District to increase the annual Special Taxes levied in the District to replenish the Reserve Fund is additionally subject to certain additional limitations under the Act restricting the amount by which Special Taxes on taxable parcels can be increased due to delinquencies of other taxable parcels.

Except as otherwise provided in the Fiscal Agent Agreement, all amounts on deposit in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Interest Account and the Principal Account of the Bond Fund in the event of any deficiency at any time in either of such accounts of the amount then required for payment of the principal of and interest and any premium on the Bonds or, in accordance with the provisions of the Fiscal Agent Agreement for the purpose of redeeming Bonds as described below.

Whenever, on any September 2, the amount in the Reserve Fund, less Investment Earnings resulting from the investment of the funds therein which pursuant to the Fiscal Agent Agreement must be rebated to the United States, as previously directed by the City, exceeds the Reserve Requirement, as calculated by the City, the Fiscal Packet Pg. 2104
21 Agent shall provide written notice to the City of the amount of the excess. Upon receiving written direction from an Authorized Officer (upon which the Fiscal Agent may conclusively rely), the Fiscal Agent shall, subject to the requirements of the Fiscal Agent Agreement, transfer an amount from the Reserve Fund which will reduce the amount on deposit therein to an amount equal to the Reserve Requirement to the Interest Account and the Principal Account, in such order, to be used for the payment of the interest on and principal of the Bonds on the next succeeding Interest Payment Date in accordance with the Fiscal Agent Agreement.

Whenever the balance in the Reserve Fund is equal to or exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall, upon receiving written direction from an Authorized Officer (upon which the Fiscal Agent may conclusively rely), transfer the amount in the Reserve Fund to the Interest Account and the Principal Account, in the priority specified in the Fiscal Agent Agreement, to be applied, on the next succeeding Interest Payment Date, to the payment and redemption, in accordance with the Fiscal Agent Agreement, of all of the Outstanding Bonds. In the event that the amount available to be so transferred from the Reserve Fund to the Interest Account and the Principal Account exceeds the amount required to pay and redeem the Outstanding Bonds, the excess shall be transferred to the City to be used for any lawful purpose of the City.

In the event of a prepayment of Special Taxes, under certain circumstances, a portion of the Reserve Fund will be credited to the amount being prepaid and be applied to redeem Bonds. See APPENDIX D — “SUMMARY OF FISCAL AGENT AGREEMENT.”
No Superior Obligations; No Parity Bonds Except for Refunding The District and the City covenant in the Fiscal Agent Agreement that they will not issue any other obligations payable, as to principal or interest, from the Special Tax Revenues which have, or purport to have, any lien upon the Special Tax Revenues superior to or on a parity with the lien of the Bonds, except with respect to the redemption prior to maturity of any Bonds subject to call and redemption and payment of said Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State of California, which shall be payable from and have a lien upon the Special Tax Revenues on a parity with the Bonds to be outstanding following the issuance of such refunding bonds.

THE DISTRICT
The information about the Developer contained in this section of the Official Statement entitled “THE DISTRICT” has been provided by representatives of the Developer and has not been independently confirmed or verified by the Underwriter, the City or the District. None of the Underwriter, the City or the District makes any representation as to the accuracy or adequacy of the information contained in this section. There may be material adverse changes to this information after the date of this Official Statement.

No assurance can be given that the proposed development within the District will occur as described below. As the proposed development progresses and homes are sold, it is expected that the ownership of the land within the District will become more diversified. No assurance can be given that development within the District will occur in a timely manner or in the configuration described herein, or that any property owner described herein will obtain or retain ownership of any of the land within the District. The Bonds and the Special Taxes are not personal obligations of any property owners, including the Developer and, in the event that a property owner defaults in the payment of the Special Taxes, the City may proceed with judicial foreclosure but has no direct recourse to the assets of any property owner. As a result, other than as provided herein, no financial statements or information is, or will be, provided about the Developer or any other property owner. The Bonds are secured solely by the Special Tax Revenues and other amounts pledged under the Fiscal Agent Agreement.

See “SOURCES OF PAYMENT FOR THE BONDS” and “RISK FACTORS.” The information under this of the Official Statement includes forward-looking statements. See the cautionary information regarding forward-looking statements in this Official Statement on the page immediately Packet Pg. 2105
22 preceding the Table of Contents. As previously discussed, such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such statements. Readers are cautioned not to place undue reliance on such forward-looking statements, which only speak as of the date of this Official Statement.

General Description of the District
The District contains approximately 28.34 gross acres and 17.68 developable acres, located at the northeast corner of Little League Drive and Magnolia Avenue, north of Interstate 215, in the Verdemont neighborhood of the City. The District is included within Tract Map No. 20006 and is planned for 119 single family homes at buildout.

The Developer acquired the property in the District in April 2020 and plans to construct 119 single-family homes thereon in two product lines known as “Navarra” and “Rioja” and sell such homes to individual homebuyers. The Navarra neighborhood is planned to consist of 64 single-family homes and the Rioja neighborhood is planned to consist of 55 single-family homes.

As of the May 1, 2022 Date of Value of the Appraisal Report, 53 of the 119 planned single-family residential homes had been completed and conveyed to individual homeowners. Of the remaining 66 residential lots, the Developer owned six completed model homes (none of which were in escrow), 12 homes which were over 95% completed (all of which were in escrow), 28 homes under construction but less than 95% completed (all of which were in escrow) and 20 finished lots without any vertical home construction thereon (none of which were in escrow). Homes under contract may not result in closed escrows as sales contracts are subject to cancellation by the homebuyers. Development within the District has progressed since the Date of Value.

The following table summarizes the ownership and development status within the District as of June 7, 2022.

Property Owner
Completed
Homes
Under
Construction
Finished
Lots(2)
Individual Owner 65 0 0
Developer 6(1) 34 14
TOTAL: 71 34 14
(1) Includes six model homes.
(2) Represents finished lots without any vertical home construction thereon.

Source: The Developer.

As of June 7, 2022, the Developer had obtained building permits for 109 of the 119 lots within the District (the “Project”). According to Spicer Consulting Group, LLC (the “Special Tax Consultant”), based on the number of building permits obtained for lots within the District as of June 7, 2022, 109 lots will be classified as Developed Property under the Rate and Method for the Fiscal Year 2022-23 Special Tax levy. See APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.”
Description of Authorized Facilities
The City Facilities authorized to be financed from Bond proceeds consist of water system facilities, including capacity in existing facilities, and sewer system facilities, including capacity in existing facilities and sewage treatment and disposal capacity, storm drain improvements and transportation improvements, including street and traffic improvements of the City and such other improvements authorized by the Act, as well as incidental expenses related to the planning, design and completion of such facilities.

Packet Pg. 2106
23 The Developer
TH Rancho Palma, LLC, a Delaware limited liability company (previously defined as the “Developer”) is a single-purpose entity whose sole member and manager is Trumark Homes LLC, a California limited liability company (“Trumark Homes”). Trumark Homes was founded by Gregg Nelson and Michael Maples. Trumark Homes is engaged in the building of master planned communities, single family and attached housing, urban and mixed-use development in California and Colorado. Trumark Homes has developed more than 8,000 residential lots in California since its founding in 1988. In 2020, Daiwa House USA Inc., a wholly owned subsidiary of Osaka, Japan based Daiwa House Industry Co., Ltd. (“Daiwa House”), acquired a 60% equity interest in Trumark Homes. Daiwa House is Japan’s largest homebuilder and is a publicly traded company.

Brief resumes of the key personnel at Trumark Homes are set forth below.

Gregg Nelson, Co-Chief Executive Officer. Gregg Nelson is a Co-Chief Executive Officer of Trumark Homes. Mr. Nelson co-founded the firm in 1988. He has worked in the construction, development and real estate investment arenas for 35 years. Mr. Nelson graduated from San Jose State University with a Bachelor of Science degree in Business Administration and completed an MBA program at Santa Clara University.

Michael Maples, Co-Chief Executive Officer. Michael Maples is a Co-Chief Executive Officer of Trumark Homes. Mr. Maples has been a Managing Member of Trumark Homes and related entities since he founded the firm in 1988. Mr. Maples earned a Bachelor of Science degree in Business Administration from San Jose State University. He also received a Master of Divinity degree from Bethel Seminary in St. Paul, Minnesota.

Eric Lindquist, Chief Financial Officer. Eric Lindquist serves as Chief Financial Officer of the Trumark Homes. Mr. Lindquist previously served as Corporate Controller of Trumark Homes. Prior to joining Trumark Homes, Mr. Lindquist served as the Vice President of Finance for the Bay Area Division of Lennar Corporation (formerly CalAtlantic Homes). He has also held positions as a Controller at Blu Homes Inc. and Audit Senior Manager with KPMG. Mr. Lindquist has been in the real estate and finance industry for 17 years.

The Development
The property within the District is expected to be developed with 119 single-family detached homes in two product lines -known as “Navarra” and “Rioja,” planned to consist of 64 single -family homes and 55 single -family homes, respectively. The Navarra neighborhood is planned to consist of 64 single family homes with three floor plans (“Plan 1,” “Plan 2” and “Plan 3”) ranging in size from approximately 2,000 square feet to approximately 2,506 square feet, with homes constructed in ten phases. The Rioja neighborhood is planned to consist of 55 single family homes with three floor plans (“Plan 4,” “Plan 5” and “Plan 6”) ranging in size from approximately 2,522 square feet to approximately 3,179 square feet, with homes constructed in nine phases.

Substantial infrastructure within the District has been completed, which includes construction of the retaining walls and permanent walls of the homes, onsite water and street improvements, SCE relocation of mainline installation, off-site landscape, street and street light improvements, onsite sewer and storm drain improvements. The Developer has completed construction of the private park, public park and RV lot. The remaining infrastructure necessary for the development of the property includes installing water meters on seven (7) lots in the Rioja neighborhood and miscellaneous lighting improvements in the District.

As of the Date of Value of the Appraisal Report, 53 of the 119 planned single family residential homes had been completed and conveyed to individual homeowners. As of such date, the Developer owned six (6) completed model homes, 12 homes that were over 95% complete (all of which were in escrow), 28 homes under construction but less than 95% completed (all of which were in escrow) and 20 finished lots without any vertical home construction thereon (none of which were in escrow), as of the Date of Value. Development within the District has progressed since the Date of Value. Between May 2, 2022 and June 7, 2022, an additional 12 homes closed escrow to individual homeowners, resulting in 65 homes conveyed to individual homeowners as of such Packet Pg. 2107
24 date. Of the remaining 54 residential lots owned by the Developer, there were six completed model homes (none of which were in escrow), 34 homes under construction (all of which were in escrow), and 14 finished lots without any vertical home construction thereon (none of which were in escrow) as of June 7, 2022. Homes under contract may not result in closed escrows as sales contracts are subject to cancellation by the homebuyers.

As of June 7, 2022, the Developer had obtained building permits for 109 of the 119 lots within the District.

According to the Special Tax Consultant, based on the number of building permits obtained for lots within the District as of June 7, 2022, 109 lots will be classified as Developed Property under the Rate and Method for the Fiscal Year 2022-23 Special Tax levy. See APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. The Developer expects to complete home construction and to convey all homes within the District to individual homeowners by December 2022.

A summary of the proposed product mix and development status for each of the Navarra and Rioja products, including estimated square footage and estimated base sales prices for the property being developed by the Developer within the District as of May 1, 2022 is set forth below:

TABLE 2A
Navarra
(as of May 1, 2022)
Plan
Expected
Number of
Homes at
Buildout
Estimated
Square
Footage
Number of
Bedrooms /
Bathrooms
Closed to
Individual
Homeowners
Completed
Homes Owned
by Developer(1)
Homes
Under
Construction
Owned by
Developer
Finished
Lots Owned
by
Developer
Estimated
Base Sales
Price(2)
1 19 2,000 3/2 7 4 4 4 $540,000
2 22 2,274 4/2.5 8 4 4 6 529,000
3 23 2,506 4/2.5 10 3 4 6 576,600
Total 64 25 11 12 16
(1) Includes one model home per plan. Homes over 95% complete are considered completed homes. (2) Base home prices shown exclude lot premiums, options and extras and any incentives or price reductions. Base sales prices are subject to change.

Source: Appraisal.

TABLE 2B
Rioja
(as of May 1, 2022)
Plan
Expected
Number of
Homes at
Buildout
Estimated
Square
Footage
Number of
Bedrooms /
Bathrooms
Closed to
Individual
Homeowners
Completed
Homes Owned
by Developer(1)
Homes
Under
Construction
Owned by
Developer
Finished
Lots Owned
by
Developer
Estimated
Base Sales
Price(2)
4 16 2,522 4/3 8 2 5 1 $615,155
5 19 2,824 4/3 9 3 6 1 623,155
6 20 3,179 5/4 11 2 5 2 667,355
Total 55 28 7 16 4
(1) Includes one model home per plan. Homes over 95% complete are considered completed homes. (2) Base home prices shown exclude lot premiums, options and extras and any incentives or price reductions. Base sales prices are subject to change.

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 above 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. In changing market conditions, builders will often revise the product lines and prices and the rate of sales can fluctuate. The Developer continuously evaluates its product Packet Pg. 2108
25 lines and prices in light of the then current market conditions. See “RISK FACTORS” herein for a discussion of risk factors.

Status of Entitlement Approvals. Other than building permits and other permits required in the normal course of home construction, the Developer believes all discretionary approvals required for the development of the Project have been obtained.

Environmental Review. The Project as currently planned has undergone all required environmental and biological review and the necessary environmental approvals for the development of the entire property have been obtained. On April 4, 2017, the City of San Bernardino Community Development Department issued a Notice of Determination which approved the Project and made the following determinations: (i) an Environmental Impact Report was prepared for the Project pursuant to the provisions of CEQA; (ii) mitigation measures were made a condition of approval of the Project; (iii) a mitigation reporting or monitoring plan was adopted for the Project; (iv) findings were made pursuant to the provisions of CEQA. The Developer has addressed the mitigation measures that were a condition of approval of the Project. A CEQA Guidelines Section 15162 Exemption was approved for the Project by the City of San Bernardino Community Development Department on May 4, 2017.

COVID-19 Impact. The development within the District is subject to disruption and delays due to the COVID-19 pandemic and other related public health and governmental authorities’ orders and actions which could have a material adverse effect on the Developer’s ability to complete its proposed development within the District in the timeframe and budget, and at the sales prices, described in this Official Statement.

As of June 1, 2022, the Developer has experienced increases in certain construction costs, supply chain delays, labor shortages, and increased cycle time for home deliveries. However, the Developer has not experienced any significant development delays resulting from work stoppages, reduced attendance of workers, or the ability to obtain necessary inspections and approvals for homes, which may be attributed, directly or indirectly, to the COVID-19 pandemic.

Although the recent cost increases and construction delays are not currently having a significant impact on the overall development of homes in the District, the impacts caused by the outbreak are evolving and no prediction can be made with respect to the ultimate effects of the COVID-19 outbreak and related public health and governmental authorities’ orders and actions (including, without limitation, the scope of restrictions under the current or any amended County or State of California orders), on the Developer’s ability to sell and close homes in the District. Such effects, if and as they arise, could have a material adverse effect on the ability to develop the homes in the District as planned, and no assurance can be provided that the Developer will be able to (a) complete in whole or in any part, or within any particular time, its construction of homes within the District; (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/or delays in obtaining necessary inspections and approvals; or (c) sell homes, and close home sales or not experience purchase contract cancellations, due to in each case to public health or governmental restrictions, further spread of COVID-19, an economic downturn driven by the pandemic, or otherwise. See “RISK FACTORS – COVID-19 Outbreak.” Financing Plan. Through April 30, 2022, the Developer had expended approximately $43,206,972 on its project in the District, including land acquisition costs, site development costs, permits and fees, direct and indirect home construction costs, and marketing and sales costs and expenses (exclusive of corporate overhead allocation and other carry costs). The Developer expects to incur approximately $12,662,477 on remaining site development costs, permits and fees, direct and indirect home construction costs, and marketing and sales costs and expenses (exclusive of corporate overhead and other carry costs), between May 1, 2022 and full buildout of its project in the District.

The Developer expects to use a combination of home sales revenue, proceeds of the Bonds, and borrowings under the Credit Facility (defined below) to complete its development in the District.

Packet Pg. 2109
26 As of May 31, 2022, the Developer’s parent, Trumark Homes, was a party to a $170 million secured revolving credit facility with Wells Fargo Bank (the “Credit Facility”) which matures in April 2024. The Credit Facility provides working capital and letter of credit capacity. Trumark Homes’ obligations under the Credit Facility are secured by liens on substantially all of its personal property and a significant portion of its owned real properties. Not only is the Credit Facility secured by and available to finance the development and construction of homes on the property owned by the Developer within the District, but is also available to finance and be secured by projects under development by other subsidiaries of Trumark Homes. The Credit Facility contains certain covenants, including negative and financial covenants, with which Trumark Homes is required to comply and which may limit the amount Trumark Homes may borrow or have outstanding at any time. As of May 31, 2022, Trumark Homes satisfied the conditions that would allow it to borrow up to $170 million, of which $109,677,148 in borrowings was outstanding, leaving $60,322,852 available under the Credit Facility to be drawn as of such date. Trumark Homes’ ability to renew the Credit Facility in the future is dependent upon a number of factors including the state of the commercial lending environment, the willingness of banks to lend to homebuilders and Trumark Homes’ financial condition and strength.

The following table is a summary of the Developer’s estimated sources and uses of funds for its projects in the District. As shown in the table below, As of May 1, 2022, approximately $29,646,198 of the Developer’s remaining development and construction costs within the District are expected to be funded from borrowings under the Credit Facility.

COMMUNITY FACILITIES DISTRICT NO. 2020-1 (RANCHO PALMA)

OF THE CITY OF SAN BERNARDINO

DEVELOPER PROJECTED SOURCES AND USES OF FUNDS
April 1, 2022
through
April 30, 2022
May 1, 2022
Through
Projected
Build-Out Total Budget
Sources of Funds
Credit Facility $39,513,130 $29,646,198 $ 69,159,328
Home Sales Revenues 31,429,221 37,663,244 69,092,465
CFD 2020-1 Bond Proceeds 0 2,980,000 2,980,000
Total Sources of Funds $70,942,351 $70,289,442 $141,231,793 Uses of Funds
Land and Site Improvements $ 6,547,973 $ 182,978 $ 6,730,951 Consultants / Site Development 10,487,908 1,507,422 11,995,330 Fees 4,756,033 68,740 4,824,773
Onsite Construction 2,592,163 1,425,789 4,017,952
House Costs 16,342,801 8,381,133 24,723,934
Finance Costs 21,481,838 43,314,405 64,796,243
Model, Advertising and Sales 1,126,721 83,467 1,210,188 Overhead 1,353,373 1,012,947 2,366,320
Total Uses of Funds $64,688,810 $55,976,882 $120,665,691 Net Cash Flow $ 6,253,541 $14,312,560 $ 20,566,102
Source: Developer.

Although the Developer expects to have sufficient funds available to complete its development in the District, commensurate with the development timing described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development and home construction costs within the District will be available from the Developer, or from any other source, when needed. Neither the Developer nor any other entity or person is under any legal obligation of any kind to expend funds for the remaining development of and construction of homes on its property in the District or obtain loans. Any contributions by the Developer or any other entity or person (including borrowings under the Credit Facility) to fund the costs of such development and home construction are made or obtained voluntarily.

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27 If and to the extent the aforementioned sources are inadequate to pay the costs to complete the planned development by the Developer within the District and other financing by the Developer is not put into place, there could be a shortfall in the funds required to complete the proposed development by the Developer in the District and the remaining portions of the project in the District may not be completed. There is no legal obligation to Bond holders to make any such funds available for land development, construction, or the payment of ad valorem property taxes or the Special Taxes. See “RISK FACTORS” herein for a discussion of risk factors.

Loan Defaults; Bankruptcy; History of Property Tax Payments. In connection with the issuance of the Bonds, an authorized representative or officer of the Developer will execute a certificate (the “Letter of Representations”) containing the following representations (among others) as of its date:
(1) Except as described in this Official Statement, there are no material loans outstanding and unpaid, and no material lines of credit of the Developer or its Relevant Entities (defined below), that are secured by an interest in the Property (defined below). To the Actual Knowledge of the Developer (defined below), the Developer and its Relevant Entities are not in breach of or in default under any applicable loan agreement, line of credit, option agreement, development agreement, indenture, fiscal agent agreement, bond or note (collectively, the “Material Agreements”) to which the Developer or its Relevant Entities are a party or otherwise subject, which breach or default could reasonably be expected to materially and adversely affect the ability of the Developer: (a) to own and develop the Property, as described in this Official Statement; (b) to pay Special Taxes on the Property (to the extent the responsibility of the Developer) prior to delinquency; (c) to carry on its business as described in this Official Statement; or (d) to perform its obligations under the Property Owner Continuing Disclosure Certificate.
(2) The Developer and, to the Actual Knowledge of the Developer, its Relevant Entities, are able to pay their respective bills as they become due, and to the Actual Knowledge of the Developer, there are no proceedings against the Developer (with proper service of process to the Developer having been accomplished) or overtly threatened in writing in which the Developer or any of its Relevant Entities may be adjudicated as bankrupt, become the debtor in a bankruptcy proceeding, be discharged from any and all of its respective debts or obligations, be granted an extension of time to pay its respective debts or obligations, or be granted a reorganization or readjustment of its respective debts or obligation. (3) To the Actual Knowledge of the Developer, neither the Developer nor any of its Relevant Entities is currently in, or, in the last five (5) years, has defaulted to any material extent in the payment of property taxes or special taxes or assessments in connection with the District or any other community facilities districts or assessment districts for any Property owned by the Developer or Related Entity.

As used in the above representations of the Developer, the following defined terms and phrases have the following meanings:
“Actual Knowledge of the Developer” means, as of the date of the Letter of Representations, the actual knowledge (as opposed to constructive), after reasonable investigation, that the authorized representative or officer signing the Letter of Representations on behalf of Developer (the “Authorized Representative”) currently has or has obtained through: (i) interviews with such current officers and responsible employees of Developer as the Authorized Representative has determined are reasonably likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in the Letter of Representations and/or (ii) review of documents reasonably available to the Authorized Representative and which the Authorized Representative reasonably deemed necessary for the Authorized Representative to obtain knowledge of the matters set forth in the Letter of Representations. The Authorized Representative has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Developer’s current business and operations. The Authorized Representative has not contacted individuals who are no longer employed by the Developer.

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28 “Relevant Entity” means, with respect to the Developer, any other Person (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Developer, and (ii) for whom information, including financial information or operating data, concerning such Person is material to potential investors in their evaluation of the District and investment decision regarding the Bonds (i.e., such person or entity’s assets or funds would materially affect the Developer’s ability to develop the Property as described in this Official Statement or to pay its Special Taxes on the Property (to the extent the responsibility of the Developer) prior to delinquency). “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof.

The term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. “Property” means the property within the District held in the name of the Developer.

Overlapping Community Facilities Districts
The principal of and interest on the Bonds are payable from the Special Tax authorized to be collected within the District, and payment of the Special Tax is secured by a lien on certain real property within the District.

Such lien is co-equal to and independent of the lien for general taxes and any other liens imposed under the Act, regardless of when they are imposed on the property in the District. The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and co-equal liens which must be satisfied in foreclosure. The City, the County and certain other public agencies are authorized by the Act to form and have formed other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within the District. See “-Estimated Direct and Overlapping Indebtedness.” As of May 1, 2022, the City has two overlapping community facilities districts for annual public safety and maintenance expenses. See “Table 3” below.

Estimated Direct and Overlapping Indebtedness
Within the boundaries of the District are other overlapping local agencies providing public services. The approximate amount of the direct and overlapping debt on the parcels within the District as of May 1 2022 is shown in Table 3 below.

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29 TABLE 3
COMMUNITY FACILITIES DISTRICT NO. 2020-1 (RANCHO PALMA)

OF THE CITY OF SAN BERNARDINO

DIRECT AND OVERLAPPING DEBT
As of May 1, 2022
I. Appraisal Value (1) $47,976,884
II. Land Secured Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt Type Issued Outstanding % Applicable Amount
Applicable
CITY OF SAN BERNARDINO CFD NO. 2020-1, SERIES 2022 CFD $3,480,000* $3,480,000 100.000% $3,480,000 TOTAL LAND SECURED BONDED DEBT $3,480,000
III. General Obligation Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt Type Issued Outstanding % Applicable(2) Amount
Applicable
SAN BERNARDINO UNIFIED SCHOOL DISTRICT GO $372,980,000 $ 67,020,000 0.261% $175,244 SAN BERNARDINO COMMUNITY COLLEGE GO 989,999,797 857,585,469 0.060 517,034 TOTAL OUTSTANDING GENERAL OBLIGATION BONDED DEBT $692,278 Authorized but Unissued Direct and Overlapping Indebtedness Type Issued Outstanding % Applicable(2) Amount
Applicable
SAN BERNARDINO UNIFIED SCHOOL DISTRICT GO $440,000,000 $67,020,000 0.261% $175,244 SAN BERNARDINO COMMUNITY COLLEGE GO 1,160,000,000 170,000,203 0.060 102,492 CITY OF SAN BERNARDINO CFD NO. 2020-1, SERIES 2022 CFD 5,000,000 100.000 TOTAL UNISSUED GENERAL OBLIGATION INDEBTEDNESS $277,736 TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION INDEBTEDNESS $970,015 TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $4,172,278 TOTAL OF ALL OUTSTANDING DIRECT AND UNISSUED DIRECT OVERLAPPING INDEBTEDNESS $4,450,015 IV. Ratios to Appraisal Value
Outstanding Land Secured Bonded Debt 13.79:1
Total Outstanding Bonded Debt 11.50:1
 Preliminary, subject to change.
(1) Represents the appraised value as set forth in the Appraisal Report as of the Date of Value. (2) Calculated by dividing the appraised value by the total assessed value for Fiscal year 2021-22. (3) Following the issuance of the Bonds, no additional bonds can be issued on a parity basis with the Bonds, with the exception of refunding bonds.

Source: San Bernardino County Assessor’s Office, Spicer Consulting Group, LLC.

Expected Tax Burden
Based on the appraised values within the District set forth in the Appraisal Report, the projected debt service on the Bonds, and estimated District Administrative Expenses of $25,000 for Fiscal Year 2022-23, the City expects that, in Fiscal Year 2022-23, the projected effective tax rates levied on taxable property in the District, will range from approximately 1.83% to 1.86% of average appraised value of homes within each Land Use Category (as defined in the Rate and Method). Subject to the limitations established by the Rate and Method and the provisions of the Act, the City Council will covenant in the Fiscal Agent Agreement to levy Special Taxes on parcels of taxable property in the District in each Fiscal Year in an amount sufficient to pay debt service on the outstanding Bonds.

Table 4 below describes the estimated Fiscal Year 2022-23 effective tax burden for sample units of Developed Property within the District. The estimated tax rates and amounts presented in this Official Statement are based on currently available information. The actual amounts charged may vary and may increase in future years depending on the amount of Bonds, and the number of delinquencies in the District, among other factors.

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30 TABLE 4
COMMUNITY FACILITIES DISTRICT NO. 2020-1 (RANCHO PALMA)

OF THE CITY OF SAN BERNARDINO
PROJECTED FISCAL YEAR 2022-23 EFFECTIVE TAX OBLIGATION

FOR SAMPLE DEVELOPED PROPERTY WITHIN EACH NEIGHBORHOOD
Plan Type 1 2 3 4 5 6
CFD Tax Category
Less than
2,100 Sq.

Ft.
2,101 to
2,399 Sq.

Ft.
2,400 to
2,699 Sq.

Ft.
2,700 to
2,999 Sq. Ft.

Greater than
3,000 Sq. Ft.

Home Size 2,000 2,274 2,506 2,522 2,824 3,179
Appraisal Value(1) $520,000 $523,020 $551,320 $580,060 $593,040 $604,010 Ad Valorem Property Taxes:

General Purpose $ 5,200 $ 5,230 $ 5,513 $ 5,801 $ 5,930 $ 6,040 San Bernardino Unified School District (0.09690%) 566 570 600 632 646 658 San Bernardino Community College (0.05620%) 278 279 294 310 317 323 San Bernardino Valley Municipal Water District (0.14250%) 676 680 717 754 771 785 Total General Property Taxes $ 6,720 $ 6,759 $ 7,125 $ 7,496 $ 7,664 $ 7,806 Assessment, Special Taxes & Parcel Charges:(3)
County Fire Protection District Services Zone FP-5 $ 162 $ 162 $ 162 $ 162 $ 162 $ 162 San Bernardino Vector Control District 6 6 6 6 6 6
City of San Bernardino CFD 2018-1 Safety Services 385 385 385 385 385 385 City of San Bernardino CFD 2019-1, Zone 5 Maintenance Services 344 344 344 344 344 344 City of San Bernardino CFD 2020-1 (Rancho Palma)(2) 1,880 2,080 2,185 2,185 2,420 2,525 Total Assessments & Special Taxes $ 2,777 $ 2,977 $ 3,082 $ 3,082 $ 3,317 $ 3,422 Projected Total Property Tax $ 9,497 $ 9,736 $ 10,206 $ 10,578 $10,980 $11,227 Projected Effective Tax Rate 1.83% 1.86% 1.85% 1.82% 1.85% 1.86% (1) Reflects the appraised value based as of Date of Value, the date of value and ownership. (2) Reflects estimated Fiscal Year 2022-23 Special Tax levy based on development as of June 1, 2022, and includes priority Administrative Expenses in the amount of $25,000.
(3) Reflects estimated Fiscal Year 2022-23 Special Tax Rates for tax bill items.

Source: San Bernardino County Assessor's Office; Spicer Consulting Group, LLC.

Appraisal Report
In order to provide information with respect to the value of the property within the District, the County engaged Kitty Siino & Associates, Inc., the Appraiser, to prepare the Appraisal Report. The Appraiser has an “MAI” designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land-secured municipal bonds. The Appraiser was selected by the City and has no material relationships with the City or the owners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal Report. The City instructed the Appraiser to prepare its analysis and report in conformity with the Uniform Standards of Professional Appraisal Practice and the appraisal standards of the California Debt and Investment Advisory Commission. A copy of the Appraisal Report is included as APPENDIX B — “APPRAISAL REPORT” to this Official Statement.

The purpose of the Appraisal Report was to estimate the market value of the fee simple interest of the property within the District subject to the Special Tax levy. The estimate of market value assumes that all improvements and benefits to the subject properties, which are to be funded with the proceeds of the Bonds are completed and in place.

Subject to the assumptions and limiting conditions set forth in the Appraisal Report, the Appraiser concluded that, as of the Date of Value (May 1, 2022), the appraised value of the property within the District subject to the Special Tax lien was $47,976,884. The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in APPENDIX B. The City makes no representation as to the accuracy of the Appraisal Report. See APPENDIX B — “APPRAISAL REPORT.” There is no assurance that the property within the District can be sold for the prices set forth in the Appraisal Report 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 landowner. See “RISK FACTORS — Land Values” and APPENDIX B — “APPRAISAL REPORT.” Packet Pg. 2114
31 Estimated Value-to-Lien Ratio
The appraised value of the property within the District as of the Date of Value is $47,976,884. Dividing the appraised value by the principal amount of the Bonds results in value to lien ratio of 13.79 to 1 for the District.

As of the date of issuance of the Bonds, the City expects that the only land-secured debt applicable to parcels within the District will be the Bonds. However, additional land-secured special tax or assessment debt could be applicable to the parcels within the District in the future. See “RISK FACTORS — Parity Taxes and Special Assessments.”
Table 5 below reflects the values assigned to parcels in the Appraisal Report, the estimated principal amount of the Bonds and the estimated appraised value-to-lien ratios in the District, based on the estimated Fiscal Year 2022-23 Special Tax levy, categorized by property ownership. The Developer, as owner of 66 of the 119 lots within the District, is responsible for the payment of 55.46% of the Fiscal Year 2022-23 Special Tax levy.

See “RISK FACTORS - Concentration of Ownership.”
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32 TABLE 5
COMMUNITY FACILITIES DISTRICT NO. 2020-1 (RANCHO PALMA)

OF THE CITY OF SAN BERNARDINO
ESTIMATED VALUE-TO-LIEN RATIOS FOR FISCAL YEAR 2022-23

ALLOCATED BY PROPERTY OWNERSHIP
(As of May 1, 2022)
Property Owner
No. of
Units
Appraised
Property
Value(3)
Percentage
of Appraised
Value
Assigned
Special
Tax Levy
Percentage of
Special
Tax Levy
Estimated
Fiscal Year
2022-23
Levy(4)
Percentage of
Estimated
Fiscal Year
2022-23 Levy
CFD 2020-1
Proposed
2022 Bonds(5)
All Other
Overlapping
Debt Issued
Appraised
Value-toLien Ratio
Developed - Individually Owned 53 $29,959,310 62.45% $130,079 44.60% $118,685 48.97% $1,704,210 $339,019 14.66:1 Developed - Trumark Homes Owned(1) 56 15,986,509 33.32 137,209 47.05 123,670 51.03 1,775,790 353,259 7.51:1 Subtotal Developed 109 $45,945,819 95.77% $267,288 91.65% $242,355 100.00% $3,480,000 $692,278 11.01:1 Approved -Trumark Homes Owned (2) 10 $ 2,031,065 4.23% $ 24,358 8.35% $ 0 0.00% $ 0 $ 0 N/A Subtotal Developer Owned 10 2,031,065 4.23 24,358 8.35 0 0.00 0 0 Total 119 $47,976,884 100.00% $291,646 100.00% $242,355 100.00% $3,480,000 $692,278 11.50:1 (1) Reflects appraised value for 6 model homes, 12 lots over 95% complete, 28 homes under construction and 10 finished lots, for Trumark Homes, which have building permits issued and are therefore considered developed per the Rate and Method.
(2) Reflects appraised value for 10 finished lots for Trumark Homes owned, which have not issue building permits yet and are therefore considered approved per the Rate and Method. (3) Reflects the appraised value as of the Date of Value. (4) Estimated Fiscal Year 2022-23 Special Tax levy based upon development status as of the Date of Value and preliminary debt service with administration of $25,000. (5) Includes the principal amount of the Bonds. Responsibility of the principal amount of the Bonds has been allocated based on the projected Fiscal Year 2022-23.

Source: San Bernardino County Assessor's Office; Spicer Consulting Group, LLC.

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33 Table 6 below sets forth the appraised value-to-lien ratios for the parcels of Taxable Property in the District by value-to-lien ranges based on the projected Fiscal Year 2022-23 Special Tax levy and development status as of the Date of Value (May 1, 2022). Since the Date of Value, the Developer has conveyed additional homes to individual homeowners and has commenced construction of additional homes within the District.

TABLE 6
COMMUNITY FACILITIES DISTRICT NO. 2020-1 (RANCHO PALMA)

OF THE CITY OF SAN BERNARDINO

VALUE-TO-LIEN STRATIFICATION FOR DEVELOPED PROPERTY ONLY Value-to Lien Category No. of Units
Percentage
of Units
Appraised
Value(1)
Percentage of
Appraised
Value
CFD 2020-1
Estimated
Fiscal Year
2022-23 Levy
Percent Share
of Estimated
Fiscal Year
2022-23 Levy
CFD 2020-1
Proposed
Bonds(2)
Percent
Share of
Proposed
Bonds
All Other
Overlapping
Debt
Aggregate
Value-to
Lien
Less than 5.00:1(3) 14 12.84% $ 2,843,490 6.19% $ 34,615 14.28% $ 497,040 14.28% $ 98,876 4.77:1 Between 5.01:1 to 7.00:1 24 22.02 4,874,555 10.61 4,980 20.62 717,668 20.62 142,766 5.67:1 Between 7.01:1 to 9.00:1 0 0.00 0 0.00 0 0.00 0 0.00 0 N/A Between 9.01:1 to 11.00:1 2 1.83 918,718 2.00 5,050 2.08 72,513 2.08 14,425 10.57:1 Between 11.01:1 to 13.00:1 12 11.01 5,512,309 12.00 26,505 10.94 380,588 10.94 75,711 12.08:1 Between 13.01:1 to 15.00:1 42 38.53 23,516,266 51.18 95,565 39.43 1,372,228 39.43 272,978 14.29:1 Greater than 15.01:1(3) 15 13.76 8,280,480 18.02 30,640 12.64 439,963 12.64 87,522 15.70:1 Total 109 100.00% $45,945,819 100.00% $242,355 100.00% $3,480,000 100.00% $692,278 11.01:1 (1) Reflects the appraised value as of the Date of Value and ownership information. (2) Responsibility of the par amount has been allocated based on the estimated Fiscal Year 2022-23 Special Tax levy, with development status as of May 1, 2022 and preliminary bond sizing as provided by the Underwriter. (3) The minimum value to lien in the Less than 5.00:1 category is 4.89:1. The maximum value to lien in the Greater than 15.01:1 category is 16.82:1.

Source: San Bernardino Assessor's Office; Spicer Consulting Group, LLC.

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34 Delinquency History
There are no delinquencies on the parcels in the District for Fiscal Year 2021-22.

City’s Collection Practices
The staff of the City provides administrative and other support services for the community facilities districts that have been formed by the City. These services include, but are not limited to, attempting to collect delinquent special taxes prior to the commencement of foreclosure proceedings by sending demand letters to property owners whose special taxes are delinquent advising them of the consequences of failing to pay the applicable special taxes. The City expects to levy Special Taxes within the District and will covenant in the Fiscal Agent Agreement to commence foreclosure proceedings against parcels with delinquent Special Taxes under certain circumstances described in this Official Statement. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.”

RISK FACTORS
The purchase of the Bonds involves significant investment risks and, therefore, the Bonds are not suitable investments for many investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth in this Official Statement, in evaluating the investment quality of the Bonds.

The Bonds have not been rated by a rating agency. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of the events discussed in this section of this Official Statement could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed in this section of this Official Statement could adversely affect the value of the property in the District. See “— Land Values” and “— Limited Secondary Market” below.

Risks of Real Estate Secured Investments Generally
The Bond Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes and floods), which may result in uninsured losses.

No assurance can be given that the individual homeowners will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See “RISK FACTORS — Bankruptcy and Foreclosure” below, for a discussion of certain limitations on the District’s ability to pursue judicial proceedings with respect to delinquent parcels.

Tax Cuts and Jobs Act
H.R. 1 of the 115th U.S. Congress, known as the “Tax Cuts and Jobs Act,” was enacted into law on December 22, 2017 (the “Tax Act”). The Tax Act makes significant changes to many aspects of the Internal Revenue Code of 1986, as amended (the “Code”). For example, the Tax Act reduces the amount of mortgage interest expense and state and local income tax and property tax expense that individuals may deduct from their gross income for federal income tax purposes. These changes could increase the cost of home ownership within the District and could slow the pace of home sales by the Developer or result in sales price reductions from the current expected levels. However, the City cannot predict the effect that the Tax Act may have on the cost of home ownership or the price of homes in the District, the pace at which homes in the District are sold to individual homeowners, or the ability or willingness of homeowners to pay Special Taxes or property taxes.

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35 Limited Obligations
The Bonds and related interest are not payable from the funds of the City. Except with respect to the Special Taxes, neither the credit nor the taxing power of the District or the City is pledged for the payment of principal or interest of the Bonds, and, except as provided in the Fiscal Agent Agreement, no Owner of the Bonds may compel the exercise of any taxing power by the District or the City or force the forfeiture of any City or District property. The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of the City’s or District’s property or upon any of the City’s or District’s income, receipts or revenues, except the Special Tax Revenues and other amounts pledged under the Fiscal Agent Agreement.

Insufficiency of Special Taxes
The annual amount of Special Tax to be levied on each taxable parcel in the District will generally be based on the land use class to which a parcel of Developed Property is assigned under the Rate and Method. See APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” and “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Rate and Method of Apportionment of Special Tax.” The maximum Special Tax for each Assessor’s Parcel of Single Family Residential Property in any Fiscal Year shall be the greater of (i) the Assigned Special Tax or (ii) the Backup Special Tax. See APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” Notwithstanding that the maximum Special Taxes that may be levied in the District exceeds debt service due on the Bonds, the Special Taxes collected could be inadequate to make timely payment of debt service either because of nonpayment or because property becomes exempt from taxation as permitted in the Rate and Method.

In order to pay debt service on the Bonds, it is necessary that the Special Taxes be paid in a timely manner.

Should the Special Taxes not be paid on time, the City has established a Reserve Fund under the Fiscal Agent Agreement to pay debt service on the Bonds to the extent other funds are not available. See “SOURCES OF PAYMENT FOR THE BONDS — Reserve Fund.” The City will covenant in the Fiscal Agent Agreement to maintain in the Reserve Fund an amount equal to the Reserve Requirement subject, however, to the limitation that the City may not levy the Special Tax in the District in any Fiscal Year at a rate in excess of the maximum amounts permitted under the Rate and Method. In addition, under no circumstances may the Special Tax levied against any parcel used for private residential purposes be increased as a consequence of delinquency or default by owner of any other parcel or parcels within the District by more than 10% in any Fiscal Year. As a result, if a significant number of delinquencies occurs, the District could be unable to replenish the Reserve Fund to the Reserve Requirement. If such defaults were to continue in successive years, the Reserve Fund could be depleted and a default on the Bonds could occur.

The City will covenant in the Fiscal Agent Agreement that, under certain conditions, it will institute judicial foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the 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 the delinquent Special Tax to protect its security interest. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales” for provisions which apply in the event of such foreclosure and which the City is required to follow in the event of delinquencies in the payment of the Special Tax.

In the event that sales or foreclosures of property are necessary, there could be a delay in payments to owners of the Bonds (if the Reserve Fund has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the City on behalf of the District of the proceeds of sale. The City may adjust the future Special Tax levied on taxable parcels in the District, subject to the limitation on the maximum Special Tax, to provide an amount required to pay interest on, principal of, and redemption premiums, if any, on the Bonds, and the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Reserve Requirement and to pay all current expenses. There is, however, no assurance that the total amount of the Special Packet Pg. 2119
36 Tax that could be levied and collected against taxable parcels in the District will be at all times sufficient to pay the amounts required to be paid by the Fiscal Agent Agreement, even if the Special Tax is levied at the maximum Special Tax rates. See “Bankruptcy and Foreclosure” below for a discussion of potential delays in foreclosure actions.

The Rate and Method governing the levy of the Special Tax expressly exempts property owned by public agencies and other exempt entities in the District. See Section F of APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” If for any reason property within the District becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government, another public agency or a religious organization, subject to the limitations of the maximum authorized rates, the Special Tax will be reallocated to the remaining taxable properties within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the ability and willingness of the owners of such property to pay the Special Tax when due.

The Act provides that, if any property within the District 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. 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 in the courts. Due to problems of collecting taxes from public agencies, if a substantial portion of land within the District was to become owned by public agencies, collection of the Special Tax might become more difficult and could result in collections of the Special Tax which might not be sufficient to pay principal of and interest on the Bonds when due and a default could occur with respect to the payment of such principal and interest.

Special Tax Delinquencies
Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, are customarily billed to the properties within the District on the ad valorem property tax bills sent to owners of such properties. The Act currently provides that such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.

See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales,” for a discussion of the provisions which apply, and procedures which the City is obligated to follow under the Fiscal Agent Agreement, in the event of delinquencies in the payment of Special Taxes. See “RISK FACTORS — FDIC/Federal Government Interests in Properties” below, for a discussion of the policy of the Federal Deposit Insurance Corporation (the “FDIC”) regarding the payment of special taxes and assessment and limitations on the City’s ability to foreclose on the lien of the Special Taxes in certain circumstances where property within the District is owned by the federal government, agencies of the federal government, or, possibly, government sponsored enterprises such as Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”).

The City has the authority and the obligation, subject to the Act and the maximum Special Tax rates set forth in the Rate and Method, to increase the levy of Special Taxes against non-delinquent property owners in the District in the event other owners in the District are delinquent. Pursuant to the Rate and Method and the Act, under no circumstances may the Special Tax levied against any parcel used for private residential purposes be increased as a consequence of delinquency or default by owner of any other parcel or parcels within the District by more than 10% in any Fiscal Year. Thus, the City may not be able to increase Special Tax levies in future Fiscal Years by enough to make up for delinquencies for prior Fiscal Years. This would result in draws on the Reserve Fund, and if delinquencies continue and in the aggregate exceed the Reserve Fund balance, defaults would occur in the payment of principal and interest on the Bonds.

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37 Although the City will covenant in the Fiscal Agent Agreement to commence and diligently pursue foreclosure under the circumstances described under the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales,” foreclosure delays may occur under the circumstances described under the caption “RISK FACTORS — Bankruptcy and Foreclosure.” Delinquencies may result as a consequence of many factors. See “RISK FACTORS,” generally, for a discussion of certain potential causes of delinquencies.

Climate Change
According to the California Climate Change Fourth Assessment for the Inland Desert Regions, which was published in 2018, the region covering the City, the region will continue to experience, among other things, (a) extremely high maximum temperatures, (b) increased energy needs for cooling to compensate for a rise in temperatures, and (c) increased water stress in an already water-limited region. Such climate change risks may exacerbate the impact of natural disasters listed above. See “- Natural Disasters.” Natural Disasters
The District, like all California communities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Southern California is a seismically active area. On June 4, 2020, there was a 5.5 magnitude earthquake in the in Searless Valley, California in the County of San Bernardino. The City is located between several active fault zones including: the San Andreas Fault, the San Jacinto Fault, the Glen Helen Fault and the Loma Linda Fault. Seismic activity represents a potential risk for damage to buildings, roads, bridges and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. The District is not located within an earthquake fault zone.

In recent years, wildfires have caused extensive damage throughout the State, including within the City.

Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances entire neighborhoods have been destroyed. Several fires which occurred in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events.

In August 2021, there was a fire north of Glen Helen Parkway, east of Sierra Avenue and Lytle Creek Road, west of the 15 Freeway in San Bernardino County and approximately 15 minutes from the District that burned 819 acres. In September of 2021, there was another fire in the City of San Bernardino near the I-215 Freeway and University Parkway that burned 71 acres. The District is not located in an area which the Department of Forestry and Fire Protection of the State of California has designated as a very high fire hazard severity zone. However, there is a risk of residential property within the District being destroyed by wildfires and no assurance can be given as to the severity or frequency of wildfires within the vicinity of the District.

In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes.

Drought
From time to time, areas of the State have experienced significant drought conditions that resulted in severe impacts to water supplies and restrictions on water use. On July 8, 2021, Governor Newsom issued Executive Order No. 10-21, which declared a drought state of emergency in 50 counties in northern and central California (including the County) and requested that all water users voluntarily reduce water use by fifteen percent (15%). On October 19, 2021, the Governor extended the declaration to include the remaining counties, such that the drought state of emergency is in effect Statewide. At the end of March 2022, following the driest first three months of a year in the state’s recorded history, Governor Newsom signed an executive order calling on local water suppliers to move to Level 2 of their Water Shortage Contingency Plans, which require locally-appropriate Packet Pg. 2121
38 actions that will conserve water across all sectors, and directed the State Water Resources Control Board to consider a ban on the watering of decorative grass at businesses and institutions. The State Water Resources Control Board voted unanimously On May 24, 2022, to implement a statewide ban on watering of non-functional turf in the commercial, industrial, and institutional sectors, as well as regulations requiring local agencies to implement water use restrictions amid the possibility that water supplies may be up to 20% lower due to extreme weather. In the last ten years, the per capita water use in the system has been reduced due to conservation measures. An increase in drought conditions could lead to wildfires which may cause damage within the District.

See “-Natural Disasters” above.

Wind
According to the Safety Element of the City’s General Plan, the City is subject to extremely high winds, which have resulted in significant property damage. For example, portions of roofs and block walls have been broken and blown away and public utility structures such as power lines and traffic signals have been damaged.

The most significant wind problems occur at the canyon mouths and valleys extending downslope from the San Bernardino Mountains. The highest velocities are associated with downslope canyon and Santa Ana winds (90- 100 mph). Santa Ana wind conditions are a reversal of the prevailing southwesterly winds and usually occur on a region-wide basis during late summer and early fall. Santa Ana winds are dry, warm winds that flow from the higher desert elevations in the north through the mountain passes and canyons. Of the major fires in the San Bernardino Mountains, all have occurred during periods of high winds. The high wind velocity and property damage potential have resulted in the northern half of the City adjacent to the mountains being classified by the City as a “High Wind Area.” In this area of the City, stringent conditions for the construction of buildings and public facilities are applied.

Hazardous Substances
The presence of hazardous substances on a parcel may result in a reduction in the value of a parcel. In general, the owners and operators of a 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 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.

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

The value of the taxable property within the District, as set forth in the various tables in this Official Statement, does not reflect the presence of any hazardous substance or the possible liability of the owner (or operator) for the remedy of a hazardous substance condition of the property. The City has not independently verified, but is not aware, that any owner (or operator) of any of the parcels within the District has such a current liability with respect to any such parcel. However, it is possible that such liabilities do currently exist and that the District is not aware of them.

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39 Parity Taxes and Special Assessments
Property within the District is subject to taxes imposed by public agencies also having jurisdiction over the land within the District. See “THE DISTRICT — Estimated Direct and Overlapping Indebtedness.” The Special Taxes and any related penalties will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all special taxes and special assessments levied by the City and other agencies and is co-equal to and independent of the lien for general property taxes regardless of when they are imposed upon the same property. The Special Taxes have priority over all existing and future private liens imposed on the property except, possibly, for liens or security interests held by the Federal Deposit Insurance Corporation. See “RISK FACTORS — Bankruptcy and Foreclosure” below.

The City has no control over the ability of other entities and districts to issue indebtedness secured by special taxes, ad valorem taxes or assessments payable from all or a portion of the property within the District. In addition, the landowners within the District may, without the consent or knowledge of the City, petition other public agencies to issue public indebtedness secured by special taxes, ad valorem taxes or assessments. Any such special taxes, ad valorem taxes or assessments may have a lien on such property on a parity with the Special Taxes and could reduce the estimated value-to-lien ratios for property within the District described in this Official Statement. See “SOURCES OF PAYMENT FOR BONDS” and “THE DISTRICT — Estimated Direct and Overlapping Indebtedness.”
Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax even if the value of the parcel is sufficient may be affected by whether or not the owner was given due notice of the Special Tax authorization at the time the owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate and the risk of such a levy, and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The City has caused the Notice of Special Tax Lien to be recorded in the Office of the Recorder for the County against each parcel. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within the District or lending of money thereon.

The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute.

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

Non-Cash Payments of Special Taxes
Under the Act, the City Council as the legislative body of the 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 Taxes applicable thereto by tendering a Bond. Such a practice would decrease the cash flow available to the City to make payments with respect to other Bonds then outstanding; and, unless the practice was limited by the City, the Special Taxes paid in cash could be insufficient to pay the debt service due with respect to such other Bonds.

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40 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 Special Taxes, the Fiscal Agent Agreement includes a covenant pursuant to which the City will not authorize owners of taxable parcels to satisfy Special Tax obligations by the tender of Bonds unless the City shall have first obtained a report of an Independent Financial Consultant certifying that doing so would not result in the City having insufficient Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds when due.

Payment of the Special Tax Is Not a Personal Obligation of the Owners An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, the City has no recourse against the owner.

Concentration of Ownership
Based on development and ownership status as of May 1, 2022, the Developer and individual homeowners are expected to be responsible for approximately 55.46% and 44.54% of the projected Fiscal Year 2022-23 Special Tax levy, respectively.

The timely payment of principal of and interest on the Bonds depends upon the willingness and ability of the current and future property owners in the District to pay the Special Taxes prior to delinquency. General and local economic conditions and governmental requirements or restrictions may affect the willingness of the current property owners, or any successor property owners, to pay the Special Taxes, and there is no assurance that the current property owners, or any successor property owners, will pay such Special Taxes even if financially able to do so. Due to the concentration of ownership of the property within the District, a failure by the Developer or any successor property owner thereto to pay the Special Taxes may result in a default in the payment of debt service on the Bonds. See “THE DISTRICT – The Developer.” Land Values
The value of the property within the District is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of Special Taxes, the District’s only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes. See “THE DISTRICT — Appraisal Report” and APPENDIX B — “APPRAISAL REPORT.”
The Appraiser has estimated, on the basis of certain assumptions and limiting conditions contained in the Appraisal Report, that as of the Date of Value, the minimum market value of the property within the District was $47,976,884. See “THE DISTRICT — Appraisal Report.” The Appraisal Report indicates the Appraiser’s opinion as to the minimum market value of the properties referred to therein as of the date and under the conditions specified therein. The Appraiser’s opinion reflects conditions prevailing in the applicable market as of the Date of Value. The Appraiser’s opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future.

Prospective purchasers of the Bonds should not assume that the taxable land within the District could be sold for the appraised amount at a foreclosure sale for delinquent Special Taxes. In arriving at the estimate of market value, the Appraiser assumes that any sale will be unaffected by undue stimulus and will occur following a reasonable marketing period, which is not always present in a foreclosure sale. See APPENDIX B for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser. Any event which causes one of the Appraiser’s assumptions to be untrue could result in a reduction Packet Pg. 2124
41 of the value of the taxable land and improvements within the District from the market value estimated by the Appraiser.

No assurance can be given that any bid will be received for a parcel with delinquent Special Taxes offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquent Special Taxes.

See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” Increasing Mortgage Interest Rates
Between approximately November 2021 and July 2022, mortgage interest rates for 30-year loans have increased from approximately 3.1% to 5.0%. Mortgage interest rates are expected to continue to increase in the near term. Increases in mortgage interest rates could have a negative impact on the sale of the remaining homes in the District described herein. With respect to entry-level households, increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for owning a lower-priced home relative to renting a residence, thereby making purchasing less attractive. With respect to move-up households, higher mortgage interest rates may impact the desire of current homeowners to move from their present home due to the fact that their present home likely has a relatively low mortgage interest rate. In addition, the new home would likely have a higher interest rate on a new mortgage loan as well as a higher purchase price and property taxes. Such considerations may decrease the desire for move-up households to purchase a new home. The foregoing factors could reduce demand for and/or the ability to achieve the sales prices of the remaining homes to be sold within the District as described herein.

FDIC/Federal Government Interests in Properties
The ability of the City to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the FDIC, the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.

Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest.

The supremacy clause of the United States Constitution reads as follows: “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 supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.” This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within the District 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 City 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 parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v.

Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.

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42 Bankruptcy and Foreclosure
The payment of the Special Tax and the ability of the City to foreclose the lien of a delinquent unpaid tax may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State of California relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings and could result in the possibility of delinquent Special Tax installments not being paid in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds. To the extent that property in the District continues to be owned by a limited number of property owners, the chances are increased that the Reserve Fund could be fully depleted during any such delay in obtaining payment of delinquent Special Taxes.

As a result, sufficient moneys would not be available in the Reserve Fund for transfer to the Debt Service Fund or the Redemption Fund to make up shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of and interest on the Bonds on a timely basis.

To the extent that bankruptcy or similar proceedings were to involve a large property owner, the chances would increase the likelihood that the Reserve Fund could be fully depleted during any resulting delay in receiving payment of delinquent Special Taxes. As a result, sufficient monies would not be available in the Reserve Fund for transfer to the Redemption Fund to make up any shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of and interest on the Bonds on a timely basis.

On July 30, 1992, the United States Court of Appeals for the Ninth Circuit issued its opinion in a bankruptcy case entitled In re Glasply Marine Industries. In that case, the court held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on that property. The court upheld the priority of unpaid ad valorem property taxes imposed before the bankruptcy petition (the “pre-petition taxes”), but unpaid taxes imposed after the filing of the bankruptcy petition (“post-petition taxes”) were declared to be unsecured “administrative expenses” of the bankruptcy estate, and were therefore held to be payable from the bankruptcy estate only after payment of all secured creditors. As a result, the secured creditor of the property was able to foreclose on the property and retain all of the proceeds of the sale except for the amount of the prepetition taxes.

According to the court’s ruling, as administrative expenses, post-petition taxes would have to be paid, but only if the debtor had sufficient assets not subject to other perfected security interests to do so. In certain circumstances, payment of such administrative expenses may also be allowed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise) it would at that time again become subject to and would secure liens for then current and future ad valorem property taxes.

Glasply was controlling precedent on bankruptcy courts in the State of California for several years subsequent to the date of the Ninth Circuit’s holding. Pursuant to state law, the lien date for general ad valorem property taxes levied in the State of California is the January 1 preceding the Fiscal Year for which the taxes are levied. Under the Glasply holding, a bankruptcy petition filing would have prevented the lien for general ad valorem property taxes levied in Fiscal Years subsequent to the filing of a bankruptcy petition from attaching and becoming a lien so long as the property was a part of the estate in bankruptcy. However, the Glasply holding was for the most part subsequently rendered inoperative with respect to the imposition of a lien for and the collection of ad valorem property taxes by amendments to the federal Bankruptcy Code (Title 11 U.S.C.) which were part of the Bankruptcy Reform Act of 1994 (the “Bankruptcy Reform Act”) passed by Congress during the latter part of 1994. The Bankruptcy Reform Act added a provision to the automatic stay section of the Bankruptcy Code Packet Pg. 2126
43 which, pursuant to Section 362(b)(18) thereof, excepts from the Bankruptcy Code’s automatic stay provisions, “the creation of a statutory lien for an ad valorem property tax imposed by . . . a political subdivision of a state, if such tax comes due after the filing of the petition” by a debtor in bankruptcy court. The effect of this provision is to continue the secured interest of ad valorem taxes on real property (i.e., post-petition taxes) in effect during the period following the filing of a bankruptcy petition, including during the period bankruptcy proceedings are pending.

Without further clarification by the courts or Congress, the original rationale of the Glasply holding could, however, still result in the treatment of post-petition special taxes as “administrative expenses,” rather than as tax liens secured by real property, at least during the pendency of bankruptcy proceedings. This treatment might result from the fact that, although the lien of special taxes is of record from the date of the filing of a Notice of Special Tax Lien, the actual special tax is levied annually. As noted above, special taxes have a different lien date than the lien date for general ad valorem property taxes in the State of California noted above. The lien of a MelloRoos special tax attaches upon recordation of the notice of the special tax lien, as provided for in Section 53328.3 of the Act, as opposed to the annual January 1 lien date for general ad valorem property taxes. Thus, in deciding whether the original Glasply ruling is applicable to a bankruptcy proceeding involving special taxes rather than general ad valorem property taxes, a court might consider the differences in the statutory provisions for creation of the applicable tax lien (general ad valorem or special tax) in determining whether there is a basis for postpetition special taxes to be entitled to a lien on the property during pending bankruptcy proceedings. If a court were to apply Glasply to eliminate the priority of the special tax lien as a secured claim against property with respect to post-petition levies of the Special Taxes made against property owners within the District who file for bankruptcy, collections of the Special Taxes from such property owners could be reduced as the result of being treated as “administrative expenses” of the bankruptcy estate. Also, and most importantly, is the fact that the original holding in Glasply and the mitigation of that holding by the Bankruptcy Reform Act of 1994 both appear to be applicable only to general ad valorem property taxes, and, therefore, the exemption from the automatic stay in Section 362(b)(18) discussed above may not be applicable to special taxes since they were not expressly mentioned or provided for in this section, nor defined to be included within the term “ad valorem property taxes.” No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or in the event interest on the Bonds becomes included in gross income for federal income tax purposes.

See “— Limitations on Remedies” below.

Loss of Tax Exemption
As discussed under the caption “LEGAL MATTERS — Tax Exemption,” the interest on the Bonds could become includable in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds as a result of a failure of the City to comply with certain provisions of the Code. Such an event of taxability would not in and of itself result in an early redemption of the Bonds and the Bonds will remain outstanding to maturity or until redeemed under the redemption provisions of the Fiscal Agent Agreement.

Limitations on Remedies
Remedies available to the owners of the 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 Bonds or to preserve the tax-exempt status of the Bonds.

Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Fiscal Agent Agreement to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditors’ rights, by equitable principles and by the exercise of judicial discretion. The lack of availability of certain remedies or Packet Pg. 2127
44 the limitation of remedies may entail risks of delay, limitation or modification of the rights of the owners of the Bonds.

Limited Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Although the City has committed to provide certain financial and operating information on an annual basis, there can be no assurance that such information will be available to Bond owners on a timely basis. See “CONTINUING DISCLOSURE.” The failure to provide the required annual financial information does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.

Voter Initiatives
Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, 2010.

Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies such as the City. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the Bonds.

Proposition 218 —Voter Approval for Local Government Taxes — Limitation on Fees, Assessments, and Charges — Initiative Constitutional Amendment, added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges.

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

The Special Taxes and the issuance of special tax bonds of the City for the District were each authorized by not less than a two-thirds vote of the landowners within the District who constituted the qualified electors at the time of such voted authorization. The City believes, therefore, that issuance of the Bonds does not require the conduct of further proceedings under the Mello-Roos Act, Proposition 218 or Proposition 26.

Like their antecedents, Proposition 218 and Proposition 26 are likely to undergo both judicial and legislative scrutiny before the impact on the City and the District can be determined. Certain provisions of Proposition 218 and Proposition 26 may be examined by the courts for their constitutionality under both State and federal constitutional law, the outcome of which cannot be predicted.

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45 IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar bonds).

Ballot Initiatives
From time to time, initiative measures qualify for the State ballot pursuant to the State’s constitutional initiative process, and those measures could be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State, the County or other local districts to increase revenues or to increase appropriations or on the ability of the landowners to complete the development of land in the District.

See “–Voter Initiatives” below.

Recent Case Law Related to the Mello-Roos Act
On August 1, 2014, the California Court of Appeal, Fourth Appellate District, issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego. The CCFD is a financing district established under its City of San Diego charter (the “Charter”) and was intended to function much like a community facilities district established under the Mello-Roos Act. The CCFD was comprised of all of the real property in the entire City of San Diego.

However, the CCFD special tax was to be levied only on properties in the CCFD that were improved with a hotel.

At the election to authorize the CCFD special tax, the CCFD proceedings limited the electorate to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel was located.

Registered voters in the City of San Diego were not permitted to vote. This definition of the qualified electors of the CCFD was based on Section 53326(c) of the Mello-Roos 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 community facilities district whose property would be subject to the special tax.

The San Diego Court held that the CCFD special tax election did not comply with the City of San Diego’s Charter and with applicable provisions of the California Constitution -- specifically Article XIIIA, section 4 (“Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district....”) and Article XIIIC, section 2(d) (“No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote.”) -- because the electors in the CCFD election should have been the registered voters residing within the CCFD (the boundaries of which were coterminous with the boundaries of the City of San Diego).

As to the District, there were no registered voters within the District at the time of the election to authorize the Special Taxes. Significantly, the San Diego Court expressly stated that it was not addressing the validity of a landowner election to impose special taxes on residential property pursuant to the Mello-Roos Act in situations where there are fewer than 12 registered voters. Therefore, by its terms, the San Diego Court’s holding does not apply to the special tax election in the District.

Moreover, Sections 53341 and 53359 of the Act establish a limited period of time in which special taxes levied under the Mello-Roos Act may be challenged by a third party:
53341. Any action or proceeding to attack, review, set aside, void, or annul the levy of a special tax or an increase in a special tax pursuant to [the Mello-Roos Act] shall be commenced within 30 days after the special tax is approved by the voters....

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46 53359. An action to determine the validity of bonds issued pursuant to [the Mello-Roos Act] or the validity of any special taxes levied pursuant to [the Mello-Roos Act] ... shall .... be commenced within 30 days after the voters approve the issuance of the bonds or the special tax ...

Section 53326(b) of the Mello-Roos Act defines the authorized voters for an election in which the special taxes will be levied on residential property: “Except as otherwise provided in subdivision (c), if at least 12 persons, who need not necessarily be the same 12 persons, have been registered to vote within the territory of the proposed community facilities district for each of the 90 days preceding the close of the protest hearing, the vote shall be by the registered voters of the proposed district, with each voter having one vote. Otherwise, the vote shall be by the landowners of the proposed district and each person who is the owner of land at the close of the protest hearing, or the authorized representative thereof, shall have one vote for each acre or portion of an acre of land that he or she owns within the proposed community facilities district not exempt from the special tax....” Landowner voters approved the Special Taxes and the issuance of bonds for the District in compliance with all applicable requirements of the Mello-Roos Act in 2020. Therefore, pursuant to Sections 53341 and 53359 of the Mello-Roos Act, the statute of limitations period to challenge the validity of the special tax has expired.

Because the San Diego Court expressly stated that it did not consider the facts presented by the District and because the period for challenging the Special Taxes has passed, the City believes the Special Taxes are valid and cannot be challenged.

Potential Early Redemption of Bonds from Prepayments or Assessment Bond Proceeds Property owners within the District, including the Developer and any individual property owner, are permitted to prepay their Special Taxes at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities district. Such prepayments will result in a redemption of the Bonds on the Interest Payment Date for which timely notice may be given under the Fiscal Agent Agreement following the receipt of the prepayment. The resulting redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds.

See the caption “THE BONDS — Redemption.”
Legal Requirements
Other events that may affect the value of a parcel include changes in the law or application of the law.

Such changes may include, without limitation, local growth control initiatives, local utility connection moratoriums and local application of statewide tax and governmental spending limitation measures. Development in the District may also be adversely affected by the application of laws protecting endangered or threatened species.

COVID-19 Outbreak
The spread of the COVID-19 pandemic is impacting governments, businesses and people in a manner that is having negative effects on global and local economies. In addition, financial markets in the U.S. and globally have seen significant declines and volatility attributed to coronavirus concerns. The COVID-19 pandemic is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak, and the economic and other actions that may be taken by governmental authorities to contain the outbreak or to treat its impact are uncertain. However, the impact of the COVID-19 outbreak could adversely impact development within the District, including, but not limited to one or more of the following ways: (a) potential supply chain slowdowns or shutdowns resulting from the unavailability of workers in locations producing construction materials; (b) slowdowns or shutdowns of local governmental agencies in providing governmental permits, inspections, title and document recordation, and other services and activities associated with real estate development; (c) delays in construction where one or more members of the workforce becomes infected with COVID-19; (d) continued extreme fluctuations in the financial markets and contraction in available liquidity; (e) extensive job losses and declines in business activity across important sectors of the economy; (f) declines in Packet Pg. 2130
47 business and consumer confidence that negatively impact economic conditions or cause an economic recession; (g) the failure of government measures to stabilize the financial sector and introduce fiscal stimulus to counteract the economic impact of the pandemic; (h) delays in sales or fewer sales due to lower traffic at model home complexes and real estate offices; and (i) delays in sales, or cancellations, due to mortgage lending issues.

There can be no assurances that the spread of COVID-19 and/or responses intended to slow the spread of COVID-19 such as declining travel and business activity, will not materially adversely impact the state and national economies and, accordingly, materially adversely impact the financial condition of the City. The ultimate geographic spread of the virus, the duration and severity of the outbreak, and the economic and other actions that may be taken by governmental authorities to contain the outbreak or to treat its impact are uncertain. The ultimate adverse impact of COVID-19 on the City, the District, the Developer’s operations and finances, homebuyers’ willingness and ability to pay Special Taxes when due, and the real estate market in general is unknown.

Cyber Security
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. To date, the City has not experienced a material threat to its computer operating system. However, no assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City or the District, or the administration of the Bonds.

The City is also reliant on other entities and service providers in connection with the administration of Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes, the Fiscal Agent, and the dissemination agent. No assurance can be given that the City and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond Owners.

CONTINUING DISCLOSURE
City Continuing Disclosure
Pursuant to the City Continuing Disclosure Certificate, the City will agree to provide, or cause to be provided, to the EMMA system of the Municipal Securities Rulemaking Board, which can be found on the Internet at www.emma.msrb.org, on an annual basis certain financial information and operating data concerning the District. This covenant is being made by the City in order to assist the Underwriter in complying with the Rule.

The City and its related entities have previously entered into continuing disclosure undertakings under the Rule in connection with the issuance of municipal obligations. The City is late in filing its continuing disclosure obligations for Fiscal Year 2020-21 for the City of San Bernardino Taxable Pension Obligation Bonds, 2020 Series A. [As of the date of this Official Statement, the City has made corrective filings and provided the requested information.]
Developer Continuing Disclosure
Although the Developer is not considered to be an obligated person under the Rule, the Developer has agreed to enter into a Developer Continuing Disclosure Certificate in connection with the issuance of the Bonds, pursuant to which it will provide semi-annual reports containing updated information with respect to the development within the District. Pursuant to the Developer Continuing Disclosure Certificate, the Developer will provide semi-annual reports not later than April 1 and September 30 of each year beginning April 1, 2023, until satisfaction of certain conditions set forth in the Developer Continuing Disclosure Certificate. The semi-annual reports to be provided by the Developer will contain updates regarding the development within the District as outlined in Section 4 of the Developer Continuing Disclosure Certificate attached as APPENDIX E. In addition Packet Pg. 2131
48 to its semi-annual reports, the Developer will agree to provide notices of certain events set forth in the Developer Continuing Disclosure Certificate.

The Developer’s obligations under the Developer Continuing Disclosure Certificate will terminate upon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all of the Bonds, or (b) if, at any time, the Developer and its Affiliates (as defined in the Developer Continuing Disclosure Certificate), collectively, own fewer than 24 lots within the District.

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

Developer Continuing Disclosure Compliance. This is the first continuing disclosure undertaking by the Developer with respect to community facilities districts or assessment districts in California within the past five years.

LEGAL MATTERS
Tax Exemption
In the opinion of Best Best & Krieger LLP, Riverside California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that interest on the Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum tax.

Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest on the Bonds is based upon certain representations of fact and certifications made by the City, on behalf of the District, the Underwriter and others and is subject to the condition that the City complies with all requirements of the Code and the regulations adopted pursuant to the Code (the “Treasury Regulations”) that must be satisfied subsequent to the issuance of the Bonds to assure that interest on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code and the Treasury Regulations might cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City will covenant in the Fiscal Agent Agreement and the Tax Certificate to be delivered in connection with the issuance of the Bonds to comply with all such requirements.

Should the interest on the Bonds become includable in gross income for federal income tax purposes, the Bonds are not subject to early redemption as a result of such occurrence and will remain outstanding until maturity or until otherwise redeemed in accordance with the Fiscal Agent Agreement.

Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Bond Owners from realizing the full current benefit of the tax status of such interest. For example, legislative proposals are announced from time to time which generally would limit the exclusion from gross income of interest on obligations like the Bonds to some extent for taxpayers who are individuals and whose income is subject to higher marginal income tax rates. Other proposals have been made that could significantly reduce the benefit of, or otherwise affect, the exclusion from gross income of interest on obligations like the Bonds. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds.

Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed Packet Pg. 2132
49 federal or state tax legislation, regulations or litigation, and regarding the impact of future legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.

Bond Counsel’s opinion may be affected by action taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such action or events are taken or do occur, or whether such actions or events may adversely affect the value or tax treatment of a Bond, and Bond Counsel expresses no opinion with respect thereto.

Although Bond Counsel will render an opinion that interest on the Bonds is excluded from gross income for federal income tax purposes provided the City continues to comply with certain requirements of the Code, the accrual or receipt of interest on the Bonds may otherwise affect the tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient’s particular tax status and other items of income or deductions. Bond Counsel expresses no opinion regarding any such consequences. Accordingly, all potential purchasers should consult their tax advisors before purchasing any of the Bonds.

A copy of the proposed form of Bond Counsel opinion is attached hereto as APPENDIX F.

Legal Opinion
The legal opinion of Bond Counsel, approving the validity of the Bonds in substantially the form set forth as APPENDIX F, will be made available to the original purchaser at the time of original delivery. A copy of the legal opinion for the Bonds will be provided with each definitive bond. Certain legal matters will be passed upon for the City and the District by the City Attorney’s Office, and by Best Best & Krieger LLP, Riverside, California, as Disclosure Counsel, and for the Underwriter by Kutak Rock, LLP, Irvine, California, as counsel to the Underwriter.

Litigation
No litigation is pending or threatened concerning the validity of the Bonds, the pledge of Special Tax Revenues to repay the Bonds, the powers or authority of the City with respect to the Bonds, or seeking to restrain or enjoin development of the land within the District and a certificate of the City to that effect will be furnished to the Underwriter at the time of the original delivery of the Bonds.

No Rating
The District has not made and does not contemplate making application to any rating agency for the assignment of a rating of the Bonds.

Underwriting
The Bonds are being purchased by Hilltop Securities Inc. (the “Underwriter”). The Underwriter has agreed to purchase the Bonds at a price of $__________ (being $__________ aggregate principal amount thereof, less Underwriter’s discount of $__________ and plus net original issue premium of $___________). The purchase agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in such purchase agreement, the approval of certain legal matters by counsel and certain other conditions.

Under certain circumstances, the Underwriter may offer and sell the Bonds to certain dealers and others at prices lower or yields greater than the offering prices or yields stated on the inside cover page of this Official Statement. The offering prices or yields may be changed from time to time by the Underwriter.

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50 Municipal Advisor
The District has retained Columbia Capital Management, LLC, Carlsbad, California, as municipal advisor (the “Municipal Advisor”) for the sale of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.

The Municipal Advisor, is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

Financial Interests
The fees being paid to the Municipal Advisor, the Underwriter, Underwriter’s Counsel, Bond Counsel and Disclosure Counsel are contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel and Disclosure Counsel represent the Underwriter on matters unrelated to the Bonds.

Pending Legislation
[The District is not aware of any significant pending legislation which would have material adverse consequences on the Bonds or the ability of the District to pay the principal of and interest on the Bonds when due.]
Additional Information
The purpose of this Official Statement is to supply information to prospective buyers of the Bonds.

Quotations and summaries and explanations of the Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete statements and their provisions.

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51 The execution of this Official Statement by the City Manager of the City and the delivery thereof have been duly authorized by the City Council acting in its capacity as the legislative body of the District.

THE CITY OF SAN BERNARDINO
By:

City Manager of the City of San Bernardino
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APPENDIX A

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
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APPENDIX B

APPRAISAL REPORT
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APPENDIX C

SUPPLEMENTAL INFORMATION CONCERNING

CITY OF SAN BERNARDINO AND COUNTY OF SAN BERNARDINO
The Bonds will not be secured by any pledge of ad valorem taxes or City General Fund revenues but will be payable solely from Special Taxes to levied on and collected from the owners of certain taxable land within the District. The information set forth below is included in the Official Statement for background purposes only.

General Description and Background
Incorporated in 1854, the City of San Bernardino (the “City”) is a charter city that functions under a Council-Manager form of government. The governance structure is comprised of an at-large elected Mayor and seven Council Members elected by constituents in the specific ward. Each elected official serves a four-year term.

San Bernardino County (the “County”), which encompasses 20,105 square miles, is the largest county in the contiguous United States. On April 26, 1853, the County was created from parts of Los Angeles, San Diego and Mariposa Counties. Located in the southeastern portion of California, the County is bordered on the south by Riverside County, on the east by the State of Arizona and Nevada, on the north by Inyo and Tulare Counties, and on the west by Los Angeles and Kern Counties. There are 24 incorporated cities in the County.

The County’s varying topology includes desert, valley and mountain areas as well as gently rolling terrain.

Three distinct geographical areas characterize the County: the valley region, the mountain region and the desert region. The valley region contains the majority of the County’s incorporated areas and is the most populous region. The mountain region is primarily comprised of public lands owned and managed by federal and state agencies. The desert region is the largest region and includes parts of the Mojave Desert.

Population
The following sets forth the City, the County and the State population estimates as of January 1, for the years 2018 to 2022:

CITY OF SAN BERNARDINO, SAN BERNARDINO COUNTY AND STATE OF CALIFORNIA Estimated Population
Year
(January 1)
City of
San Bernardino
San Bernardino
County
State of
California
2018 217,550 2,150,017 39,519,535
2019 217,701 2,165,876 39,605,361
2020 217,935 2,175,424 39,648,938
2021 222,024 2,182,343 39,303,157
2022 220,840 2,187,665 39,185,605
Source: State of California Department of Finance, Demographic Research Unit. March 2020 and 2010 Benchmark.

Commerce
A summary of historic taxable sales within the City for the years 2017 to 2021 is shown in the following table. Total taxable sales during calendar year 2021 in the City were reported to be $4,586,492,917, a 37.8% increase over the total taxable sales of $3,329,458,829 reported during calendar year 2020.

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CITY OF SAN BERNARDINO
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Total Retail and Food Services Total All Outlets
Number of
Permits
Taxable
Transactions
Number of
Permits
Taxable
Transactions
2017 5,598 $2,573,088,941 7,313 $3,101,214,754
2018 5,635 2,677,251,960 7,625 3,261,802,303
2019 5,789 2,731,818,391 8,005 3,335,912,787
2020 6,288 2,774,471,134 8,823 3,329,458,829
2021 5,442 3,868,978,999 7,875 4,586,492,917
Source: California State Board of Equalization, Taxable Sales in California – Cities by Type of Business (Taxable Table 4).

A summary of historic taxable sales within the County during for the years 2017 to 2021 is shown in the following table. Total taxable sales during calendar year 2021 in the County were reported to be $55,254,235,219, a 27.7% increase over the total taxable sales of $43,265,512,311 reported during calendar year 2020.

COUNTY OF SAN BERNARDINO
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Total Retail and Food Service Total All Outlets
Number of
Permits
Taxable
Transactions
Number of
Permits
Taxable
Transactions
2017 39,067 25,603,171,101 58,956 $38,399,372,700
2018 39,837 26,905,783,745 61,838 40,554,023,790
2019 40,964 27,585,905,470 64,771 41,768,747,848
2020 44,330 28,745,277,036 71,145 43,265,512,311
2021 40,801 38,261,479,465 66,585 55,254,235,219
Source: California State Board of Equalization, Taxable Sales in California – Counties by Types of Business (Taxable Table 3).

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Employment and Industry
The City is included in the Riverside-San Bernardino-Ontario labor market area. The unemployment rate in the Riverside-San Bernardino-Ontario MSA was 4.3% in March 2022, down from a revised 5.0% in February 2022, and below the year-ago estimate of 8.5%. This compares with an unadjusted unemployment rate of 4.2% for California and 3.8 % for the nation during the same period. The unemployment rate was 4.3 % in Riverside County and 4.3 % in San Bernardino County.

The following table shows the average annual estimated numbers of wage and salary workers by industry.

The table does not include proprietors, the self-employed, unpaid volunteers or family workers, domestic workers in households, and persons in labor management disputes.

RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA (SAN BERNARDINO COUNTY)
Industry Employment & Labor Force
(Annual Averages)
2016 2017 2018 2019 2020
Civilian Labor Force 930,200 942,000 955,000 966,800 971,400 Civilian Employment 876,400 895,300 915,500 929,000 877,000 Civilian Unemployment 53,900 46,800 39,500 37,700 94,400 Civilian Unemployment Rate 5.8% 5.0% 4.1% 3.9% 9.7%
Total Farm 1,900 2,200 2,200 2,500 2,000
Total Nonfarm 725,200 748,800 770,500 798,500 776,700
Goods Producing 90,700 92,100 95,100 95,200 91,100
Mining and Logging 600 600 800 700 900
Construction 33,800 35,200 37,800 39,000 38,400
Manufacturing 56,300 56,300 56,600 55,400 51,900
Durable Goods 35,500 35,000 34,900 34,600 31,600
Nondurable Goods 20,800 21,400 21,700 20,800 20,300
Service Providing 634,500 656,700 675,400 703,300 685,600 Trade, Transportation and Utilities 193,500 206,600 216,000 224,800 231,200 Wholesale Trade 39,100 38,700 40,500 41,500 40,200
Retail Trade 87,400 88,200 88,300 87,000 82,000
Transportation, Warehousing and Utilities 67,000 79,600 87,100 96,300 109,000 Information 5,200 5,200 5,300 5,000 4,000
Financial Activities 23,800 22,400 21,700 23,400 22,900 Professional and Business Services 20,100 20,600 21,500 23,000 22,900 Educational and Health Services 10,400 10,800 11,100 11,700 10,400 Leisure and Hospitality 71,500 75,200 76,900 78,100 62,900 Other Services 22,800 22,800 23,000 22,900 20,100
Government 122,900 124,600 127,100 129,100 124,800
Total, All Industries 727,100 750,900 772,700 801,000 778,700 Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix C.

Source: State of California, Employment Development Department, March 2021 Benchmark.

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Principal Employers
The table below shows the 10 principal employers in the City as of June 30, 2021.

CITY OF SAN BERNARDINO

LARGEST EMPLOYERS
(As of June 30, 2021)
Rank Employer
Number of
Employees
1 Stater Brothers 23,100
2 San Bernardino City Unified School District 7,700
3 County of San Bernardino 6,094
4 The Roman Catholic Bishop of San Bernardino 2,400
5 California State University, San Bernardino 2,300
6 San Bernardino Community College District 1,446
7 Community Hospital of San Bernardino 1,400
8 The San Bernardino Hilton 1,152
9 City of San Bernardino 1,140
10 Superior Court of California, County of San Bernardino 1,000 Source: City of San Bernardino, California Annual Comprehensive Financial Report for the year ending June 30, 2021.

The table below shows the 10 principal employers in the County as of June 30, 2021.

COUNTY OF SAN BERNARDINO

PRINCIPAL EMPLOYERS
(As of June 30, 2021)
Rank Name of Business Employees
Percentage of Total
Employment

1. San Bernardino County >10,000 1.11%

2. Loma Linda University Medical Center >10,000 1.11

3. Amazon 5,000-9,999 0.55-1.11

4. Ontario International Airport 5,000-9,999 0.55-1.11

5. Plaxicon Holding Corporation 5,000-9,999 0.55-1.11

6. California State University San Bernardino 5,000-9,999 0.55-1.11

7. James Jones Company 2,500-4,999 0.28-0.55

8. Barret Business Services Inc. 2,500-4,999 0.28-0.55

9. Damao Luggage International Inc. 2,500-4,999 0.28-0.55

10. San Manuel Indian Bingo and Casino 2,500-4,999 0.28-0.55 Source: San Bernardino County State of California Annual Comprehensive Financial Report for the year ending June 30, 2021.

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APPENDIX D

SUMMARY OF FISCAL AGENT AGREEMENT
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APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATES OF THE CITY AND THE DEVELOPER

CONTINUING DISCLOSURE CERTIFICATE OF THE CITY
This Continuing Disclosure Certificate, dated as of __________, 2022 (the “Disclosure Certificate”), is executed and delivered by the City of San Bernardino (the “City”) in connection with the issuance and delivery by the City of its $3,480,000* Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds (the “Bonds”). The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of __________ 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S.

Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). The City covenants as follows:

SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.

SECTION 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Annual Report Date” means the 1st of April after the end of the City’s fiscal year, commencing April 1, 2023.
“Beneficial Owner” shall mean any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for federal income purposes.
“Disclosure Representative” shall mean the City Manager or the Assistant City Manager/Administrative Services Director of the City, or their designee, or such other officer or employee as the City shall designate in writing from time to time.
“Dissemination Agent” shall mean, initially, the City, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the City and which has filed with the then current Dissemination Agent a written acceptance of such designation. “Fiscal Year” shall mean the period from July 1 to June 30, or any other period selected by the City as its fiscal year.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. *
Preliminary, subject to change.

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“Official Statement” shall mean the final official statement executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” shall mean the original underwriter of the Bonds that is required to comply with the Rule in connection with offering of the Bonds. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “State” shall mean the State of California.

SECTION 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2023, with the report for the 2022-23 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate; provided, however, that the audited financial statements for fiscal year 2022-23 will be filed when available. The first Annual Report shall consist solely of the Official Statement. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) in a timely manner to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A to this Disclosure Certificate.
(c) With respect to each Annual Report, the Dissemination Agent shall. (i) determine prior to each Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

SECTION 4. Content of Annual Report. The City’s Annual Report shall contain or include by reference the following:
(a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

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(b) The following information, unless otherwise specified, as of September 30 of the preceding year:
(i) Principal amount of all outstanding bonds.
(ii) Balance in the Improvement Fund, until such time as the fund is closed. (iii) Balance in the Reserve Fund, statement of the Reserve Requirement as of the immediately preceding April 1 and statement of projected draws on the Reserve Fund. (iv) Update of Table 1, using assessed values instead of appraised values. (v) Update of Table 4, using assessed values instead of appraised values. (vi) Update of Table 5, using assessed values instead of appraised values (overlapping general obligation debt information needed not be included in the update). (vii) Update of Table 6, using assessed values instead of appraised values (overlapping general obligation debt information needed not be included in the update). (viii) Notwithstanding the September 30 reporting date, the following information shall be reported as of February 1 immediately preceding the date of the Annual Report rather than as of September 30.

Identity of each delinquent taxpayer responsible for 5 percent or more of total Special Tax levied, and the following information: assessor parcel number, assessed value of applicable properties, amount of Special Tax levied, amount delinquent by parcel number and status of foreclosure proceedings. If any foreclosure has been completed, summary of results of foreclosure sales or transfers. (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. (d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(i) Principal and interest payment delinquencies.
(ii) Non-payment related defaults, if material.
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iv) Unscheduled draws on credit enhancements reflecting financial difficulties. (v) Substitution of credit or liquidity providers, or their failure to perform. (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.

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(vii) Modifications to rights of security holders, if material. (viii) Bond calls, if material, and tender offers.
(ix) Defeasances.
(x) Release, substitution, or sale of property securing repayment of the securities, if material. (xi) Rating changes.
(xii) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
(xiii) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (xiv) Appointment of a successor or additional fiscal agent or the change of name of the fiscal agent, if material.
(xv) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material (for the definition of “financial obligation,” see clause (e)). (xvi) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties (for the definition of “financial obligation,” see clause (e)).
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of a Listed Event described in subsection (a)(viii) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Fiscal Agent Agreement. (c) The City acknowledges that the events described in subparagraphs (a)(ii), (a)(vii), (a)(viii) (if the event is a bond call), (a)(x), (a)(xiii), (a)(xiv) and (a)(xv) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(xi) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds. The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above. The Dissemination Agent shall not be responsible for determining whether an event is material.
(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(xii) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or Packet Pg. 2146
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governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.
(e) For purposes of Section 5(a)(xv) and (xvi), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.

SECTION 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB pursuant to this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

SECTION 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).

SECTION 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.

SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.

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A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).

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

SECTION 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders, or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

SECTION 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

SECTION 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.

CITY OF SAN BERNARDINO, for and on behalf of
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN

BERNARDINO, COUNTY OF SAN BERNARDINO,

STATE OF CALIFORNIA
By:

Assistant City Manager/Administrative
Services Director
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EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of San Bernardino
Name of Bond Issue: $ ________________________________________ Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino 2022 Special Tax Bonds Date of Issuance: ___________________________, 2022
NOTICE IS HEREBY GIVEN that the City of San Bernardino (the “City”) on behalf of Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino has not provided an Annual Report with respect to the above-named Bonds as required by the Fiscal Agent Agreement dated as of _______ 1, 2022, by and between the City and U.S. Bank Trust Company, National Association, as Fiscal Agent. The City anticipates that the Annual Report will be filed by __________, ,20__.

Dated:

CITY OF SAN BERNARDINO, for and on behalf of
COMMUNITY FACILITIES DISTRICT NO. 2020-1
(RANCHO PALMA) OF THE CITY OF SAN

BERNARDINO, COUNTY OF SAN BERNARDINO,

STATE OF CALIFORNIA
By:

Assistant City Manager/Administrative
Services Director
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FORM OF CONTINUING DISCLOSURE CERTIFICATES OF THE CITY AND THE DEVELOPER

CONTINUING DISCLOSURE CERTIFICATE OF THE DEVELOPER
This Continuing Disclosure Certificate of the Developer (this “Disclosure Certificate”), dated as of _______, 2022, is executed and delivered by TH Rancho Palma, LLC, a Delaware limited liability company (the “Property Owner”), in connection with the issuance by the Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino, County of San Bernardino, State of California (the “Bonds”). The Bonds are being issued pursuant to a Fiscal Agent Agreement dated ______, 2022 by and between the City of San Bernardino (the “City”) and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”) (the “Fiscal Agent Agreement”). The Property Owner covenants and agrees as follows:

SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Property Owner for the benefit of the holders and beneficial owners of the Bonds.

SECTION 2. Definitions. In addition to the definitions set forth above and in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined herein, the following capitalized terms shall have the following meanings. “Affiliate” means any person presently directly (or indirectly through one or more intermediaries) under managerial control of the Property Owner, and about whom information could be material to potential investors in their investment decision regarding the Bonds (including without limitation information relevant to the proposed development of the Property or to the Property Owner’s ability to pay the Special Taxes levied on the Property prior to delinquency).
“Assumption Agreement” means an undertaking of a Major Owner, for the benefit of the holders and beneficial owners of the Bonds, containing terms substantially similar to this Disclosure Certificate (as modified for such Major Owner’s development and financing plans with respect to the property in the District acquired by the Major Owner), whereby such Major Owner agrees to provide semi-annual reports and notices of significant events, setting forth the information described in sections 4 and 5 hereof, respectively, with respect to the portion of the property in the District owned by such Major Owner and, at the option of the Property Owner or such Major Owner, agrees to indemnify the Dissemination Agent (if any) pursuant to a provision substantially in the form of Section 12 hereof.
“Dissemination Agent” means the Property Owner, or any successor Dissemination Agent designated in writing by the Property Owner, which is experienced in providing dissemination agent services such as those required under this Disclosure Certificate, and which has filed with the Property Owner, the District and the Participating Underwriter, a written acceptance of such designation and acceptance. “District” means Community Facilities District No. 2020-1 (Rancho Palma) of the City of San Bernardino, County of San Bernardino, State of California. “Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. “Major Owner” means, as of any date of determination, a Person that, together with the Person’s Affiliates, owns 24 or more residential lots in the District subject to the Special Tax. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information. “Official Statement” means the Official Statement dated _____, 2022, executed by the City in connection with the issuance of the Bonds.

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“Participating Underwriter” means Hilltop Securities Inc., the original underwriter of the Bonds. “Property” means (i) the property owned by the Property Owner or an Affiliate in the District, and (ii) the property in the District that the Property Owner or an Affiliate sold to a Major Owner who has not assumed the undertakings of this Disclosure Certificate under Section 7(b) that is owned by such Major Owner as of the date of determination.
“Report Date” means (a) April 1 of each year, and (b) September 30 of each year. “Semi-Annual Report” means any Semi-Annual Report provided by the Property Owner pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Special Taxes” means the special taxes levied by the District on the Property.

SECTION 3. Provision of Semi-Annual Reports.
(a) Until such obligations are terminated pursuant to Section 7 herein, the Property Owner shall, or upon written direction of the Property Owner the Dissemination Agent shall, not later than the Report Date, commencing April 1, 2023, provide to the MSRB, in an electronic format as prescribed by the MSRB, a SemiAnnual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 calendar days prior to the Report Date, the Property Owner shall provide the Semi-Annual Report to the Dissemination Agent (if different from the Property Owner). The Property Owner shall provide a written certification with (or included as a part of) each Semi-Annual Report furnished to the Dissemination Agent (if different from the Property Owner), to the effect that such Semi-Annual Report constitutes the Semi-Annual Report required to be furnished by it under this Disclosure Certificate. The Dissemination Agent may conclusively rely upon such certification of the Property Owner and shall have no duty or obligation to review the Semi-Annual Report. The Semi-Annual Report may be submitted as a single document or as separate documents comprising a package, and may incorporate by reference other information as provided in Section 4 of this Disclosure Certificate.
(b) If the Dissemination Agent is not the Property Owner and it does not receive a Semi-Annual Report by 15 calendar days prior to the Report Date, the Dissemination Agent shall send a reminder notice to the Property Owner that the Semi-Annual Report has not been provided as required under Section 3(a) above. The reminder notice shall instruct the Property Owner to determine whether its obligations under this Disclosure Certificate have terminated (pursuant to Section 7 below) and, if so, to provide the Dissemination Agent with a notice of such termination in the same manner as for a Listed Event (pursuant to Section 5 below). If the Property Owner does not provide, or cause the Dissemination Agent to provide, a Semi-Annual Report to the MSRB by the Report Date as required in subsection (a) above, the Dissemination Agent shall send a notice in a timely manner to the MSRB in substantially the form attached hereto as Exhibit A, with a copy to the District and the Participating Underwriter.
(c) The Dissemination Agent shall:
(i) determine prior to each Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of continuing disclosure reports; and (ii) to the extent the Semi-Annual Report has been furnished to it, file a report with the Property Owner (if the Dissemination Agent is other than the Property Owner), the District, and the Participating Underwriter certifying that the Semi-Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided to and filed with the MSRB.

SECTION 4. Content of Semi-Annual Reports. Each Semi-Annual Report shall contain or incorporate by reference the information set forth in Exhibit B, any or all of which may be included by specific reference to other documents which are available to the public on the MSRB’s internet web site or filed with the Securities and Packet Pg. 2151
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Exchange Commission. The Property Owner shall clearly identify each such other document so included by reference.

In addition to any of the information expressly required to be provided in Exhibit B, each Semi-Annual Report shall include such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

SECTION 5. Reporting of Significant Events.
(a) Until such obligations are terminated pursuant to Section 7 herein, the Property Owner shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to itself or the Property, if material:
(i) bankruptcy or insolvency proceedings commenced by or against the Property Owner and, if known, any bankruptcy or insolvency proceedings commenced by or against any Affiliate of the Property Owner that is reasonably likely to have a significant impact on the Property Owner’s ability to develop the Property as described in the Official Statement or a more recently filed Semi-Annual Report or to pay Special Taxes due with respect to the Property (to the extent the responsibility of the Property Owner) prior to delinquency;
(ii) failure of the Property Owner to pay any taxes, special taxes (including the Special Taxes) or assessments due with respect to the Property on or prior to the delinquency date, to the extent such failure is not promptly cured by the Property Owner upon discovery thereof; (iii) filing of a lawsuit against the Property Owner or, if known, an Affiliate of the Property Owner, seeking damages which, if successful, could have a material and adverse impact on the Property Owner’s ability to develop the Property as described in the Official Statement or a more recently filed Semi-Annual Report or to pay Special Taxes due with respect to the Property (to the extent the responsibility of the Property Owner) prior to delinquency; (iv) material damage to or destruction of any of the improvements on the Property; and (v) any payment default or other material default by the Property Owner that continues to exist beyond any applicable notice and cure periods on any loan with respect to the construction of improvements on the Property.
(b) Whenever the Property Owner obtains knowledge of the occurrence of a Listed Event, the Property Owner shall as soon as possible determine if such event would be material under applicable Federal securities law.
(c) If the Property Owner determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Property Owner shall, or shall cause the Dissemination Agent to, within 10 business days file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, with a copy to the District and the Participating Underwriter.

SECTION 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

SECTION 7. Duration of Reporting Obligation.
(a) All of the Property Owner’s obligations hereunder shall commence on the date hereof and shall terminate (except as provided in Section 12) on the earliest to occur of the following:
(i) upon the legal defeasance, prior redemption or payment in full of all the Bonds, or Packet Pg. 2152
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(ii) at such time as the Property Owner, together with any Affiliates, own fewer than 24 residential lots within the District subject to the Special Tax; or (iii) the date on which all of the Special Taxes attributable to the Property are paid in full.

The Property Owner shall give notice of the termination of its obligations under this Disclosure Certificate in the same manner as for a Listed Event under Section 5. (b) If a portion of the Property is conveyed to a person or entity that, upon such conveyance, will be a Major Owner, the obligations of the Property Owner hereunder with respect to the property conveyed to such Major Owner shall be assumed by such Major Owner, and if so assumed the Property Owner’s obligations hereunder with respect to the property conveyed will be terminated. In order to effect such assumption, such Major Owner shall enter into an Assumption Agreement in form and substance substantially similar to this Disclosure Certificate. However, a Major Owner shall not be required to enter into an Assumption Agreement if such Major Owner is already a party to a continuing disclosure certificate in form and substance similar to this Disclosure Certificate with respect to the Bonds, and under which the property conveyed to such Major Owner will become subject to future Semi-Annual Reports. If not so assumed, the Property Owner shall use commercially reasonable efforts to report the information, as applicable to the transferee, required herein so long as the transferee is a Major Owner.

SECTION 8. Dissemination Agent. The Property Owner may, from time to time, appoint or engage a Dissemination Agent to assist the Property Owner in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent with or without appointing a successor Dissemination Agent.

The initial Dissemination Agent shall be the Property Owner. The Dissemination Agent may resign by providing 30 days’ written notice to the Property Owner.

SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Property Owner may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied (provided, however, that the Dissemination Agent shall not be obligated under any such amendment that modifies or increases its duties or obligations hereunder without its written consent thereto):
(a) if the amendment or waiver relates to the provisions of sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, or change in law; and
(b) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

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

SECTION 11. Default. In the event of a failure of the Property Owner to comply with any provision of this Disclosure Certificate, the Participating Underwriter, the District, and any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Property Owner to comply with its obligations under this Disclosure Packet Pg. 2153
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Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the Property Owner to comply with this Disclosure Certificate shall be an action to compel performance.

SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Property Owner agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents (each, an “Indemnified Party”), harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the reasonable costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding any loss, expense and liabilities due to an Indemnified Party’s negligence or willful misconduct or failure to perform its duties hereunder. If the Dissemination Agent is not the Property Owner, the Dissemination Agent shall be paid compensation for its services provided hereunder from the Administrative Expense Fund established under the Fiscal Agent Agreement in accordance with the Dissemination Agent’s schedule of fees as amended from time to time, which schedule, as amended, shall be reasonably acceptable, and all reasonable expenses, reasonable legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the District, the Property Owner, the Participating Underwriter, the Bond owners, or any other party. The obligations of the Property Owner under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

Mayor and City CouncilJuly 20, 2022

Mayor and City Council
July 20, 2022