San Jacinto City Council
May 5, 2026

PRELIMINARY OFFICIAL STATEMENT DATED MAY __, 2026
NEW ISSUE – BOOK-ENTRY ONLY Insured Rating: S&P “[__]”
Underlying Rating: S&P “[__]”
See the caption “RATING.”
In the opinion of Best Best & Krieger LLP, Riverside, California (“Bond Counsel”), subject, however, 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 interest on the Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income tax. See “TAX MATTERS” herein.
$8,285,000

CITY OF SAN JACINTO
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(RANCHO SAN JACINTO, PHASE 2)
2026 Special Tax Refunding Bonds
Dated: Date of Delivery Due: September 1, as shown on the inside cover page The City of San Jacinto Community Facilities District No. 2002-1 (Rancho San Jacinto, Phase 2) (the “District”) 2026 Special Tax Refunding Bonds (the “Bonds”) are being issued by the City of San Jacinto (the “City”) for the District pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (constituting Section 53311 et seq. of the California Government Code), and that certain Fiscal Agent Agreement (the “Agreement”), dated as of [June 1], 2026, between the City, on behalf of the District, and U.S. Bank Trust Company, National Association, as Fiscal Agent. The Bonds are special obligations of the City and are payable solely from revenues derived from certain annual Special Taxes (as defined herein) to be levied on certain taxable land within the District (less certain administrative expenses) and from certain other funds pledged under the Agreement, all as further described herein. The Special Taxes are to be levied according to the rate and method of apportionment approved by the City Council of the City and the qualified electors within the District. See “SECURITY FOR THE BONDS - Special Taxes.” The City Council of the City is the legislative body of the District.

The proceeds of the Bonds will be used to (i) refund the outstanding Community Facilities District No. 2002-1 (Rancho San Jacinto, Phase 2) 2016 Special Tax Refunding Bonds (the “2016 Bonds”); [(ii) fund a reserve fund securing the Bonds; (iii) to purchase a municipal bond insurance policy (the “Policy”)], and (iv) pay costs of issuing the Bonds. See “REFUNDING PLAN” herein.

Interest due with respect to the Bonds is payable on March 1 and September 1 of each year, commencing September 1, 2026. Initial purchases of beneficial interests in the Bonds will be made in book-entry form and the Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”). Bond denominations are $5,000 and any integral multiple in excess thereof. Purchasers of beneficial interests in the Bonds will not receive certificates representing their interests in the Bonds and will not be paid directly by the Fiscal Agent. See “APPENDIX F - DTC AND THE BOOK ENTRY SYSTEM.”
The Bonds are not subject to optional redemption prior to their stated maturity, as described herein. The Bonds are subject to special mandatory redemption prior to maturity, as described herein. See “THE BONDS - Redemption” herein.

To provide funds for payment of the Bonds in the event of a shortfall of revenues caused by delinquent Special Tax payments, the City will establish a Reserve Fund for the Bonds initially funded by a municipal bond debt service reserve policy to be provided by [INSURER].

The scheduled payment of principal and interest when due on the Bonds will be guaranteed under a municipal bond insurance policy to be issued concurrently with the issuance of the Bonds by [INSURER]. See “BOND INSURANCE” herein.

Neither the faith and credit nor the taxing power of the City, the County of Riverside, the State of California or any political subdivision thereof is pledged to the payment of the Bonds. Except for the Special Taxes, no other taxes are pledged to the payment of the Bonds. The Bonds are special tax obligations of the City for the District payable solely from Special Tax Revenues and other amounts held under the Agreement as more fully described herein.

CERTAIN EVENTS COULD AFFECT THE ABILITY OF THE CITY TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS WHEN DUE. THE PURCHASE OF THE BONDS INVOLVES SIGNIFICANT RISKS, AND THE BONDS ARE NOT SUITABLE INVESTMENTS FOR ALL INVESTORS. SEE THE SECTION OF THIS OFFICIAL STATEMENT ENTITLED “SPECIAL RISK FACTORS” FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED, IN ADDITION TO THE OTHER MATTERS SET FORTH HEREIN, IN EVALUATING THE INVESTMENT QUALITY OF THE BONDS.

This cover page contains certain information for quick reference only. It is not a complete summary of the terms of this Bond issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the Bonds.

MATURITY SCHEDULE
(see Inside Cover Page)
The Bonds are being offered when, as and if issued by the City on behalf of the District, subject to the approval as to their legality by Best Best & Krieger LLP, Riverside, California, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the City by Best Best & Krieger LLP, as City Attorney and by Best Best & Krieger LLP, Riverside, California, as Disclosure Counsel to the City, and for the Underwriter by Stradling, Yocca, Carlson & Rauth LLP, Newport Beach, California, as Underwriter’s Counsel. Delivery of the Bonds through the facilities of The Depository Trust Company is expected to occur on or about June __, 2026. [UNDERWRITER LOGO] [INSURER LOGO]
 Preliminary; subject to change.

The date of the Official Statement is __________, 2026. $8,285,000*

CITY OF SAN JACINTO
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(RANCHO SAN JACINTO, PHASE 2)
2026 Special Tax Refunding Bonds
Base CUSIP†:____

MATURITY SCHEDULE
Maturity Date
(September 1)
Principal
Amount
Interest
Rate Yield Price CUSIP†
2026 $ % %
2027
2028
2029
2030
2031
2032
2033
2034
* Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the City, the District, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. 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.

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized.

No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.

Effective Date. This Official Statement speaks only as of its date and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City or the District since the date of this Official Statement.

Use of this Official Statement. This Official Statement is submitted in connection with the sale of the Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the Bonds.

Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. The information and expressions of opinions herein 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 since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of the Bonds, the Agreement and other documents, are made subject to the provisions of such documents and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information. See “INTRODUCTION - Summary Not Definitive.” 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 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.

Changes to Offering Prices. The Underwriter may offer and sell the Bonds to certain dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter.

Bonds are Exempt from Securities Laws Registration. The Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934.

Estimates and Projections. 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,” “budget” or other similar words.

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 THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS

EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.

Website. The City of San Jacinto maintains an Internet website, but the information on the website is not incorporated in this Official Statement.

CITY OF SAN JACINTO
City Council
Crystal Ruiz, Mayor
Clarisa Sanchez, Mayor Pro-Tem
Phil Ayala, Council Member
Valerie Vandever, Council Member
Alonso Ledezma, Council Member
City Staff
Robert Johnson, City Manager
Tom Prill, Deputy City Manager
Kimberly Ganimian, Finance Director
Julia Espinoza, City Clerk

SPECIAL SERVICES
Bond and Disclosure Counsel
Best Best & Krieger LLP
Riverside, California
City Attorney
Best Best & Krieger LLP
Riverside, California
Municipal Advisor
Urban Futures, Inc.

Walnut Creek, California
Fiscal Agent/Escrow Agent
U.S. Bank Trust Company, National Association
Los Angeles, California
Verification Agent
Causey Demgen & Moore P.C.

Denver, Colorado
District Administrator
NBS
Temecula, California

TABLE OF CONTENTS
-iINTRODUCTION...........................................................1 General.....................................................................1 Issuing Authority......................................................1 Application of Proceeds...........................................1 The City....................................................................1 The District ..............................................................2 Security for the Bonds..............................................3 Limited Liability ......................................................4 Description of the Bonds..........................................4 Tax Matters..............................................................5 Bond Owners’ Risks ................................................5 Professionals Involved in the Offering.....................5 Bond Insurance and Debt Service Reserve
Policy.............................................................5 Forward-Looking Statements...................................5 Summaries Not Definitive........................................6 REFUNDING PLAN ......................................................6 Redemption of Prior Bonds......................................6 Verifications of Mathematical Computations ..........6
Sources and Uses of Bond Proceeds ........................7 Annual Debt Service of Bonds.................................7 THE BONDS ............................................................7 Authority for Issuance..............................................7 Description of the Bonds..........................................8 Redemption ..............................................................8 Selection of Bonds for Redemption .........................9 Notice of Redemption ..............................................9 Effect of Redemption .............................................10 Transfer or Exchange of Bonds..............................10 SECURITY FOR THE BONDS ...................................10 Limited Obligations ...............................................10 Special Taxes .........................................................11 No Additional Bonds..............................................13 Reserve Fund..........................................................13 Investment of Funds...............................................13 Covenant for Superior Court Foreclosure ..............14 Limited Liability ....................................................14 THE DISTRICT ..........................................................15 General...................................................................15 History....................................................................15 Authorization .........................................................16 Rate and Method of Apportionment.......................16 Development Summary and Special Taxes............16
Historical Levies and Tax Delinquencies...............18 Estimated Direct and Overlapping Debt ................18 Estimated Tax Rate ................................................20 Property Assessed Values ......................................21 Top Taxpayers........................................................22 Estimated Total Valuation of Developed
Taxable Property Within the District...........23
BOND INSURANCE....................................................23 SPECIAL RISK FACTORS..........................................24 Risks of Real Estate Secured Investments
Generally .....................................................24 Limited Obligation to Pay Debt Service ................24 Availability of Hazard Insurance ...........................24 Levy and Collection of the Special Taxes............. 25 Payment of Special Taxes is not a Personal
Obligation of the Property Owners............. 25
Assessed Valuations.............................................. 26 Property Values..................................................... 26 Other Possible Claims Upon the Property
Values......................................................... 28 Enforcement of Special Taxes on
Governmentally Owned Properties............. 28
Proceeds of Foreclosure Sales............................... 30 Depletion of Reserve Fund.................................... 31 Bankruptcy Delays................................................ 31 Disclosure to Future Purchasers ............................ 32 No Acceleration..................................................... 33 Loss of Tax Exemption ......................................... 33 Proposition 218...................................................... 33 Litigation with Respect to Community
Facilities Districts....................................... 34 IRS Audit of Tax-Exempt Bond Issues................. 35 Ballot Initiatives .................................................... 35 Potential Early Redemption of Bonds from
Prepayments or Community Facilities
District Bond Proceeds ............................... 36 Cybersecurity......................................................... 36 Enforceability of Remedies................................... 36 Secondary Market for Bonds................................. 36 TAX MATTERS ......................................................... 37 RATING ......................................................... 38 LEGAL MATTERS ..................................................... 39 Continuing Disclosure ........................................... 39 Absence of Litigation ............................................ 39 Legal Matters Incident to the Issuance of the
Bonds.......................................................... 39 CONCLUDING INFORMATION............................... 39 Secondary Market.................................................. 39 Underwriting ......................................................... 39 Verification of Mathematical Accuracy ................ 40 Financial Interests.................................................. 40 Miscellaneous........................................................ 40 APPENDIX A – SUMMARY OF THE
AGREEMENT.............................................A-1 APPENDIX B – PROPOSED FORM OF
OPINION OF BOND COUNSEL................B-1
APPENDIX C – RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAX....C-1
APPENDIX D – CITY OF SAN JACINTO
INFORMATION STATEMENT .................D-1
APPENDIX E – FORM OF CONTINUING
DISCLOSURE CERTIFICATE...................E-1
APPENDIX F – DTC AND THE BOOK
ENTRY SYSTEM........................................ F-1 APPENDIX G – SPECIMEN BOND
INSURANCE POLICY ...............................G-1
[MAP]
[THIS PAGE INTENTIONALLY LEFT BLANK]
1 $8,285,000*

CITY OF SAN JACINTO
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(RANCHO SAN JACINTO, PHASE 2)
2026 SPECIAL TAX REFUNDING BONDS

INTRODUCTION
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 this entire Official Statement, including the cover page and appendices hereto, and the documents summarized or otherwise described herein. A full review should be made of this entire Official Statement and such documents prior to making an investment in the Bonds. The sale and delivery of the Bonds to potential investors is made only by means of the entire Official Statement.

General
This Official Statement, including the appendices hereto, sets forth certain information concerning the issuance by the City of San Jacinto, California (the “City”), of the $8,285,000*aggregate principal amount of City of San Jacinto Community Facilities District No. 2002-1 (Rancho San Jacinto, Phase 2) 2026 Special Tax Refunding Bonds (the “Bonds”) for and on behalf of the City of San Jacinto Community Facilities District No. 2002-1 (Rancho San Jacinto, Phase 2) (the “District”). The Bonds are being issued by the City, on behalf of the District, under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (constituting Section 53311 et seq. of the California Government Code) (the “Act”), and that certain Fiscal Agent Agreement, dated as of [June 1], 2026 (the “Agreement”), between the City and U.S. Bank Trust Company, National Association, as Fiscal Agent (the “Fiscal Agent”). Capitalized terms used in this Official Statement and not otherwise defined herein have the meanings given such terms in the Agreement, some of which are set forth in Appendix A hereto.

Issuing Authority
The District was established by the City Council of the City (the “City Council”), acting as legislative body of the District, pursuant to proceedings under the Act on September 10, 2002. See “THE DISTRICT - Authorization” herein. The Bonds were authorized to be issued by a resolution adopted by the City Council on [May 5], 2026 (the “Resolution of Issuance”). The Bonds are being issued pursuant to the Act, the Resolution of Issuance, and the Agreement. See “THE BONDS - Authority for Issuance.” Application of Proceeds
The net proceeds of the Bonds will be used to (i) refund the outstanding City of San Jacinto Community Facilities District No. 2002-1 (Ranch San Jacinto, Phase 2) 2016 Special Tax Refunding Bonds (the “2016 Bonds”); [(ii) fund a reserve fund securing the Bonds; (iii) to purchase a municipal bond insurance policy (the “Policy”)]; and (iv) pay costs of issuing the Bonds. See “REFUNDING PLAN - Sources and Uses of Bond Proceeds” herein.

The City
The City was incorporated in 1888 as a general law city and operates under the council-manager form of government. The City encompasses approximately twenty-seven square miles and is located in Riverside County, California. See “APPENDIX D - CITY OF SAN JACINTO INFORMATION STATEMENT” attached hereto. * Preliminary, subject to change.
2 The District
The District was originally part of an approximately 511-acre area of the City known as “Rancho San Jacinto,” located close to the southeastern City limits. The 511 acres were within the boundaries of a community facilities district known as “Community Facilities District No. 2 of the City of San Jacinto” (“CFD No. 2”).

Property within CFD No. 2 was anticipated to be developed with 1,800 single-family homes.

The City Council created the District in 2002 surrounding approximately 215 undeveloped acres which were removed from CFD No. 2, leaving approximately 940 single-family residences in CFD No. 2. In 2015, 39.2 acres were removed from the District when they were sold to Eastern Municipal Water District and one (1) homeowner prepaid the Special Tax. Development continued so that the District is now fully built-out and includes 890 single-family homes owned by individuals covering approximately 141 acres. See “THE DISTRICT - History” herein.

Formation Proceedings. The District has been formed by the City Council 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 to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by twothirds 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 community facilities district and may levy and collect a special tax within such district to repay such indebtedness. The City Council acts as the legislative body of the District.

Pursuant to the Act, in 2002 the City Council adopted the necessary resolutions stating its intent to establish the District, to authorize the levy of special taxes on taxable property within the boundaries of the District, and to incur bonded indebtedness within the District. The Bonds are secured by a pledge of and are payable solely from Special Tax Revenues (as defined herein) of the District, including foreclosure proceeds obtained from foreclosure and sale of property located in the District with delinquent Special Taxes. Following public hearings conducted pursuant to the provisions of the Act, the City Council adopted resolutions establishing the District and calling a special election to submit the levy of the Special Taxes and the incurring of bonded indebtedness to the qualified voters of the District. On September 10, 2002, at an election held pursuant to the Act, the then-current landowners who comprised the qualified voters of the District authorized the District to incur bonded indebtedness in the aggregate principal amount not to exceed $20,000,000 for the District to be secured by the levy of Special Taxes on taxable property within the District. On that same date, the landowners within the District approved the rate and method of apportionment of the Special Taxes for the District (the “Rate and Method”).

Property Value
The value of the land 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 the Special Tax levied on its property, the City’s only remedy is to commence foreclosure proceedings in an attempt to obtain funds to pay the Special Tax. See “THE DISTRICT - Property Assessed Values” for a discussion of the development status of property in the District and the assessed value (and value-to-lien ratios) of property within the District. No appraisal of the property within the District has been undertaken by the City in connection with the issuance of the Bonds.

The estimated value of the property subject to the Special Tax for Fiscal Year 2025-26, based on assessed values of homes individually owned as of January 1, 2025 and for lots owned by the merchant builders as of January 1, 2025 is $327,658,982, providing an overall value to lien ratio excluding overlapping land-secured and general obligation bond debt of 39.55*to 1. See “THE DISTRICT - Property Assessed Values” below. Within the * Preliminary, subject to change.
3 District there are other liens and overlapping indebtedness. Total direct and overlapping tax and assessment debt on property in the District as of April 1, 2026 is $21,281,599, not including the Bonds (but including the 2016 Bonds to be refunded). See “THE DISTRICT - Estimated Direct and Overlapping Debt” for a discussion of additional debt secured by liens on the real property in the District on a parity with the Bonds. When the direct and overlapping land-secured debt is combined with the Bonds, the total value-to-lien ratio within the District is

33.20*:1. See “THE DISTRICT - Development Summary and Special Taxes” and “Estimated Direct and Overlapping Debt.” The value of individual parcels vary significantly. In addition, County assessed values may not reflect current market values. No recent independent appraisal of the Taxable Property subject to the levy of Special Taxes has been conducted in connection with the Bonds, and no assurance can be given that should Special Taxes levied on one or more of the parcels become delinquent, and should the delinquent parcels be offered for sale at a judicial foreclosure sale, that any bid would be received for the property or, if a bid is received, that such bid would be sufficient to pay such parcel’s delinquent Special Taxes. See “SPECIAL RISK FACTORS - Property Values” and “SPECIAL RISK FACTORS - Levy and Collection of Special Taxes.” Security for the Bonds
Under the Agreement, the Bonds are payable from a portion of the Special Tax levied on Taxable Property within the District. See “SECURITY FOR THE BONDS - Special Taxes” herein. “Special Tax” is defined in the Agreement and is used in this Official Statement to mean the special taxes levied by the City Council on parcels of Taxable Property within the District pursuant to the Act, the Rate and Method and the Agreement. Under the Agreement, the City has pledged to repay the Bonds from Special Tax Revenues and certain funds pledged thereto pursuant to the Agreement. “Special Tax Revenues” is defined in the Agreement to mean the proceeds of the Special Taxes received by the City, including any scheduled payments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes in the amount of said lien and interest and penalties thereon. The Special Taxes levied pursuant to the Rate and Method increase by two percent (2%) annually. See “APPENDIX C - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” and “APPENDIX A - SUMMARY OF THE AGREEMENT” herein.

Under the Agreement, the City has agreed to levy the Special Tax, and to repay the Bonds from the Special Tax Revenues (except for the “Priority Administrative Expense Allocation” as defined herein) and from certain amounts on deposit in the Special Tax Fund, the Bond Fund and the Reserve Fund established under the Agreement. See “APPENDIX A - SUMMARY OF THE AGREEMENT.” A portion of the proceeds of the Bonds will be deposited in the Reserve Fund to the extent necessary to make the amount on deposit therein equal to the Reserve Requirement. The moneys in the Reserve Fund will be used for, among other purposes permitted by the Agreement, payment of the principal of and interest on the Bonds in the event that moneys in the Bond Fund are insufficient therefor. See “SECURITY FOR THE BONDS - Reserve Fund.” Foreclosure Proceeds. The City, on behalf of the District, has covenanted for the benefit of the owners of the Bonds that it will (i) 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. See “SECURITY FOR THE BONDS” herein. There is no assurance that, in the event of a failure by a property owner to pay Special Taxes when due, the delinquent taxable property within the District can be sold for the values described herein. See “SPECIAL RISK FACTORS - Property Values” herein.

EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF

THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE SPECIAL OBLIGATIONS 4 OF THE CITY FOR THE DISTRICT PAYABLE SOLELY FROM SPECIAL TAX REVENUES AND CERTAIN AMOUNTS HELD UNDER THE AGREEMENT AS MORE FULLY DESCRIBED HEREIN.

Limited Liability
Although the unpaid Special Taxes constitute a lien on the taxable real property within the District, they do not constitute a personal indebtedness of any landowner within the District, or any future property owner in the District. There is no assurance that the current owners of property within the District, or any future property owners within the District, will be financially able to pay the Special Taxes or that they will pay the Special Taxes even though financially able to do so.

THE BONDS ARE PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX TO BE

LEVIED ANNUALLY ON THE TAXABLE PROPERTY WITHIN THE DISTRICT (EXCEPT FOR THE

PRIORITY ADMINISTRATIVE EXPENSE ALLOCATION) AND AMOUNTS IN CERTAIN FUNDS ESTABLISHED UNDER THE AGREEMENT. NEITHER THE FAITH AND CREDIT NOR THE TAXING

POWER OF THE STATE OF CALIFORNIA, THE CITY, OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN OF THE DISTRICT, TO THE LIMITED EXTENT SET FORTH IN THE AGREEMENT) IS

PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS. THE BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE,

LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OR REVENUES OF THE CITY, AND THE

PAYMENT OF THE INTEREST ON OR PRINCIPAL OF OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS IS NOT A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE CITY OR THE DISTRICT.

Description of the Bonds
The Bonds are dated their date of delivery and mature in the amounts and in the years, and bear interest at the rates set forth on the inside cover page of this Official Statement. Interest on the Bonds will be payable on each March 1 and September 1 each year, beginning [September 1], 2026.

The Bonds will be issued and delivered as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in denominations of $5,000 or any integral multiple in excess thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. In the event that the book-entry-only system described herein is no longer used with respect to the Bonds, the Bonds will be registered and transferred in accordance with the Agreement. See “THE BONDS - Description of the Bonds” and “APPENDIX F - DTC AND THE BOOK ENTRY SYSTEM” herein.

Principal of, premium, if any, and interest on the Bonds are payable by the Fiscal Agent to DTC.

Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry-only system is no longer used with respect to the Bonds, the Beneficial Owners will become the registered owners of the Bonds and will be paid principal and interest by the Fiscal Agent, all as described herein. See “THE BONDS - Description of the Bonds” and “APPENDIX F - DTC AND THE BOOK ENTRY SYSTEM” herein. So long as the Bonds are in book-entry-only form, all references in the Official Statement to the owners or holders of the Bonds shall mean DTC or its nominee and not the Beneficial Owners of the Bonds.

The Bonds are not subject to optional redemption prior to maturity. The Bonds are subject to mandatory redemption prior to maturity, as described herein. For more complete descriptions of the Bonds and the Agreement pursuant to which they are being issued and delivered. See “THE BONDS” and “APPENDIX A - SUMMARY OF THE AGREEMENT,” herein.
5 Tax Matters
In the opinion of Bond Counsel, based on an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California (the “State”) personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of federal alternative minimum tax imposed on individuals and corporations, although Bond Counsel observes that such interest is included in annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations. Bond Counsel expresses no opinion regarding any other federal or state income tax consequences relating to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. Set forth in Appendix B is the proposed form of opinion of Bond Counsel expected to be delivered in connection with the issuance of the Bonds. 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 “TAX MATTERS” herein.

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

See “SPECIAL RISK FACTORS” herein for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds. The purchase of the Bonds involves significant risks, and the Bonds may not be appropriate investments for some investors.

Professionals Involved in the Offering
U.S. Bank Trust Company, National Association, Los Angeles, California, will act as Fiscal Agent under the Agreement. Stifel, Nicolaus & Company, Incorporated is the Underwriter (the “Underwriter”) of the Bonds.

The proceedings of the City Council in connection with the issuance, sale 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 Best Best & Krieger LLP in its capacity as City Attorney and as Disclosure Counsel. Stradling, Yocca, Carlson & Rauth LLP, Newport Beach, California, is acting as Underwriter’s Counsel. Other professional services related to the Bonds have been performed by Urban Futures, Inc., Walnut Creek, California, as the City’s Municipal Advisor.

Bond Insurance and Debt Service Reserve Policy
The scheduled payment of principal and interest when due on the Bonds will be guaranteed under an insurance policy to be issued concurrently with the issuance of the Bonds by [INSURER]. See “BOND INSURANCE” “SPECIAL RISK FACTORS – Risks Related to Bond Insurance” and APPENDIX G — “SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”
The Reserve Fund for the Bonds will be funded by a municipal bond debt service reserve policy (the “Reserve Policy”) to be provided by [INSURER]. See “SECURITY FOR THE BONDS – Reserve Fund.” 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.”
6 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.

Summaries Not Definitive
Brief descriptions of the Bonds, the Agreement, the Continuing Disclosure Certificate, the security for the Bonds, the District, the state of development of the property in the District and certain other documents and information are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. Any references to documents herein are qualified by reference to the complete text thereof. Capitalized terms used in this Official Statement and not otherwise defined herein have the meanings given them in the Agreement, some of which are set forth in “APPENDIX A - SUMMARY OF THE AGREEMENT.” Copies of documents referenced herein may be obtained upon written request and payment of the cost of mailing and duplication from the office of the City Clerk of the City, 595 S. San Jacinto Avenue, San Jacinto, California 92583.

REFUNDING PLAN
Redemption of Prior Bonds
A portion of the proceeds of the Bonds will be used, together with certain existing funds related to the 2016 Bonds and surplus Special Taxes, to provide for the defeasance and refunding of the 2016 Bonds. Money will be deposited into an escrow fund (the “Escrow Fund”) which will be held under that certain Escrow Deposit and Trust Agreement, dated as of [June 1], 2026, between the City, the District and U.S. Bank Trust Company, National Association, as Escrow Agent (the “Escrow Agreement”).

Moneys in the Escrow Fund will be (i) held as cash uninvested, and (ii) invested in certain Federal Securities specified therein. The amount deposited in the Escrow Fund, together with interest earnings, will be sufficient to pay, on September 1, 2026, the regularly scheduled payment of principal of and interest on the 2016 Bonds and redeem, on September 1, 2026, the remaining outstanding 2016 Bonds.

As a result of the deposit and application of funds as provided in the Escrow Agreement, the obligation to make payments of the principal of, premium, if any, and interest on, as the case may be, the 2016 Bonds will be defeased on such date of deposit. Neither the moneys in the Escrow Fund nor the interest thereon will be available for the payment of the Bonds.

Verifications of Mathematical Computations
Causey Demgen & Moore P.C. (the “Verification Agent”) will verify from the information provided to them the mathematical accuracy as of the date of the closing on the Bonds of (1) the computations contained in the provided schedules to determine that the cash and investments, together with investment earnings thereon, listed in the schedules prepared by the Underwriter, to be held in escrow, will be sufficient to pay, when due, the principal, redemption premium and interest requirements of the 2016 Bonds asspecified in the Escrow Agreement, and (2) the computation of yield on the Bonds contained in the provided schedules used by Bond Counsel in its determination that the interest with respect to the Bonds is exempt from federal taxation. 7 Sources and Uses of Bond Proceeds
Under the provisions of the Agreement, the Fiscal Agent will receive the proceeds from the sale of the Bonds and will apply them and the funds related to the 2016 Bonds as follows:

Sources of Funds
Principal Amount of the Bonds $
[Plus] [Net] Original Issue [Premium]
Plus Funds on Hand from the 2016 Bonds
Total Sources $
Uses of Funds
Escrow Fund
Costs of Issuance Fund(1)
Underwriter’s Discount
Total Uses $
(1) Costs of Issuance include legal fees, printing costs, Municipal Advisor fees, Special Tax Consultant fees, and Fiscal Agent fees, Bond Counsel and Disclosure Counsel fees, premium and costs for the Policy and Reserve Fund Surety, in addition to other miscellaneous costs incidental to Bond issuance.

Annual Debt Service of Bonds
The table below sets forth the scheduled annual debt service payments on the Bonds, assuming no redemption of the Bonds from Special Tax prepayments.

Year Ending
(September 1) Principal Interest Total
2026 $ $ $
2027
2028
2029
2030
2031
2032
2033
2034

THE BONDS
Authority for Issuance
The District was established and bonded indebtedness within the District in an amount not-to-exceed $20,000,000 was authorized pursuant to the provisions of the Act. The Bonds will be issued pursuant to the Act, a Resolution of Issuance, and the Agreement. The Bonds are secured under the Agreement by a pledge of and are payable from Special Tax Revenues (except for the Priority Administrative Expense Allocation) and from funds and accounts held under the Agreement and all subaccounts therein, excluding the Administrative Expense Fund and the Rebate Fund. See “APPENDIX A - SUMMARY OF THE AGREEMENT” herein. 8 Description of the Bonds
The Bonds are dated their date of delivery (the “Closing Date”) and will mature in the amounts and in the years, and bear interest at the rates set forth on the inside cover page of this Official Statement.

The Bonds will be issued without coupons as one fully registered bond for each maturity, in the name of Cede & Co., as nominee for DTC, as registered owner of all the Bonds. The Bonds will be available to ultimate purchasers in denominations of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the Bonds. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the owners shall mean Cede & Co., and shall not mean the purchasers or Beneficial Owners of the Bonds. See “APPENDIX F - DTC AND THE BOOK ENTRY SYSTEM.”
So long as the Bonds are held in book-entry only form, principal of, premium, if any, and interest on the Bonds will be paid directly to DTC for distribution to the Beneficial Owners of the Bonds in accordance with the procedures adopted by DTC. See “APPENDIX F - DTC AND THE BOOK ENTRY SYSTEM.” The Bonds will mature on September 1, in the principal amounts and years, and bearing rates of interest, as shown on the inside cover of this Official Statement.

Interest on the Bonds will be payable semiannually on September 1 and March 1 of each year, commencing September 1, 2026 (each, an “Interest Payment Date”) and will be computed on the basis of a 360- day year comprised of twelve 30-day months. Each Bond will 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 date of authentication; 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 the Closing Date; 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 the Closing Date, if no interest has previously been paid or made available for payment thereon.

Payments of the principal of, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Fiscal Agent, so long as DTC or Cede & Co. is the registered owner of the Bonds.

Disbursements of such payments to Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of Participants and Indirect Participants, as more fully described herein. See “APPENDIX F - DTC AND THE BOOK ENTRY SYSTEM.” Redemption
Optional Redemption. The Bonds are not subject to redemption prior to their stated maturity dates.

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 by the City, in integral multiples of $5,000, from moneys derived by the City from Special Tax Prepayments and related transfers from the Reserve Fund, 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
September 1, 2026 through March 1, 2033 103%
September 1, 2033 and March 1, 2034 102
September 1, 2034 101
9 To date, there has been a total of one prepayment of Special Taxes within District.

Purchase of Bonds. In lieu of payment at maturity or redemption, 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 a 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 will 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 e for the Bonds.

Selection of Bonds for Redemption
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 the 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 will execute and the Fiscal Agent will authenticate and deliver to the Bondowner, 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.

Notice of Redemption
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, 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.

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.

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. 10 Partial Redemption. 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 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 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 have been deposited in the Bond Fund, such Bonds will cease to be entitled to any benefit under the Agreement other than the right to receive payment of the redemption price, and interest will 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 Agreement will be cancelled by the Fiscal Agent.

Transfer or Exchange of Bonds
So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of Bonds shall be made in accordance with DTC procedures. See “APPENDIX F - DTC AND THE BOOK ENTRY SYSTEM.” If the book-entry only system for the Bonds is ever discontinued, any Bond may, in accordance with its terms, be transferred or exchanged by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form acceptable to the Fiscal Agent. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The Fiscal Agent shall collect from the Bondowner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer or exchange.

No transfers or exchanges of Bonds shall be required to be made (i) within 15 days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption.

SECURITY FOR THE BONDS
Limited Obligations
The Bonds are special, limited obligations of the City for the District secured by a pledge of all of the Special Tax Revenues (except for the Priority Administrative Expense Allocation) and all moneys on deposit in the Special Tax Fund, the Bond Fund, and the Reserve Fund (including the investment earnings thereon), and from no other sources.
“Special Tax Revenues” are defined in the Agreement to mean the proceeds of the Special Taxes received by the City, including any scheduled payments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes in the amount of said lien and interest and penalties thereon.
11 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 certain amounts held by the Fiscal Agent under the Agreement, including amounts held in the Reserve Fund.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE

COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. 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 NOR GENERAL OBLIGATIONS OF THE DISTRICT BUT

ARE SPECIAL OBLIGATIONS OF THE CITY FOR THE DISTRICT PAYABLE SOLELY FROM

SPECIAL TAX REVENUES AND OTHER AMOUNTS PLEDGED THEREFOR UNDER THE AGREEMENT AS MORE FULLY DESCRIBED HEREIN.

Special Taxes
Authorization and Pledge. In accordance with the provisions of the Act, the City Council established the District on September 10, 2002, to refinance the construction and acquisition of certain public capital improvements. On that same date, at an election held pursuant to the Act, the landowners who comprised the qualified voters of the District authorized the District to incur bonded indebtedness in the aggregate principal amount not to exceed $20,000,000 for the District to be secured by the levy of Special Taxes on taxable property within the District pursuant to the Rate and Method. A Notice of Special Tax Lien was recorded in the Office of the Recorder of the County of Riverside on September 20, 2002 as Document No. 2002-523023. See “APPENDIX C - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” attached hereto for the complete text of the Rate and Method.

The Bonds are secured by a pledge of and lien upon all of the Special Tax Revenues (except the Priority Administrative Expense Allocation which will be deposited in the Administrative Expense Fund for each fiscal year pursuant to the Agreement) and all moneys on deposit in the Special Tax Fund, the Bond Fund, and the Reserve Fund. The Bonds that may be issued shall be equally secured by a pledge of and lien upon such 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 such Special Tax Revenues and such moneys. Such Special Tax Revenues and all moneys deposited into such funds are dedicated in their entirety to the payment of the principal of the Bonds that may be issued, and interest and any premium on, the Bonds, as provided in the Agreement 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 the Agreement.

The Bonds are not secured by any amounts on deposit in the Administrative Expense Fund, or the Rebate Fund established under the Agreement. Any facilities refinanced with the proceeds of the Bonds are not in any way pledged to pay debt service on the Bonds.

In the Agreement, the City has agreed to 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 County Auditor-Controller 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-Controller, such data as the Auditor-Controller requires to include the levy of the Special Taxes on the tax roll.

The Agreement provides that 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 or expenditure of the Reserve Fund, and 12 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 formation of the District and in the Rate and Method. Such maximum amount may not be sufficient to fully replenish the Reserve Fund in the event of the delinquency of payment of Special Taxes levied on property in the District. In addition, under the Act, no increase to the Special Taxes on any one parcel may exceed 10% to cover delinquencies caused by other parcels. See “APPENDIX C - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.”
Priority Administrative Expenses. “Priority Administrative Expense Allocation” means the first $[50,000] of Special Taxes collected for a Fiscal Year, escalating by 2% each Fiscal Year commencing in Fiscal Year 2026-

27. Such amounts shall be deposited in the Administrative Expense Fund.

Prepayment of Special Taxes. Under the Rate and Method, the Special Tax obligation for any parcel within the District may be prepaid in full and permanently satisfied at any time. See “APPENDIX C - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” Any required or voluntary prepayment of Special Taxes will result in a mandatory redemption of Bonds. See “THE BONDS - Redemption - Mandatory Redemption from Special Tax Prepayments.”
Collection and Application of Special Taxes. The Agreement provides that the Special Taxes shall be payable and be collected (except in the event of judicial foreclosure proceedings pursuant to the Agreement) 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.

Notwithstanding the foregoing, 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 amount of the Special Taxes to the Auditor-Controller for collection on the tax roll. The Special Taxes will be transferred to the Fiscal Agent and deposited in the Special Tax Fund established under the Agreement when received by the City. See “APPENDIX A - SUMMARY OF THE AGREEMENT.”
Under the Agreement, the City has covenanted that (a) to the extent that it is legally permitted to do so, 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 for Developed Property (the “Maximum Rates”) below the amounts which are necessary to provide Special Tax Revenues in an amount equal to one hundred ten percent (110%) of Maximum Annual Debt Service on the outstanding Bonds plus estimated Administrative Expenses for the then current fiscal year. The City has further covenanted that in the event an ordinance is adopted by initiative pursuant to Section 3 of Article XIIIC of the California Constitution, which purports to reduce or otherwise alter the Maximum Rates for the levy of Special Taxes in the Rate and Method, it will commence and pursue legal action seeking to preserve its ability to comply with its covenant described in the preceding sentence. See “SPECIAL RISK FACTORS - Voter Initiatives” herein.

Although the Special Tax will constitute a lien on the land within the District which is subject to taxation, it does not constitute a personal indebtedness of either of the current or any future property owners within the District. There is no assurance that the landowners within the District will be financially able to pay the annual Special Tax or that they will pay such tax even if financially able to do so. The risk of property owners within the District not paying the annual Special Tax is more fully described under the heading “SPECIAL RISK FACTORS - Levy and Collection of Special Taxes - Factors that Could Lead to Special Tax Deficiencies.” Under the terms of the Agreement, not later than 10 Business Days after receipt from the City, all Special Tax Revenues received by the City are to be deposited by the Fiscal Agent in the Special Tax Fund. Special Tax Revenues (with the exception of Special Tax Revenues representing Prepayments) are to be applied by the Fiscal Agent under the Agreement in the following order of priority: (i) to deposit annually the Priority Administrative Expense Allocation to the Administrative Expense Fund; (ii) to pay the principal of and interest on the Bonds 13 when due; (iii) to replenish the Reserve Fund to the Reserve Requirement; (iv) to deposit additional funds to the Administrative Expense Fund to pay Administrative Expenses of the District above the Priority Administrative Expense Allocation, referenced in (i) above; and (v) to transfer the remaining amounts to the Surplus Account.

See “APPENDIX A - SUMMARY OF THE AGREEMENT.” Special Tax Prepayments shall be deposited in the Special Tax Prepayment Account of the Bond Fund as provided for in the Agreement and used to redeem Bonds.

See “THE BONDS - Redemption - Mandatory Redemption from Special Tax Prepayments.” No Additional Bonds
The City has covenanted in the Agreement not to issue parity bonds or subordinate bonds (as defined in the Agreement).

Reserve Fund
In order to secure the payment of principal and interest on the Bonds, the City will initially deposit [the Reserve Policy] in an amount equal to the initial Reserve Requirement into the Reserve Fund held by the Fiscal Agent. The Reserve Requirement is, as of any date of calculation, the lesser of (i) ten percent (10%) of the proceeds of the sale of the Bonds; (ii) Maximum Annual Debt Service on the Bonds; or (iii) one hundred twenty-five percent (125%) of average Annual Debt Service on the Bonds, as determined by the City. [SURETY TBD] The Reserve Requirement for the Bonds will be satisfied by the delivery of the Reserve Policy by [INSURER] to the Fiscal Agent on the Closing Date. The Fiscal Agent will draw on the Reserve Policy in accordance with its terms and conditions and the terms of the Agreement. The amounts available under the Reserve Policy will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Interest Account and Principal Account in the event of any deficiency at any time in either such account of the amount then required for payment of the principal of and interest and any premium on the Bonds or for the purpose of redeeming the Bonds.

The Fiscal Agent will comply with all documentation relating to the Reserve Policy as required to maintain the Reserve Policy in full force and effect and as required to receive payments thereunder in the event and to the extent required to make any payment when and as required under the Agreement. The District has no obligation to replace the Reserve Policy or to fund the Reserve Fund with cash if, at any time that the Bonds are Outstanding, amounts are not available under the Reserve Policy.

For more information regarding [INSURER], see the caption “BOND INSURANCE” in this Official Statement.

Investment of Funds
The Agreement provides that moneys in any fund or account created or established by the 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 invest any such moneys in Permitted Investments as described in the Agreement. The Fiscal Agent shall not have any responsibility for determining the legality of any Permitted Investments and shall have no obligation to pay additional interest or maximize investment income on any funds held by it. The Agreement further provides that investments, other than investment agreements in which moneys in the Reserve Fund are invested, will be valued by the City at fair 14 market value and marked-to-market at least once in each fiscal year. See “APPENDIX A - SUMMARY OF THE AGREEMENT” for a description of the Permitted Investments for amounts in the Reserve Fund.

Covenant for Superior Court Foreclosure
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 Agreement.

Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an amount which is less than the Special Tax levied, the City Council, as the legislative body of the District, may order that Special Taxes be collected by a superior court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. The City, however, has covenanted for the benefit of the owners of the Bonds that it will (i) 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. See APPENDIX A - “SUMMARY OF THE AGREEMENT - Covenant to Foreclose.”
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 “SPECIAL RISK FACTORS - Bankruptcy Delays.” 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 “SPECIAL RISK FACTORS - Assessed Valuations” and “- Property 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.

Limited Liability

THE BONDS ARE PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX TO BE

LEVIED ANNUALLY ON THE TAXABLE PROPERTY WITHIN THE DISTRICT AND AMOUNTS IN CERTAIN FUNDS ESTABLISHED UNDER THE AGREEMENT. NEITHER THE FAITH AND CREDIT

NOR THE TAXING POWER OF THE STATE, THE CITY, OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE DISTRICT, TO THE LIMITED EXTENT SET FORTH IN THE AGREEMENT) IS

PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS. THE BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE,

LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OR REVENUES OF THE CITY AND THE

PAYMENT OF THE INTEREST ON OR PRINCIPAL OF OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS IS NOT A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE CITY OR THE DISTRICT. 15 No Teeter Plan
Although the Riverside County Board of Supervisors has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) which allows each entity levying secured property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, the 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 within the District.

THE DISTRICT
General
The Bonds are secured by a pledge of and are payable solely from Special Tax Revenues, including foreclosure proceeds obtained from foreclosure and sale of Taxable Property in the District with delinquent Special Tax levies.

Special Taxes securing the payment of the Bonds will be levied only in the District, and only the Taxable Property in the District.

History
The District was originally part of an approximately 511-acre area of the City known as “Rancho San Jacinto,” bounded on the south by Washington Avenue, on the east by Meridian Street and Mountain Avenue, on the west by Hewitt Street and on the north by Evans (Third) Street, close to the southeastern City limit. The 511 acres were within the boundaries of a community facilities district known as “Community Facilities District No. 2 of the City of San Jacinto” (“CFD No. 2”). Property within CFD No. 2 was anticipated to be developed with 1,800 single-family homes.

CFD No. 2 issued $26,000,000 of special tax bonds in 1989 (the “1989 Bonds”) to finance backbone infrastructure for the development. Due to a large number of delinquent undeveloped parcels, the special taxes collected were insufficient to pay all of the debt service on the 1989 Bonds beginning in 1997. In 2002, the City removed approximately 215 undeveloped acres from CFD No. 2, leaving approximately 940 single-family residences in CFD No. 2. The City refinanced a portion of the 1989 Bonds in 2002, secured by special taxes from the property that remained in CFD No. 2. The indebtedness of CFD No. 2 matured in 2014 and has been paid in full.

The District was created in 2002 and encompassed the 215 undeveloped acres removed from CFD No. 2.

In 2002, the District’s Special Tax Bonds, 2002 Series A (the “2002 Bonds”) and the San Jacinto Financing Authority 2002 Local Agency Revenue Bonds, Series A (Tranches A - D) (the “Authority Bonds”) were issued to refinance the remaining portion of the 1989 Bonds. By 2008-09, approximately 40% of the District was still undeveloped. The largest property owner, Ocean Springs, owned 66 acres when the general recession in the United States occurred, and became delinquent in payment of Special Taxes levied on its parcels for several years following. In 2013, Tower Music City LLC (“Tower”) purchased the Ocean Springs property. At this time, Tower also owned Tranche D of the Authority Bonds. The shortfall in special tax revenues collected, caused by the delinquency of the Undeveloped Property, did not result in the default of debt service payments on the subordinate Tranche D Bonds. The payment of debt service on the Tranche D Bonds accrued from the date of issuance was only payable beginning on the September 1 next succeeding the date on which the reserve requirement was met for the Authority Bonds. Therefore, the accrued interest on the Tranche D Bonds was paid in full on September 1, 2015, once the reserve requirement was funded as described below. The bondowner of Tranches A - C of the Authority Bonds was fully paid during this period.

In 2015, 39.2 acres were removed from the District when they were sold by Tower to the Eastern Municipal Water District. As part of the sale, all delinquent taxes (including delinquent Special Taxes) on the 16 remaining undeveloped property owned by Tower were brought current, the reserve fund for the Authority Bonds was fully funded and all accrued but unpaid debt service on the Tranche D Bonds was paid. At the same time, since 39.2 acres were no longer subject to the Special Tax, the City formed its Community Facilities District No. 2015-1 (“CFD 2015-1”) over the 26.4 remaining undeveloped acres owned by Tower, for the purpose of levying a special tax to pay debt service on the 2002 Bonds, if it was needed based on the ultimate development of those acres. After the issuance of the 2016 Bonds, the City extinguished the lien of CFD 2015-1 on such Undeveloped Property in the District. The property in the District continued to be developed and is now fully built-out and includes 890 single-family homes owned by individuals. One property owner has prepaid the Special Tax obligation on a parcel in the District.

The District is not located within a 100-Year flood plain.

Authorization
Pursuant to the Act, on August 1, 2002, the City Council adopted Resolution No. 2364, stating its intention to establish the District and Resolution No. 2365, declaring the necessity for the District to incur bonded indebtedness. On September 10, 2002 following a duly noticed public hearing, the City Council adopted Resolution No. 2371 establishing the District and Resolution No. 2372 determining the necessity to incur bonded indebtedness in an amount not to exceed $20,000,000 within the District. Pursuant to Resolution No. 2371, the City Council called an election pursuant to the Act. The then-owners of the land within the District voted in favor of the incurrence of bonded indebtedness in a principal amount not to exceed $20,000,000 to refinance certain public facilities, and the levy of the Special Tax consistent with the Rate and Method. The Bonds are secured solely by Special Tax Revenues generated within the District, including foreclosure proceeds obtained therein, and amounts in certain funds and accounts held under the Agreement. See “APPENDIX C - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The Bonds were authorized to be issued by the Resolution of Issuance adopted by the City Council on [May 5], 2026. The City has covenanted in the Agreement not to issue additional parity or subordinate bonds. See “SECURITY FOR THE BONDS - No Additional Bonds Other Than Refunding Bonds.”
Rate and Method of Apportionment
The City is legally authorized and has covenanted in the Agreement to levy the Special Taxes in accordance with the Rate and Method. Pursuant to the Rate and Method, Special Taxes are levied on “Developed Property” (that is, taxable property for which a building permit has been issued) up to the Maximum Special Tax (as defined in the Rate and Method). Pursuant to the Rate and Method, the amount of the Special Tax to be levied in each fiscal year can be levied for a period not to exceed 35 years commencing with Fiscal Year 2002-03. See “APPENDIX C - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” Development Summary and Special Taxes
Table 1 below summarizes the taxable property (the “Taxable Property”) within the District by Land Use Classification under the Rate and Method, along with the estimated Fiscal Year 2026-27 Special Tax levy, the 2026-27 Assigned Special Tax to be levied under the Rate and Method, and the Fiscal Year 2025-26 County assessed value of the property, and allocation of the Bond debt based on the estimated Special Tax levy. 17 TABLE 1

CITY OF SAN JACINTO
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(RANCHO SAN JACINTO, PHASE 2)
FISCAL YEAR 2026-27 DEVELOPMENT SUMMARY
Land Use
Class( 1) Description
Residential
Floor
Area (SF)
Number
of
Units
Number
of
Acres
2026-27
Estimated
Special Tax
Levy
2026-27
Assigned
Special Tax
2025-26
Assessed
Valuation(2)
Pro Rata
Share of the
Bonds(3)*
Average
Direct
Value-toLien Ratio*
1 Single Family Property = or > 2,550 465 78.76 $692,649 $1,083,232 $178,864,356 $4,573,460 39.11 2 Single Family Property 2,250 – 2,549 220 31.47 306,388 479,160 78,706,913 2,023,038 38.91 3 Single Family Property 1,950 – 2,249 131 20.58 9,749 265,470 44,352,338 1,120,826 39.57 4 Single Family Property 1,800 – 1,949 7 1.06 8,763 13,705 1,635,889 57,863 28.27 5 Single Family Property 1,650 – 1,799 25 3.47 30,329 47,431 7,340,716 200,255 36.66 6 Single Family Property 1,500 – 1,649 42 5.33 46,882 73,319 16,758,770 309,558 54.1 7 Single Family Property 1,350 – 1,499 0 0 0 0 0 0 n/a
8 Single Family Property < 1,350 0 0 0 0 0 0 n/a
9 Multifamily Property N/A 0 0 0 0 0 0 n/a
10 Commercial Property N/A 0 0 0 0 0 0 n/a
11 Other Non-Residential
Property N/A 0 0 0 0 0 0 n/a
N/A Undeveloped Property N/A 0 0 0 0 0 0 n/a
TOTALS 890 140.67 $1,254,760 $1,962,317 $327,658,982 $8,285,000 39.55 __________________________
* Preliminary; subject to change
(1) Per the Rate and Method.
(2) Based on the County Assessor Roll for Fiscal Year 2025-26, with a January 1, 2025 valuation date. Assessed value does not reflect any changes made to the valuation after July 2025 as a result of assessment appeal, correction, or any other changes. (3) Allocated based on proportionate share of estimated 2026-27 Special Tax levy.

Source: NBS.
18 Historical Levies and Tax Delinquencies
The following Table 2 illustrates the historical Special Tax delinquencies from Fiscal Year 2021-22 to 2025-26 for property located within the District.

TABLE 2

CITY OF SAN JACINTO
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(RANCHO SAN JACINTO, PHASE 2)

SPECIAL TAX LEVIES AND DELINQUENCIES
As of June 30 of Fiscal Year As of March 25, 2026
Fiscal
Year
Special Tax
Levy
Number of
Parcels
Delinquent
Total
Amount
Delinquent
Percentage
Delinquent
Number of
Parcels
Delinquent
Total Amount
Delinquent
Percentage
Delinquent
2021-22 $1,446,944 4 $6,123 0.4% 2 $3,028 0.2%
2022-23 1,478,249 6 9,349 0.6 2 4,079 0.3
2023-24 1,504,840 9 15,495 1.0 3 6,226 0.4
2024-25 1,463,419 12 18,708 1.3 9 13,926 1.0
2025-26 1,583,832 n/a n/a n/a 17 15,679 1.0
Source: County Tax Collector; compiled by NBS.

Estimated Direct and Overlapping Debt
Set forth in Table 3 below is the direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc., as of April 1, 2026. The Debt Report is included for general information purposes only.

The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part. Such long-term obligations are not payable from Special Taxes nor are they necessarily obligations secured by property within the District.

In many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency.

The District is overlapped in part by the Eastern Municipal Water District Community Facilities District No. 2004-32 Improvement Area A and Improvement Area B. The principal portion of the debt of Community Facilities District No. 2004-32 for which special taxes are currently assessed on property within the District as of April 1, 2026 is $1,584,000. If the allocable portion of debt of Community Facilities District No. 2004-32 is added to the initial principal of the Bonds, for total direct debt of $9,869,000*, the combined aggregate assessed valueto-lien ratio for property in the District is 33.2* to 1.

Presently, the Taxable Property is subject to $24,587,693* of direct and overlapping tax and assessment debt and overlapping general fund debt, not including the Bonds but including the 2016 Bonds to be refunded. In addition, other public agencies whose boundaries overlap those of the District could, without the consent of the City, and in certain cases without the consent of the owners of the land within the District, impose additional taxes or assessment liens on the real property within the District in order to finance public improvements or services to * Preliminary, subject to change.
19 be located or furnished inside of or outside of the District. The lien created on the real property within the District through the levy of such additional taxes or assessments may be on a parity with the lien of the Special Taxes.

The imposition of additional liens on a parity with the Special Taxes may reduce the ability or willingness of the property owners to pay the Special Taxes and increases the possibility that foreclosure proceeds, if any, realized from the sale of property with delinquent Special Taxes will not be adequate to pay delinquent Special Taxes.

TABLE 3

CITY OF SAN JACINTO
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(RANCHO SAN JACINTO, PHASE 2)

DIRECT AND OVERLAPPING DEBT SUMMARY
2025-26 Local Secured Assessed Valuation: $327,658,982
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 4/1/26 Metropolitan Water District General Obligation Bonds 0.008% $ 1,218 Mount San Jacinto Unified School District General Obligation Bonds 0.215 500,522 San Jacinto Unified School District General Obligation Bonds 6.153 7,623,550 Eastern Municipal Water District Improvement District No. U12 General Obligation Bonds 75.683 117,309 Eastern Municipal Water District Community Facilities District No. 2004-32, I.A. A 100.000 943,000 Eastern Municipal Water District Community Facilities District No. 2004-32, I.A. B 100.000 641,000 City of San Jacinto Community Facilities District No. 2002-1 100.000 11,455,000(1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ 21,281,599 OVERLAPPING GENERAL FUND DEBT:

Riverside County General Fund Obligations 0.072% $ 790,788 Riverside County Pension Obligation Bonds 0.072 395,517 San Jacinto Unified School District Certificates of Participation 6.153 2,119,789 TOTAL OVERLAPPING GENERAL FUND DEBT $ 3,306,094
COMBINED TOTAL DEBT $24,587,693(2)
Ratios to 2025-26 Local Secured Assessed Valuation:

Direct Debt ($11,455,000)................................................................ 3.50% Total Direct and Overlapping Tax and Assessment Debt.................. 6.50% Combined Total Debt........................................................................ 7.50% (1) Represents the outstanding par amount of the 2016 Bonds; does not include the Bonds. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source: California Municipal Statistics.
20 Estimated Tax Rate
Set forth in Table 4 below is a description of the estimated effective tax rates for Fiscal Year 2025-26 for single family residential property.

TABLE 4

CITY OF SAN JACINTO
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(RANCHO SAN JACINTO, PHASE 2)
SINGLE FAMILY RESIDENTIAL - ESTIMATED TOTAL EFFECTIVE TAX RATE IN FISCAL YEAR 2025-26(1) Land Use
Class 1
Land Use
Class 2
Land Use
Class 3
Land Use
Class 4
Land Use
Class 5
Land Use
Class 6
Estimated Property Characteristics
Median Assessed Value $373,694 $355,014 $340,228 $229,476 $295,279 $432,970 Homeowner’s Exemption (7,000) (7,000) (7,000) (7,000) (7,000) (7,000) Total Property Value $366,694 $348,014 $333,228 $222,476 $288,279 $425,970 Ad Valorem Tax Rate
Property Tax – 1% Rate 1.00000% $3,667 $3,480 $3,332 $2,225 $2,883 $4,260 San Jacinto Unified School District 0.19000 697 661 633 423 548 809 Mt. San Jacinto Junior College 0.00254 9 9 8 6 7 11
MWD East 1301999 0.00700 26 24 23 16 20 30
EMWD IMP DIST U-12 0.00684 25 24 23 15 20 29
Total(3) 1.20638% $4,424 $4,198 $4,020 $2,684 $3,478 $5,139 Special/Direct Assessments, Taxes & Charges
The District (CFD 2002-1 San Jacinto)(4) $1,894 $1,771 $1,648 $1,592 $1,543 $1,419 FLD CNTL Stormwater/Cleanwater 4 4 3 4 3 2
CSA 152-San Jacinto Storm 10 10 10 10 10 10
San Jacinto LL Park 1 0 0 118 0 0 0
San Jacinto LLPD 2 Zn 10 0 0 0 0 430 0
San Jacinto LLPD 2 Zn 34 0 0 0 753 0 753
San Jacinto LLPD 2 Zn 36 602 0 0 0 0 0
San Jacinto LLPD 2 Zn 39 0 668 0 0 0 0
Valley-Wide Regional Fac. LMD 88-1 22 22 22 22 22 22
MWD Standby East 7 7 7 7 7 7
EMWD Infrastructure Availability Charge 30 30 20 30 20 30 CFD 2004-32 Rch Jacinto IA-A EMWD 417 0 0 0 0 0
CFD 2004-32 Rch Jacinto IA-B EMWD 0 453 0 453 0 453
Total $2,986 $2,964 $1,828 $2,871 $2,035 $2,697
Total Estimated Annual Property Taxes $7,410 $7,163 $5,848 $5,555 $5,513 $7,835 Effective Tax Rate 1.9829% 2.0176% 1.7188% 2.4205% 1.8670% 1.8097% (1)
The information shown above reflects the actual assessments, charges, and taxes shown on the property tax bill for a single family residential property located within the median assessed value for each land use class, but does not include line items for delinquent charges or PACE liens. There are several other overlapping CFD/LLPDs that are not shown in this table. Special taxes for CFD 2003-1 and CFD 2020-1 apply to 154 parcels in the District, but are not represented in this table. The fiscal year 2025-26 charges for those CFDs for a single family residential parcel was $671 and $1,374, respectively.

Source: Alliant Tax Research.
21 The City has no control over the amount of additional debt payable from special taxes or assessments levied on all or a portion of the property within the District that may be incurred in the future by other governmental agencies having jurisdiction over such property. Furthermore, nothing prevents owners of property within the District from consenting to the issuance of such debt by other governmental agencies. To the extent that such indebtedness is payable from assessments, special taxes levied pursuant to the Act, or other taxes, such assessments, special taxes, and other taxes may be secured by liens on the property within the District on a parity with the lien of the Special Taxes.

The incurrence of any such additional indebtedness could cause the total debt on the property within the District to increase without any corresponding increase in the value of such property, thereby reducing (perhaps dramatically) the estimated value-to-lien ratios that exist at the time the Bonds are issued. The incurrence of such additional indebtedness could reduce the willingness and ability of the property owners within the District to pay Special Taxes when due. See “SPECIAL RISK FACTORS - Other Possible Claims Upon the Property Values.” Property Assessed Values
The most recent assessed value reported by the County Assessor for the taxable property in the District was as of January 1, 2025, which assessed value totaled $327,658,982. The assessed values of property in the District discussed in this Official Statement are from that County Assessor’s secured property tax roll. These assessed values represent the “full cash value” of such property as determined by the County Assessor. Pursuant to rules of the State Board of Equalization that govern the County Assessor’s valuation of property in the District, “full cash value” of real property means the price at which the unencumbered or unrestricted fee simple interest in the real property (subject to any enforceable governmental restrictions) would transfer for cash or its equivalent under prevailing market conditions. These rules also provide that when valuing property as a result of a change in ownership for consideration it shall be rebuttably presumed that the consideration valued in money (i.e., the purchase price), whether paid in money or otherwise, is the full cash value of the property. Pursuant to the California Constitution, the full cash value of property may reflect from year to year the inflationary rate not to exceed two percent for any given year or reduction as shown in the consumer price index or comparable data for the area under taxing jurisdiction, or may be reduced to reflect substantial damage, destruction or other factors causing a decline in value.

No assurance can be given, therefore, that the assessed value of property in the District will not be reduced by the County Assessor for Fiscal Year 2026-27 or for any subsequent fiscal year.

See “SPECIAL RISK FACTORS - Property Values.”
Assessed values, as determined by the County Assessor, may not reflect the actual market value of property in the District (e.g., homes in the District might sell for more or less than the County Assessor’s assessed value). The City does not intend to have an appraisal prepared to estimate the market value of any property in the District.
22 Table 5 below shows annual changes in assessed valuations for Developed Property in the District for Fiscal Years 2021-22 through 2025-26.

TABLE 5

CITY OF SAN JACINTO
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(RANCHO SAN JACINTO, PHASE 2)

HISTORICAL ASSESSED VALUATION FOR DEVELOPED PROPERTY
Fiscal Year Land Value Structure Value Assessed Value % Change 2021-22 $37,370,642 $171,842,031 $209,212,673 N/A
2022-23 38,859,169 187,940,291 226,799,460 8.4%
2023-24 40,135,528 201,025,873 241,161,401 6.3
2024-25 42,083,402 229,430,919 271,514,321 12.6
2025-26 51,166,951 276,492,031 327,658,982 20.7
____
Source: County Assessor; compiled by NBS.

Top Taxpayers
As of the January 1, 2025 tax roll, all parcels in the District are classified as Developed Property for the Fiscal Year 2026-27 Special Tax levy.

Table 6 below shows the percent of the Fiscal Year 2026-27 estimated Special Tax based on property ownership status as of January 1, 2025 as provided by the County of Riverside.

TABLE 6

CITY OF SAN JACINTO
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(RANCHO SAN JACINTO, PHASE 2)
LARGEST TAXPAYERS FOR FISCAL YEAR 2026-27
Property Owner
Number of
Parcels
2026-27 Estimated
Special Tax Levy
Percentage of 2026-27
Estimated Special
Tax Levy
INDIVIDUAL OWNER 4 $5,958 0.5%
CENTURY COMMUNITIES OF CALIFORNIA 4 5,474 0.4
INDIVIDUAL OWNER 3 4,469 0.4
FAC MANAGEMENT 3 4,372 0.3
SEPTEMBER PROP 3 3,984 0.3
INDIVIDUAL OWNER 2 2,979 0.2
INDIVIDUAL OWNER 2 2,979 0.2
PEACE WORLD INTERNATIONAL USA INC 2 2,882 0.2
GROUP VIII COVINA PROP 2 2,882 0.2
INDIVIDUAL OWNER 2 2,882 0.2
OTHERS 863 1,215,898 96.9
TOTALS 890 $1,254,760 100.0%
Source: NBS.
23 Estimated Total Valuation of Developed Taxable Property Within the District Table 7 below shows the pro-rata share of Bonds allocated by estimated Fiscal Year 2026-27 Special Tax levy summarized based on value-to-lien ratios ranges.

TABLE 7

CITY OF SAN JACINTO
COMMUNITY FACILITIES DISTRICT NO. 2002-1
(RANCHO SAN JACINTO, PHASE 2)

VALUE TO LIEN RATIOS FOR DEVELOPED SINGLE-FAMILY RESIDENTIAL PROPERTY

COMMUNITY FACILITIES DISTRICT AND ASSESSMENT DISTRICT DEBT ONLY Value-to-Lien
Units
Taxed
2026-27
Estimated
Special Tax
Levy
Percentage
of 2026-27
Estimated
Special Tax
Levy
2025-26
Assessed
Value(1)
Pro Rata Share
of Bonds*(2)
Overlapping
Special Tax
and
Assessment
District Debt(3)
Total Direct and
Overlapping
Special Tax and
Assessment
Debt*
Average Direct
and
Overlapping
Value-to-Lien
Ratio*
20:1 and above 730 $1,028,049 81.9% $297,260,229 $6,788,062 $1,204,358 $7,992,419 37.19 15:1 to 19.99:1 128 182,160 14.5 26,286,656 1,202,779 312,773 1,515,553 17.34 10:1 to 14.99:1 22 31,176 2.5 3,782,121 205,853 59,893 265,746 14.23 5:1 to 9.99:1 0 0 0.0 0 0 0 0 n/a
3:1 to 4.99:1 6 7,803 0.6 224,520 51,524 6,976 58,499 3.84 Less than 3:1 4
(4) 5,571 0.4 105,456 36,783 0 36,783 2.87
Total 890 $1,254,760 100.0% $327,658,982 $8,285,000 $1,584,000 $9,869,000 33.20 (1) Per the Riverside County Assessor's roll data for Fiscal Year 2025-26, with a January 1, 2025, valuation date. Assessed value does not reflect any changes made to valuation after July 2025 as a result of assessment appeal, correction or any other changes. (2) Allocated based on the proportionate share of the estimated 2026-27 Special Tax levy. (3) Per overlapping debt statement.
(4) As of Fiscal Year 2025-26, the four parcels had building permits issued on or after March 2023 with a total assessed value under $30,000, with no structure value.

Source: NBS.
* Preliminary, subject to change.

Notwithstanding the foregoing and following discussions and estimates of value, there is no assurance that, in the event of a foreclosure sale of a parcel for delinquent Special Taxes, any bid would be received for such property or that any bid received would be sufficient to pay the delinquent Special Taxes and any parity special taxes, taxes and assessments. See the section herein entitled “SPECIAL RISK FACTORS.” The City has no control over the amount of additional indebtedness that may be issued in the future by other public agencies, the payment of which, through the levy of a tax or an assessment, may be on a parity with the Special Taxes and be secured by a lien on a parity with the lien securing payment of the Special Taxes. See “THE DISTRICT - Estimated Direct and Overlapping Debt” herein.

BOND INSURANCE
[TBD]
24 SPECIAL RISK FACTORS
Investment in the Bonds involves risks which may not be appropriate for certain investors. The following is a discussion of certain risk factors, in no particular order of importance, all of which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of existing or future property owners within the District to pay the Special Taxes levied in the District when due. Such failure to pay Special Taxes could result in the inability of the City to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District.

Risks of Real Estate Secured Investments Generally
The Owners of the Bonds will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of 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 (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes, fires and floods), which may result in uninsured losses.

No assurance can be given that the individual homeowners and other property owners will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See “SPECIAL RISK FACTORS – Levy and Collection of the Special Taxes - Factors that Could Lead to Special Tax Deficiencies” below, for a discussion of certain limitations on the City’s ability to pursue judicial proceedings with respect to delinquent parcels.

Limited Obligation to Pay Debt Service
The City has no obligation to pay principal of or interest on the Bonds if Special Tax collections are delinquent or insufficient for such purposes, other than from amounts, if any, on deposit in the Reserve Fund established for the Bonds or funds derived from the foreclosure and sale of parcels for Special Tax delinquencies.

The City is not obligated to advance its own funds to pay debt service on the Bonds.

Availability of Hazard Insurance
According to the California Department of Insurance, insurance companies declined to renew 2.8 million homeowner policies in the State. Insurers have been exiting the State, refusing to write new policies in areas they consider to be at high risk for certain hazards (e.g., wildfire hazard), or in some cases refusing to offer coverage for high-value homes, which insurance companies generally classify as homes with a replacement cost of $750,000 or higher. Such cancellations generally have resulted in increased cost to homeowners as they obtain replacement coverage. The California FAIR Plan Association provides insurance to homeowners who cannot otherwise find insurance coverage, but policies through the FAIR Plan do not provide as much coverage as traditional homeowner’s insurance and tend to bear rates that are higher than traditional homeowner’s insurance.

Though several legislative and policy revisions are circulating, neither the City nor the District can predict whether homeowner’s insurance will continue to be available to home purchasers at affordable rates. An increase in homeowner’s insurance rates may reduce affordability and may cause homeowners to be unable or unwilling to pay the Special Taxes when due.
25 Levy and Collection of the Special Taxes
General. The principal source of payment of principal of and interest on the Bonds is the proceeds of the annual levy and collection of the Special Tax against property within the District.

Limitation on Special Tax Rate. The annual levy of the Special Tax on any parcel is limited to the maximum Special Tax rate authorized in the Rate and Method. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the Bonds.

Moreover, the Special Tax levy in a fiscal year on a residential parcel may not be increased by more than 10% as a consequence of delinquencies in payment of Special Taxes by other property owners in the District.

No Relationship Between Property Value and Special Tax Levy. Because the Rate and Method is not based on property value, the levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular Taxable Parcels and the amount of the levy of the Special Tax against those parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of the Taxable Parcels and their proportionate share of debt service on the Bonds, and certainly not a direct relationship.

Factors that Could Lead to Special Tax Deficiencies. The following are some of the factors that might cause the levy of the Special Tax on any particular Taxable Parcel to vary from the Special Tax that might otherwise be expected:

Transfers to Governmental Entities. The number of Taxable Parcels could be reduced through the acquisition of Taxable Parcels by a governmental entity (by exercise of its rights as mortgage guarantor, or for other reasons) and failure of the government to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from taxation, thereby resulting in an increased tax burden on the remaining taxed parcels. See “SPECIAL RISK FACTORS - Enforcement of Special Taxes on Governmentally Owned Properties.” Property Tax Delinquencies. Failure of the owners of Taxable Parcels to pay property taxes (and, consequently, the Special Tax), or delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Special Taxes. For a summary of Special Tax collections in the District, see “DISTRICT - Historical Levies and Tax Delinquencies.”
Delays Following Delinquencies and Foreclosure Sales. The Agreement provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant in the Agreement for foreclosure described in “SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure” and in the Act, is subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes. Under these procedures, if taxes are unpaid for a period of five years or more, the property is subject to sale by the County. See “SPECIAL RISK FACTORS - Proceeds of Foreclosure Sales.” If sales or foreclosures of property are necessary to collect delinquent Special Taxes, there could be a delay in payments to the District, pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of sale allocable to the Special Tax delinquencies if the Reserve Fund for the Bonds is depleted.

Payment of Special Taxes is not a Personal Obligation of the Property Owners Property Owners are not personally obligated to pay their respective Special Taxes. Rather, the Special Taxes are obligations only against the respective parcels against which they are levied. If, after a default in the 26 payment of the Special Tax and a foreclosure sale, the resulting proceeds are insufficient, taking into account other obligations also constituting a lien against the parcel, the City has no personal recourse against the parcel owner.

Assessed Valuations
The City has not commissioned an appraisal of the parcels in the District in connection with the issuance of the Bonds. Therefore, the estimated valuation of the Taxable Parcels in the District set forth in this Official Statement are based on the County Assessor’s values. The assessed value is not an indication of what a willing buyer might pay for a property. The assessed value is not evidence of future value because future facts and circumstances may differ significantly from the present.

No assurance can be given that any of the Taxable Parcels in the District could be sold for the assessed value if that property should become delinquent and subject to foreclosure proceedings.

Property Values
The value of Taxable Parcels within the District is a critical factor in determining the investment quality of the Bonds. If a parcel owner defaults in the payment of the Special Taxes, the City’s only remedy is to foreclose on the delinquent property to collect the delinquent Special Taxes.

The following is a discussion of risk factors that could affect the value of property in the District.

Prolonged Economic Downturn. Declines in home values in the District could result in property owner unwillingness or inability to pay mortgage payments, as well as ad valorem property taxes and Special Taxes, when due. Under such circumstances, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings. See “SPECIAL RISK FACTORS - Bankruptcy Delays.”
Natural Disasters. The value of the parcels in the District in the future can be adversely affected by a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the parcels in the District and the continued habitability and enjoyment of such private improvements. Natural disasters could include, without limitation, floods, wildfires, and droughts. One or more natural disasters could occur and could result in damage to improvements of varying seriousness. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances there could be significant delinquencies in the payment of Special Taxes, and the value of the taxable parcels may well depreciate.

In 2018, the City has adopted a resolution approving the use of the County’s Operational Area Jurisdictional Local Hazard Mitigation Plan as the City’s Local Hazard Mitigation Plan Annex. This plan includes a hazard analysis for earthquake, flood, landslide and fire risk and is required to comply with FEMA requirements for disaster relief funding. Details regarding the plan are available on the City’s website. As noted, the District, like the rest of the City, could be impacted by an earthquake, flood, and wildfires.

Seismic Hazard. According to the public safety element of the City’s General Plan, the City is located in a seismically active region and could be impacted by a major earthquake originating from the numerous faults in the area. Of primary concern are the Claremont or San Jacinto Fault and the Casa Loma Fault, although other faults exist in the area such as the San Andreas Fault and the Elsinore Fault. Seismic hazards encompass both potential ground rupture, ground shaking and liquefaction. The City also contains a number of hillsides in excess of a 20% slope, and such steep topography makes landslides and other slope instabilities possible.

Flood Hazard. Despite the District not being located in a 100-Year flood plain, potential hazards for the City and District include flooding and inundation due to dam failure due to the prevalence of natural drainage corridors and the presence of human-made water reservoirs in the region. The Casa Loma Canal, 27 Colorado River Aqueduct and the San Jacinto River traverse the City, with accompanying flooding risks.

Additionally dam failure at any of the reservoirs such as Diamond Valley Lake, Lake Hemet, or Little Lake could cause potential downstream inundation and flooding.

Fire Hazard. In recent years, wildfires have caused extensive damage throughout the State.

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. In January 2025, multiple fires occurred across communities in Los Angeles County, including Pacific Palisades, Malibu and Altadena, some of which damaged or destroyed property in areas that were not previously considered to be at risk from such events.

In April 2026, the Springs Fire burned over 4,000 acres in Riverside County. No structures in the City were damaged. While some areas were evacuated, there were no evacuations of City residents. In addition, other fires with smaller impact, such as the Vista Fire, State Fire and the Record Fire have occurred in areas proximate to the City. No damage, however, was done to any structures within the City due to these fires.

In March 2025, Department of Forestry and Fire Protection of the State (“Cal Fire”) released an updated Fire Hazard Severity Zone map for the Southern California region. The Cal Fire Hazard Severity Zone maps evaluate fire hazard, which is defined as the likelihood and expected fire behavior over a 30 to 50-year period without considering mitigation measures such as home hardening, recent wildfire or fuel reduction efforts, as opposed to risk, which is the potential damage a fire can do to the area under existing conditions, accounting for any modifications such as fuel reduction projects, defensible space, and ignition resistant building construction.

Pursuant to State law, the State Fire Marshal is mandated to classify the state responsibility areas where the state has financial responsibility for wildfire protection and prevention into Fire Hazard Severity Zones classified as “Moderate,” “High” or “Very High.” In areas designated as local responsibility areas, where local agencies have financial responsibility for wildfire protection and revision, Cal Fire’s Fire Hazard Severity Zone maps make recommendations for the classification of Moderate, High or Very High Fire Hazard Severity Zones and the local agencies must adopt maps which either adopt Cal Fire’s recommendations or place the relevant areas in a higher classification. For more information on Cal Fire’s Fire Hazard Severity Zone maps, see the Cal Fire website.

Portions of the District are located within an area which Cal Fire has designated as a High or Very High Fire Hazard Severity Zone. No assurance can be given as to the severity or frequency of wildfires within the vicinity of or in the District.

On January 16, 2025, Governor Gavin Newsom issued Executive Order N-10-25 (the “Governor’s Order”) which suspended penalties, costs and interest on overdue property taxes (including special taxes) within certain zip codes affected by the Palisades Fire during calendar year 2025. In the event of a major fire or other natural disaster affecting the City or District, a similar order affecting the City or District could impact the collection of Special Taxes needed to make debt service payments for the Bonds.

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.

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 28 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, of the presence of any hazardous substance within the District or that any owner (or operator) of any of the parcels within the District has such a current liability with respect to any such parcel. It is possible, however, that such substances are present and/or liabilities do currently exist and that the City is not aware.

Other Factors. Other factors that could adversely affect property values in the District include, among others, relocation of employers out of the area, shortages of water, electricity, natural gas or other utilities, and destruction of property caused by man-made disasters.

Other Possible Claims Upon the Property Values
While the Special Taxes are secured by a lien on the Taxable Parcels in the District, the property is subject to various parity liens and other similar claims. Tables listing the outstanding governmental obligations affecting the District are set forth under “THE DISTRICT - Estimated Direct and Overlapping Governmental Liens.” In addition, other governmental obligations may be authorized and undertaken or issued in the future, the tax, assessment or charge for which may become an obligation of one or more of the parcels within the District, and may be secured by a lien on a parity with the lien of the Special Taxes securing the Bonds.

In general, the Special Taxes, and all other taxes, assessments and charges also collected on the tax roll, are on a parity, that is, are of equal priority. Questions of priority become significant when collection of one or more of the taxes, assessments or charges is sought by some other procedure, such as foreclosure and sale. If proceedings are brought to foreclose a delinquency, the Special Taxes will generally be on parity with the other taxes, assessments and charges, and will share the proceeds of such foreclosure proceedings on a pro-rata basis.

Enforcement of Special Taxes on Governmentally Owned Properties General. 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 Federal Deposit Insurance Corporation (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 29 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 a 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.

The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes within the District. No assurance can be given as to the likelihood that the risks described above will materialize while the Bonds are outstanding.

FDIC. If any financial institution making any loan secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan (or loans) goes into default, resulting in ownership of the property by the FDIC, then the ability of the City to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.

The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims.

The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.

The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special taxes and assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Mello-Roos Act and a special tax formula, which determines the special tax due each year, are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC’s federal immunity. The Ninth Circuit issued a ruling on August 28, 2001, in which it determined that the FDIC, as a federal agency, is exempt from Mello-Roos special taxes.

The City is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the District in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes to be foreclosed on at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Fund established for the Bonds and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the Bonds. 30 Exemptions Under Rate and Method and the Mello-Roos Act. Certain properties are exempt from the Special Tax in accordance with the Rate and Method and the Act, which provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within the District acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax.

In addition, although the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment, the constitutionality and operation of these provisions of the Act have not been tested, meaning that such property could become exempt from the Special Tax. The Act further provides that no other properties or entities are exempt from the Special Tax unless the properties or entities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax.

Proceeds of Foreclosure Sales
Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax, the City Council, as the legislative body of the District, may order that the Special Taxes be collected by a superior court action to foreclose the lien within specified time limits. The City has covenanted in the Agreement that it will, under certain circumstances, commence such a foreclosure action. See “SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure.”
No assurances can be given that a taxable parcel in the District that would be subject to a judicial foreclosure sale for delinquent Special Taxes will be sold or, if sold, that the proceeds of such sale will be sufficient to pay the delinquent Special Tax installment. Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not specify any obligation of the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action if there is no other purchaser at such sale and the City has not in any way agreed nor does it expect to be such a bidder.

In a foreclosure proceeding, a judgment debtor (i.e., the property owner) has 140 days from the date of service of the notice of levy in which to redeem the property to be sold and may have other redemption rights afforded by law. If a judgment debtor fails to so redeem and the property is sold, his only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale if the purchaser at the sale was the judgment creditor. If a foreclosure sale is thereby set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made.

If foreclosure proceedings were ever instituted, any holder of a mortgage or deed of trust on the affected property could, but would not be required to, advance the amount of the delinquent Special Tax installment to protect its security interest.

In the event such superior court foreclosure or foreclosures are necessary, there could be a delay in principal and interest payments to the owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the District of the proceeds of the foreclosure sale, if any. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions and other factors beyond the control of the City, including delay due to crowded local court calendars or legal tactics and, in any event could take several years to complete. In particular, bankruptcy proceedings involving the merchant builder or any other owner of a taxable parcel in the District could cause a delay, reduction or elimination in the flow of Special Tax Revenues to the Fiscal Agent. See “SPECIAL RISK FACTORS - Bankruptcy Delays.” 31 Depletion of Reserve Fund
A Reserve Fund has been established and may be used to pay principal of and interest on the Bonds if insufficient funds are available from the proceeds of the levy and collection of the Special Taxes against property within the District. See “SECURITY FOR THE BONDS - Reserve Funds.” If funds in the Reserve Fund are depleted, the funds can be replenished from the proceeds of the levy and collection of the Special Tax that are in excess of the amount required to pay all amounts to be paid to the Fiscal Agent under the Agreement. No replenishment from the proceeds of a Special Tax levy can occur, however, so long as the proceeds that are collected from the levy of the Special Tax against property within the District at the maximum Special Tax rates, together with other available funds, remain insufficient to pay all such amounts.

Moreover, the Special Tax levy on a residential parcel may not be increased by more than 10% as a consequence of delinquencies in payment of Special Taxes by other property owners in the District. Thus, it is possible that the Reserve Fund will be depleted and not be replenished by the levy of the Special Tax.

Bankruptcy Delays
The payment of the Special Taxes, and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax, may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by State laws 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.

Bankruptcy, insolvency and other laws generally affecting creditors’ rights could adversely impact the interests of owners of the Bonds in at least two ways. First, the payment of property owners’ taxes and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax pursuant to its covenant to pursue judicial foreclosure proceedings may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure could be delayed due to many reasons, including crowded local court calendars or lengthy procedural delays.

Second, the Bankruptcy Code might prevent moneys on deposit from being applied to pay interest on the Bonds and/or to redeem Bonds if bankruptcy proceedings were brought by or against a landowner or other party and if the court found that the landowner or other party had an interest in such moneys within the meaning of Section 541(a)(1) of the Bankruptcy Code.

Although a bankruptcy proceeding would not cause the Special Taxes to become extinguished, the amount of any Special Tax lien could be modified if the value of the property falls below the value of the lien. If the value of the property is less than the lien, such excess amount could be treated as an unsecured claim by the bankruptcy court. In addition, bankruptcy of a property owner could result in a delay in prosecuting Superior Court foreclosure proceedings. Such delay would increase the likelihood of a delay or default in payment of delinquent Special Tax installments and the possibility of delinquent Special Tax installments not being paid in full.

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 the property. Although the court upheld the priority of unpaid taxes imposed before the bankruptcy petition, unpaid taxes imposed after the filing of the bankruptcy petition were declared to be “administrative expenses” of the bankruptcy estate, payable after all secured creditors. As a result, the secured creditor was able to foreclose on the property and retain all the proceeds of the sale except the amount of the pre-petition taxes. 32 The Bankruptcy Reform Act of 1994 (the “Bankruptcy Reform Act”) included a provision which 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].” This amendment effectively makes the Glasply holding inoperative as it relates to ad valorem real property taxes. It is possible, however, that the original rationale of the Glasply ruling could 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.

According to the court’s ruling, as administrative expenses, post-petition taxes would be paid, assuming that the debtor had sufficient assets to do so. In certain circumstances, payment of such administrative expenses may be allowed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise), it would at that time become subject to current ad valorem taxes.

The Act provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem taxes. No case law exists with respect to how a bankruptcy court would treat the lien for Special Taxes levied after the filing of a petition in bankruptcy. Glasply is controlling precedent on bankruptcy courts in the State. If the Glasply precedent was applied to the levy of the Special Taxes, the amount of Special Taxes received from parcels whose owners declare bankruptcy could be reduced.

Risks Associated with Bond Insurance
In the event that the City defaults in the payment of principal of or interest on the Bonds when due, the Owners of the Bonds will have a claim under the Policy for such payments. See the caption “BOND INSURANCE.” In the event that the Insurer becomes obligated to make payments on the Bonds, no assurance can be given that such event will not adversely affect the market for the Bonds. In the event that the Insurer is unable to make payments of principal of or interest on the Bonds when due under the Policy or the Reserve Surety Bond, the Bonds will be payable solely from Special Tax Revenues and amounts that are held in certain funds and accounts established under the Agreement, as described under the caption “SECURITY FOR THE BONDS.” The long-term credit rating on the Bonds is dependent in part on the financial strength of the Insurer and its claims-paying ability. The Insurer’s financial strength and claims-paying ability are predicated upon a number of factors which could change over time. If the long-term ratings of the Insurer are lowered, such event could adversely affect the market for the Bonds. See the caption “RATINGS.” None of the City, the Municipal Advisor or the Underwriter has made an independent investigation of the claims paying ability of the Insurer, and no assurance or representation regarding the financial strength or projected financial strength of the Insurer is being made by the City, the Municipal Advisor or the Underwriter in this Official Statement. Therefore, when making an investment decision with respect to the Bonds, potential investors should carefully consider the ability of the City to pay principal and interest on the Bonds, assuming that the Policy is not available to pay principal and interest on the Bonds, and the claims-paying ability of the Insurer through final maturity of the Bonds.

So long as the Policy remains in effect and the Insurer is not in default of its obligations thereunder, the Bond Insurer has certain notice, consent and other rights under the Agreement and will have the right to control all remedies in the event of a default under the Agreement as to the Bonds. The Insurer is not required to obtain the consent of the Owners of the Bonds with respect to the exercise of remedies. See Appendix A hereto.

Disclosure to Future Purchasers
The City recorded, in the Office of the County Recorder, a notice of the Special Tax lien with respect to the District. 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 the obligations 33 represented by the Special Taxes in the purchase of a parcel of land or a home in the District, or the lending of money secured by property in the District.

No Acceleration
The Agreement does not contain a provision allowing for acceleration of the principal of the Bonds, if a payment default or other default occurs under the Agreement.

Loss of Tax Exemption
As discussed under the caption “TAX MATTERS,” 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 Internal Revenue Code of 1986, as amended (the “Tax 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.

Current or future legislative proposals, if enacted into law, clarification of the Tax 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 Beneficial Owners from realizing the full current benefit of the tax status of such interest.

Legislative changes have previously been proposed in Congress, which, if enacted, would result in additional federal income tax being imposed on certain owners of tax-exempt state or local obligations, such as the Bonds. The introduction or enactment of any pending or future legislative proposals, clarification of the Tax Code or court decisions may also affect 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 federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.

It is possible that subsequent to the issuance of the Bonds there might be federal, State, or local statutory changes (or judicial or regulatory interpretations of federal, State, or local law) that affect the federal, State, or local tax treatment of the Bonds or the market value of the Bonds. Legislative changes have been introduced in Congress, which, if enacted, could result in additional federal income or state tax being imposed on owners of tax-exempt state or local obligations, such as the Bonds. The introduction or enactment of any of such changes could adversely affect the market value or liquidity of the Bonds. No assurance can be given that subsequent to the issuance of the Bonds such changes or interpretations will not occur. Before purchasing any of the Bonds, all potential purchasers should consult their tax advisors regarding possible statutory changes or judicial or regulatory changes or interpretations, and their collateral tax consequences relating to the Bonds. See “TAX MATTERS” below.

Proposition 218
An initiative measure commonly referred to as the “Right to Vote on Taxes Act” (the “Initiative”) was approved by the voters of the State at the November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to the California Constitution. According to the “Title and Summary” of the Initiative prepared by the California Attorney General, the Initiative limits “the authority of local governments to impose taxes and property-related assessments, fees and charges.” The provisions of the Initiative have not yet been interpreted by the courts, although several lawsuits have been filed requesting the courts to interpret various aspects of the Initiative. The Initiative could potentially impact the Special Taxes available to the City to pay the principal of and interest on the Bonds as described below.

Among other things, Section 3 of Article XIII states that “. . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” The Act provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of 34 apportionment of an existing special tax. The Act, however, prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that:
“Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution.” Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely retirement of the Bonds.

It may be possible, however, for voters or the City Council acting as the legislative body of the District to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels.

Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in amounts greater than the amount necessary for the timely retirement of the Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses. Nevertheless, to the maximum extent that the law permits it to do so, the City will covenant in the Fiscal Agent Agreement that it will not initiate proceedings under the Act to reduce 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. No assurance, however, can be given as to the enforceability of the foregoing covenants.

The interpretation and application of Article XIIIC and Article XIIID will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See “RISK FACTORS — Limitations on Remedies.”
Litigation with Respect to Community Facilities Districts Shapiro. With respect to the approval of the Special Taxes, on August 1, 2014, the California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997) (the “San Diego Decision”). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego (“San Diego”). The CCFD is a financing district much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in San Diego. The special tax to be levied within the CCFD, however, was to be levied only on hotel properties located within the CCFD.

The election authorizing the special tax was limited to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel is located. Thus, the election was not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was modeled after Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIIIA, Section 4 thereof and Article XIIIC, Section 2 thereof require that the electors in such an election be the registered voters within the district. 35 The facts of the San Diego Decision show that there were thousands of registered voters within the CCFD (viz., all of the registered voters in San Diego). The election held in the District had no registered voters within the District at the time of the election to authorize the Special Tax. In the San Diego Decision, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court’s holding does not apply to the Special Tax election in the District.

Horizon. The Sacramento County Superior Court had issued a ruling in Horizon Capital Investments, LLC v. City of Sacramento et al. (Case No. 34-2017-80002661). As described below, this case involved an election to approve the levy of a special tax within a community facilities district (“CFD”) formed under the Act.

In 2017, the City of Sacramento initiated proceedings to form a CFD to finance certain costs to operate and maintain a streetcar line. As permitted by the Act, the proposed district included non-contiguous parcels of non-residential property. Because there were fewer than 12 registered voters residing within the territory of the proposed CFD, the City Council submitted the special tax proposed to be levied within the proposed CFD to the owners of land within the proposed CFD, as required by the Act. The proposed special tax received the requisite two-thirds vote in the landowner election.

Petitioners Horizon Capital Investments, LLC et al. filed a writ of mandate and complaint for reverse validation and declaratory relief. Petitioners argued, and the superior court agreed in its final ruling, that under section 4(a) of article XIII A of the California Constitution (which provides that “Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district [sic], may impose special taxes on such district…”) the phrase “qualified electors” means the registered voters of the entire City of Sacramento and not just the owners of the property within the boundaries of the proposed CFD. Citing the San Diego Decision, the tentative ruling states that the phrase “qualified electors of the district” refers to the registered voters of the entity imposing the special tax, which in this case was the City of Sacramento. Because the vote within the proposed CFD was by landowners only and not by all registered voters in the City of Sacramento, the final ruling states that the special tax is invalid.

The superior court’s final ruling is not binding upon other courts within the State and does not directly apply to the District, the Special Taxes, or the Bonds. The City of Sacramento did not appeal the superior court’s ruling.

IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service has initiated a 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). See, “TAX MATTERS” herein.

Ballot Initiatives
Article XIII A, XIII B, XIII C and XIII D were adopted pursuant to measures qualified for the ballot pursuant to California’s constitutional initiative process and the State Legislature has in the past enacted legislation which has altered the spending limitations or established minimum funding provisions for particular activities.

On March 6, 1995 in the case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. From time to time, other initiative measures could be adopted by California voters or legislation enacted by the legislature. The adoption of any such initiative or legislation might place limitations on the ability of the State, the County, or local districts to increase revenues or to increase appropriations or on the ability of the Developers to complete the remaining proposed development within the District.
36 Potential Early Redemption of Bonds from Prepayments or Community Facilities District Bond Proceeds Property owners within the District are permitted to prepay their Special Taxes at any time. 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 — Mandatory Redemption from Special Tax Prepayments.” Cybersecurity
The City, like other public and private entities, relies on a large and complex technology environment to conduct its operations, and consequently faces the threat of cybersecurity incidents. Such incidents can result from unintentional events, or from deliberate attacks by unauthorized entities or individuals attempting to gain access to the City’s information technology systems to misappropriate assets or information or to cause operational disruption and damage. The City and its departments face cyber threats from time to time, including but not limited to hacking, viruses, malware, phishing, distributed denial-of-service, and other attacks on computers, networks, and systems.

No assurances can be given that the City’s security and operational control measures will ensure against any and all cybersecurity threats and attacks. A cybersecurity incident or breach could damage the City’s information technology systems and cause disruption to City services and operations. The cost of any such disruption or remedying damage caused by future attacks could be substantial. The City will continue to assess cyber threats and protect its data and systems.

The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation, the Fiscal 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 Owners of the Bonds.

Enforceability of Remedies
The remedies available to the Fiscal Agent and the owners of the Bonds upon a default under the Agreement or any other document described in this Official Statement are in many respects dependent upon regulatory and judicial actions that are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. Any legal opinions to be delivered concurrently with the issuance of the Bonds will be qualified to the extent that the enforceability of the legal documents with respect to the Bonds is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally.

Judicial remedies, such as foreclosure and enforcement of covenants, are subject to exercise of judicial discretion. A California court may not strictly apply certain remedies or enforce certain covenants if it concludes that application or enforcement would be unreasonable under the circumstances and it may delay the application of such remedies and enforcement.

Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Prices of bond 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.

No assurance can be given that the market price for the Bonds will not be affected by the introduction or enactment of any future legislation (including without limitation amendments to the Internal Revenue Code), or changes in interpretation of the Internal Revenue Code, or any action of the Internal Revenue Service, including 37 but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the Bonds for audit examination, or the course or result of any Internal Revenue Service audit or examination of the Bonds or obligations that present similar tax issues as the Bonds.

TAX MATTERS
In the opinion of Best Best & Krieger LLP, Riverside, California, subject, however, to certain qualifications described in this Official Statement, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants, the interest on the Bonds is excluded from gross income for federal income tax purposes, and interest on the Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income tax.

The opinions set forth in the preceding paragraph are subject to the condition that the District and City comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds. The District and City have made certain representations and covenanted to comply with each such requirement.

Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds.

Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events, or matters.

If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded.

Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, prepayment, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual alternative minimum taxes.

Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the bond’s maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term 38 to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Bonds.

Current and future legislative proposals, if enacted into law, clarification of the Tax Code, or court decisions may cause interest with respect to 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 beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code, or court decisions may also affect 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 federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.

The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts.

Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the District or City or about the effect of future changes in the Tax Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The District and City have covenanted, however, to comply with the requirements of the Tax Code.

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

Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above.

The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the Bonds, or as to the consequences of owning or receiving interest on the Bonds, as of any future date. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.

RATINGS
S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC, (“Standard & Poor’s”) is expected to assign its municipal bond rating of “[__]” to the Bonds based on the issuance of the Policy by the Insurer at the time of issuance of the Bonds. See “BOND INSURANCE” herein.

In addition, Standard & Poor’s has assigned its underlying municipal bond rating of “[__]” to the Bonds, independent of the delivery of the Policy. Such ratings reflect only the views of Standard & Poor’s and an explanation of the significance of such ratings may be obtained from Standard & Poor’s. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by such organization, if in its judgment circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. 39 LEGAL MATTERS
Continuing Disclosure
The City will provide certain annual financial information (the “Annual Reports”) and notices of the occurrence of certain enumerated events in accordance with Rule 15c2-12 of the Securities Exchange Act of 1934 as amended (the “Rule”) by not later than April 1 in each year commencing April 1, 2027. NBS will act as dissemination agent. The specific nature of the information to be contained in the annual report or the notices of listed events and certain other terms of the continuing disclosure obligation are found in the form of the City’s disclosure certificate attached in “APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE.” The City, its former Redevelopment Agency and its Successor Agency, and the Authority, have entered into previous undertakings pursuant to the Rule. Within the last five years, the City, the Redevelopment Agency and the Authority [have not failed to materially comply with prior undertakings].

Absence of Litigation
At the time of delivery of and payment for the Bonds, the City will deliver a certificate to the effect that there is no known action, suit, proceeding, inquiry or investigation at law or in equity for which the City has been served before or by any court or regulatory agency against the City or the District affecting the existence of the City or the District or the title of their respective officers to office 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 Agreement, or the collection or application of the Special Taxes 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 of Issuance, the Agreement, or any other applicable agreements or any action of the City or the District or contemplated by any of said documents.

Legal Matters Incident to the Issuance of the Bonds
Certain legal matters incident to the authorization and issuance of the Bonds are subject to the approving opinion of Best Best & Krieger LLP, acting in its capacity as Bond Counsel. Certain legal matters related to the Bonds and the District will be passed upon for the City by Best Best & Krieger LLP, acting in its capacity as City Attorney to the City. Certain legal matters related to disclosure will be passed upon for the City by Best Best & Krieger LLP, acting in its capacity as Disclosure Counsel to the City. Stradling, Yocca, Carlson & Rauth LLP, Newport Beach, California, is acting as counsel for the Underwriter. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally.

CONCLUDING INFORMATION
Secondary Market
Should a Bond Owner elect to sell a Bond prior to maturity, no representations or assurances can be made that a market will have been established or maintained for the purchase and sale of the Bonds. The Underwriter assumes no obligation to establish or maintain a market for the purchase and sale of the Bonds and is not obligated to repurchase any of the Bonds at the request of an owner thereof.

Underwriting
The Bonds are being purchased by the Underwriter for a purchase price of $__________, being equal to the initial principal amount of the Bonds of $_________, [plus an original issue premium] of $__________ and less an Underwriter’s discount of $__________. The Bonds are being offered for sale to the public at the prices set forth on the inside cover page of this Official Statement, which prices may be changed by the Underwriter from time to time without notice. The Bonds may be offered and sold to dealers, including the Underwriter and 40 dealers acquiring Bonds for their own account or for an account managed by them, at prices lower than the public offering price.

The Underwriter and its affiliates comprise a full-service financial institution engaged in activities which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and nonfinancial activities and services. The Underwriter and its affiliates may have provided, and may in the future provide, a variety of these services to the City and to persons and entities with relationships with the City, for which they received or will receive customary fees and expenses.

In the ordinary course of these business activities, the Underwriter and its affiliates may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the City (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the City.

The Underwriter and its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire such assets, securities and instruments. Such investment and securities activities may involve securities and instruments of the City.

Verification of Mathematical Accuracy
Causey Demgen & Moore P.C. (“Verification Agent”), upon delivery of the Bonds, will deliver a report on the mathematical accuracy of certain computations, contained in schedules provided to them which were prepared by Underwriter, relating to the sufficiency of moneys and securities deposited into the Escrow Funds to pay, when due, the principal, whether at maturity or upon prior prepayment, interest and prepayment premium requirements of the 2016 Bonds.

The report of the Verification Agent, will include the statement that the scope of its engagement is limited to verifying the mathematical accuracy of the computations contained in such schedules provided to it, and that it has no obligation to update its report because of events occurring, or data or information coming to its attention, subsequent to the date of its report.

Financial Interests
The fees being paid to the Municipal Advisor, the Underwriter, and Underwriter’s 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.

Miscellaneous
Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not expressly stated, are intended as such and not as representations of fact. No representation is made that any of such statements made will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract or agreement between any of the City, the District or the Underwriter and the purchasers or the owners of the Bonds. 41 The execution and delivery of this Official Statement has been duly authorized by the City Council acting in its capacity as the legislative body of the District.

CITY OF SAN JACINTO, FOR AND ON BEHALF

OF CITY OF SAN JACINTO COMMUNITY
FACILITIES DISTRICT NO. 2002-1 (RANCHO SAN
JACINTO, PHASE 2)
By:

City Manager
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APPENDIX A

SUMMARY OF THE AGREEMENT
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APPENDIX B

PROPOSED FORM OF OPINION OF BOND COUNSEL
[Closing Date]
City of San Jacinto
595 S. San Jacinto Avenue
San Jacinto, CA 92583
Re: $__________
* City of San Jacinto Community Facilities District No. 2002-1 (Rancho San Jacinto, Phase 2) 2026 Special Tax Refunding Bonds
Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by City of San Jacinto Community Facilities District No. 2002-1 (Rancho San Jacinto, Phase 2) (the “District”), of $__________ *
aggregate principal
amount of the Community Facilities District No. 2002-1 (Rancho San Jacinto, Phase 2) 2026 Special Tax Refunding Bonds (the “Bonds”). The Bonds are issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Act”), a resolution adopted by the City Council of the City of San Jacinto (the “City”) on [May 5], 2026 (the “Resolution”), and that certain Fiscal Agent Agreement, dated as of [June 1], 2026 (the “Agreement”), between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”).

In such connection, we have examined the Act, the Resolution, the Agreement, the Tax Certificate related to the Bonds, and certified copies of the proceedings taken for the issuance and sale of the Bonds. As to questions of fact which are material to our opinions, we have relied upon the representations of the City contained in the Agreement, and in certificates of its authorized officers which have been delivered to us for the purpose of supplying such facts, without having undertaken to verify the accuracy of any such representations by independent investigation.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other events come to our attention after the date hereof. Accordingly, this opinion speaks only as of its date and is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter.

We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the City. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Agreement and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to ensure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under the Bonds, the Resolution, the Agreement and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitations on legal remedies against cities and * Preliminary, subject to change.

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their subordinate entities in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, waiver or severability provisions contained in the documents mentioned in the preceding sentence. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering materials relating to the Bonds and express no opinion with respect thereto.

Based upon the foregoing, we are of the opinion, under existing law, that:

1. The Bonds have been duly and validly authorized by the City, for and on behalf of the District, and are legal, valid, and binding special obligations of the City. The Bonds are secured and payable solely from sources provided therefor in the Agreement.

2. The Agreement has been duly authorized by the City, on behalf of the District, and constitutes the valid and legally binding obligation of the City enforceable against the City in accordance with its terms, as such enforcement may be limited by bankruptcy, insolvency, moratorium, transfer or conveyance or other laws affecting creditors’ rights generally, or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases; provided, however, that we express no opinion with respect to any indemnification, contribution, choice of law or waiver provisions contained therein.

3. The Agreement creates a valid pledge of that which the Agreement purports to pledge, subject to the provisions of the Agreement, except to the extent that the enforceability of the Agreement may be limited by moratorium, bankruptcy, reorganization, fraudulent conveyance or transfer, insolvency or other laws affecting creditors’ rights generally, or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases.

4. Under existing statutes, regulations, rulings and court decisions, the interest on the Bonds is excluded from gross income for purposes of federal income taxation. Interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax imposed on individuals and corporations, however, interest on the Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations.

Although the interest on the Bonds is excluded from gross income for purposes of federal income taxation, the accrual or receipt of interest on the Bonds, or any portion thereof, may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend on the recipient’s particular tax status or other items of income or deduction. We express no opinion regarding any such consequences.

5. Interest on the Bonds is exempt from State of California personal income tax.

Although interest on the Bonds is excluded from gross income for purposes of federal income taxation, the accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient.

The extent of these tax consequences will depend on the recipient’s particular tax status or other items of income or deduction. We express no opinion regarding any such consequences.

Respectfully submitted,
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APPENDIX C

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
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APPENDIX D

CITY OF SAN JACINTO INFORMATION STATEMENT
The following information relating to the City of San Jacinto is supplied solely for the purposes of information. The City is not obligated in any manner to pay principal of or interest on the Bonds or to cure any delinquency or default on the Bonds. The Bonds are payable solely from the sources described in the Official Statement.

General Information
The City of San Jacinto encompasses approximately 27 square miles, and is one of the oldest cities in Riverside County, California, incorporated in 1888. The City is located approximately 35 miles southeast of the City of San Bernardino and the City of Riverside. The community is surrounded by farm and agricultural lands in the San Jacinto Valley beneath the San Jacinto Mountains. The City has a current population of over 54,000.

The City operates under the council/manager form of government. The City is governed by a five-member council, each elected at large for four-year alternating terms. Positions of City Manager and City Attorney are filled by appointments of the City Council.

The City contracts with the Riverside County Sheriff’s Department for law enforcement services. The Riverside County Fire Protection District provides fire protection services, as well as emergency medical and paramedic services, hazardous materials response and urban search and rescue services.

City services include waste management, sewer and storm drain maintenance, zoning and development services, code enforcement and street maintenance.

San Jacinto has numerous neighborhood parks, and is home to the 36-acre park and Sports Center operated by the Valley-Wide Recreation and Park District. The City enjoys close proximity to major regional recreation areas, including the Idyllwild Recreational Area approximately 15 miles to the east, Palm Springs 43 miles to the east, and the San Bernardino Mountains to the north.

Interstate 215, linking the San Bernardino/Riverside area to the San Diego area, can be accessed 13 miles west of the City along State Highway 74, part of the Pines to Palms Scenic Byway. Interstate 215 provides access to Riverside, San Bernardino and Los Angeles via Interstate 60 and to Orange County via Interstate 91. Interstate 60 and Interstate 10, connecting Riverside to the Palm Springs area and Arizona, can be accessed 12 miles north of the City along Highway 79.

General Demographic Information
The following sets forth the City, the County and the State population estimates as of January 1, for the years 2021 to 2025.

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CITY, COUNTY AND STATE
Estimated Population
Year
(January 1)
City of
San Jacinto
Riverside
County
State of
California
2021 54,159 2,423,069 39,369,530
2022 54,391 2,435,510 39,179,680
2023 54,800 2,467,690 39,228,444
2024 54,936 2,491,037 39,420,663
2025 54,990 2,495,640 39,529,101
Source: State of California, Department of Finance, “E-4 Population Estimates for Cities, Counties and the State, 2021-2025, with 2020 Census Benchmark.” Per capita personal income information for Riverside County, the State of California and the United States are summarized in the following table.

PER CAPITA PERSONAL INCOME
Riverside County, State of California and the United States 2020-2024
Year Riverside County California United States
2020 47,600 70,100 59,151
2021 51,584 77,134 64,692
2022 51,449 77,196 66,298
2023 53,350 81,196 70,002
2024 56,404 86,232 73,204
Source: U.S. Department of Commerce, Bureau of Economic Analysis.

D-4
Employment and Industry
The following table represents the estimated annual average labor force and industry employment for the Riverside San Bernardino Ontario MSA for the period from 2021 through 2025.

RIVERSIDE SAN BERNARDINO ONTARIO MSA
Industry Employment & Labor Force - by Annual Average
March 2025 Benchmark
2021 2022 2023 2024 2025(1)
Total, All Industries 1,588,800 1,673,500 1,692,900 1,703,100 1,762,600 Total Farm 13,700 13,800 13,100 14,700 14,400
Total Nonfarm 1,575,100 1,659,800 1,679,800 1,688,400 1,748,200 Total Private 1,333,100 1,409,800 1,418,900 1,417,000 1,482,900 Goods Producing 207,700 216,300 216,100 215,300 200,400 Mining, Logging and Construction 111,500 116,300 117,200 119,900 106,900 Mining and Logging 1,400 1,500 1,500 1,600 1,600
Construction 110,100 114,700 115,700 118,300 105,300
Manufacturing 96,100 100,000 98,900 95,400 93,500
Service-Providing 1,367,400 1,443,500 1,463,700 1,473,100 1,547,800 Trade, Transportation, and Utilities 443,200 464,900 456,500 446,200 476,60 Wholesale Trade 67,400 69,500 68,700 68,100 67,700
Retail Trade 177,000 181,000 182,700 180,200 188,800
Transportation, Warehousing, and Utilities 198,800 214,400 205,100 197,900 220,100 Information 12,500 13,000 13,300 13,000 12,000
Financial Activities 45,200 46,000 44,900 44,000 43,200 Professional and Business Services 166,600 173,900 164,800 158,700 157,400 Private Education and Health Services 254,300 267,500 287,500 302,700 355,000 Leisure and Hospitality 160,200 180,900 186,500 186,300 187,300 Other Services 43,600 47,400 49,300 50,800 51,000
Government 242,000 250,000 260,900 271,400 265,300
(1) Preliminary; as of December 2025.

Source: State of California Employment Development Department.

D-5
The following table summarizes the labor force, employment and unemployment figures for the years 2020 through 2024 for the City, the County, the State and the nation as a whole.

CITY OF RIVERSIDE, COUNTY OF RIVERSIDE,

STATE OF CALIFORNIA AND UNITED STATES
Average Annual Civilian Labor Force, Employment and Unemployment Year and Area Labor Force Employment (1) Unemployment (2) Unemployment
Rate (%)(3)
2020
City of San Jacinto 22,700 20,300 2,400 10.6%
Riverside County 1,118,900 1,006,200 112,700 10.1
California 18,958,600 17,037,000 1,921,600 10.1
United States(4) 160,607,000 149,769,000 10,838,000 6.7 2021
City of San Jacinto 23,500 21,400 2,000 8.5%
Riverside County 1,130,500 1,047,700 82,800 7.3
California 18,956,600 17,568,700 1,387,800 7.3
United States(4) 162,010,000 155,178,000 6,832,000 4.2
2022
City of San Jacinto 23,500 22,500 1,100 4.6%
Riverside County 1,145,700 1,097,200 48,500 4.2
California 19,169,300 18,348,900 820,400 4.3
United States(4) 164,713,000 158,788,000 5,925,000 3.6
2023
City of San Jacinto 23,900 22,700 1,200 5.2%
Riverside County 1,157,900 1,102,300 55,600 4.8
California 19,308,300 18,388,300 920,000 4.8
United States(4) 167,767,000 161,443,000 6,324,000 3.8
2024
City of San Jacinto 24,200 22,800 1,400 5.8%
Riverside County 1,181,300 1,118,600 62,700 5.3
California 19,644,100 18,600,900 1,043,100 5.3
United States(4) 168,547,000 161,661,000 6,886,000 4.1
(1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table.
(4) Not strictly comparable with data for prior years; as of December in each year.

Source: California Employment Development Department and U.S. Department of Labor, Bureau of Labor Statistics.

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APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the “Disclosure Certificate”), is executed and delivered by the City of San Jacinto (the “Issuer”) on behalf of the City of San Jacinto Community Facilities District No. 2002-1 (Rancho San Jacinto, Phase 2) (the “District”) in connection with the issuance of its $__________ City of San Jacinto Community Facilities District No. 2002-1 (Rancho San Jacinto, Phase 2) 2026 Special Tax Refunding Bonds (the “Bonds”). The Bonds are being issued pursuant to that certain Fiscal Agent Agreement, dated as of [June 1], 2026, by and between the Issuer and U.S. Bank Trust Company, National Association (the “Fiscal Agent”) (the “Agreement”). The Issuer covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with SEC Rule 15c2-12.

Section 2. Definitions. In addition to the definitions set forth in the Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms have the following meanings:
“Annual Report” means any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4.
“Annual Report Date” means March 1 in each year, beginning March 1, 2027. “City” means the City of San Jacinto, California, a municipal corporation and general law city organized and existing under the laws of the State of California. “Disclosure Representative” means the Finance Director of the City, or such other officer or employee of the City as the City shall designate in writing to the Fiscal Agent from time to time. “Dissemination Agent” means NBS, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation. “Listed Events” means any of the events listed in Section 5(a) or 5(b). “MSRB” means 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. “Official Statement” means the Official Statement dated May ___, 2026 relating to the Bonds. “Participating Underwriter” means Stifel, Nicolaus & Company, Incorporated, the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

Section 3. Provision of Annual Reports.
(a) The Issuer shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4. Not later than 5 days prior to the Annual Report Date, the Issuer shall provide the Annual Report to the Dissemination Agent (if other than the Issuer). The Annual Report may be submitted as a single document or as separate documents comprising a package, E-2
and may include by reference other information as provided in Section 4; provided that the audited financial statements of the Issuer 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 Issuer’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The Dissemination Agent (if other than the Issuer) shall have no duty or obligation to review such Annual Report. (b) If the Issuer does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the Issuer shall provide a notice (or cause the Dissemination Agent to provide) in a timely manner to the MSRB, in an electronic format as prescribed by the MSRB. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the 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 Issuer, file a report with the Issuer 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 Reports. The Issuer’s Annual Report shall contain or incorporate by reference the following:
(a) 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 Issuer’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 final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The following information with respect to the Bonds:
(i) The principal amount of Bonds Outstanding as of the December 31 next preceding the Annual Report Date;
(ii) The balance in the Reserve Fund, and a statement of the Reserve Requirement (as defined in the Agreement), as of the December 31 next preceding the Annual Report Date. (c) The following information for the District:
(i) The special tax delinquency rate for the District as of June 30 of the prior calendar year; the number of parcels within the District delinquent in payment of special taxes as of the June 30 next preceding the Annual Report Date; the amount of each delinquency; the length of time delinquent and the date on which foreclosure was commenced, or similar information pertaining to delinquencies deemed appropriate by the District; provided, however, that parcels with delinquencies of $1,000 or less may be grouped together and such information may be provided by category;
(ii) The status of foreclosure proceedings and a summary of the results of any foreclosure sales as of the December 31 next preceding the Annual Report Date; (iii) The identity of any property owner, representing more than 5% of the special tax levy, delinquent in payment of special taxes as of the June 30 next preceding the Annual Report Date; and
E-3
(iv) The information included in Table 1, Table 2 and Table 5 of the Official Statement for the fiscal year next preceding the Annual Report Date. (d) In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the Issuer shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

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 Issuer 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 Issuer shall clearly identify each such other document so included by reference.

Section 5. Reporting of Listed Events.
(a) Reportable Events. The Issuer shall, or shall cause the Dissemination Agent (if not the Issuer) to, give notice of the occurrence of any of the following events within ten (10) business days of the event with respect to the Bonds:

1. principal and interest payment delinquencies;

2. unscheduled draws on debt service reserves reflecting financial difficulties;

3. unscheduled draws on credit enhancements reflecting financial difficulties;

4. substitution of credit or liquidity providers, or their failure to perform;

5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB);

6. defeasances;

7. tender offers;

8. bankruptcy, insolvency, receivership or similar proceedings; and

9. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation, any of which reflect financial difficulties.

10. ratings changes.
(b) Material Reportable Events. The Issuer shall give, or cause to be given, notice of the occurrence of any of the following events within ten (10) business days of the event with respect to the Bonds, if material:

1. Unless described in paragraph 5(a)(5) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds;

2. The consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake E-4
such an action or the termination; of a definitive agreement relating to any such actions, other than pursuant to its term;

3. appointment of a successor or additional fiscal agent or the change of the name of a fiscal agent;

4. non-payment related defaults;

5. modifications to the rights of Bond owners;

6. bond calls; and

7. release, substitution or sale of property securing repayment of the Bonds.

8. incurrence of a Financial Obligation, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation, any of which affect Bondowners.
(c) Time to Disclose. Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the Issuer shall, or shall cause the Dissemination Agent (if not the Issuer) to, file a notice of such occurrence with EMMA, 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.

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

Section 7. Termination of Reporting Obligation. The Issuer’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds.

Section 8. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be NBS. The Dissemination Agent may resign by providing thirty days prior written notice to the Issuer.

Section 9. Amendment. Notwithstanding any other provision of this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, provided no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of such party, and any provision of this Disclosure Certificate may be waived if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to the Issuer to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule.

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer 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 Issuer 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 Issuer 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. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any 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 E-5
Issuer 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 Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer or the Dissemination Agent to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent (if other than the Issuer), its officers, directors, employees and agents, 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 costs and expenses (including attorney’s fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct.

The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the Issuer from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent may conclusively rely upon the Annual Report provided to it by the Issuer as constituting the Annual Report required of the Issuer in accordance with this Disclosure Certificate and shall have no duty or obligation to review such Annual Report. The Dissemination Agent shall have no duty to prepare the Annual Report nor shall the Dissemination Agent be responsible for filing any Annual Report not provided to it by the Issuer in a timely manner in a form suitable for filing with the MSRB. In accepting the appointment under this Agreement, the Dissemination Agent is not acting in a fiduciary capacity to the Holders or Beneficial Owners of the Certificates, the Issuer, the Participating Underwriters or any other party or person.

No provision of this Disclosure Certificate shall require the Dissemination Agent to risk or advance or expend its own funds or incur any financial liability. Any company succeeding to all or substantially all of the Dissemination Agent’s business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act.

Section 13. Beneficiaries. This Disclosure Certificate inures solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Bonds, and creates no rights in any other person or entity.

Date: __________, 2026

CITY OF SAN JACINTO
By: ________________________
Finance Director

DISSEMINATION AGENT
NBS
By: ________________________
Its: ________________________
F-1

APPENDIX F

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

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

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+.

The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information on such website is not incorporated by reference in this Official Statement.

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

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such F-2
other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

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

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

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Fiscal Agent, on payable date in accordance with their respective holdings shown on DTC’s records.

Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Fiscal Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Fiscal Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

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

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

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

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

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

BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE

VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.

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APPENDIX G

SPECIMEN BOND INSURANCE POLICY