Agenda — Temecula City Council, February 13, 2024 (part 2 of 3)

EXHIBIT B

FACILITIES ELIGIBLE FOR ACQUISITION FROM THE DEVELOPER AND

RELATED BUDGETED COSTS
Facility Budgeted
No. Description Cost
Exhibit B

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EXHIBIT C

FORM OF PAYMENT REQUEST
PAYMENT REQUEST NO.

The undersigned ("the Developer'), hereby requests payment in the total amount of $ for the Facilities (as defined in the Acquisition Agreement, dated as of February 13, 2024, between (a) the Temecula Public Financing Authority (the "Authority"), for and on behalf of the Temecula Public Financing Authority Community Facilities District No. 23-01 (Altair), and (b) the Developer), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby represents and warrants to the Authority as follows:

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

2. To the extent that this payment request is with respect to a completed Facility, the Developer has submitted or submits herewith to the City of Temecula (the "City") as -built drawings or similar plans and specifications for the items to be paid for as listed in Attachment 1 hereto with respect to any such completed Facility, and such drawings or plans and specifications, as applicable, are true, correct and complete.

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

4. Supporting documentation (such as third party invoices) is attached with respect to each cost for which payment is requested.

5. There has been compliance with applicable laws relating to prevailing wages for the work to construct the Facilities for which payment is requested.

6. The Facilities for which payment is requested were constructed in accordance with all applicable City or other governmental standards, and in accordance with the as -built drawings or plans and specifications, as applicable, referenced in paragraph 2 above.

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

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

Exhibit C

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

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

DEVELOPER:

SB ALTAIR, LLC
0 Authorized Representative of the Developer
Date:

AUTHORITY:

Payment Request Approved for Submission
to the Finance Director of the City of Temecula
Director of Public Works
Date:

Exhibit C

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ATTACHMENT 1

EXHIBIT C
[list here all Facilities for which payment is requested, and attach support documentation]
Exhibit C-1

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ATTACHMENT 2

EXHIBIT C

CALCULATION OF PURCHASE PRICE
[Use a separate sheet for each Facility
for which payment is being requested]

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

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

3. Budgeted Cost: $

4. Permitted Addition to Budgeted Cost (to the extent, and only to the extent, that Actual Cost exceeds Budgeted Cost), consisting of Savings (Actual Costs less than Budgeted Cost) carried forward from prior acquired Facilities (see first paragraph of Section 5.06A) and not previously applied to cover cost overruns (Actual Costs greater than Budgeted Cost) on previously acquired Facilities: $

5. Subtractions from Purchase Price:

A. Holdback for Lien releases (see Section 5.06(C) of the Acquisition Agreement) $
B. Retention (see Section 5.06(D) of the Acquisition
Agreement) $_

6. Total disbursement requested (amount listed in 3, plus amount, if any, listed in 4 (total of amounts in 3 and 4 not to exceed amount listed in 2), less amounts, if any, listed in 5) $.

Exhibit C-2

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Quint & Thinunig LLP 11/8/23
1/24/24

JOINT COMMUNITY FACILITIES AGREEMENT - EMWD
THIS JOINT COMMUNITY FACILITIES AGREEMENT - EMWD (the "Agreement") is entered into this day of March, 2024, by and among the TEMECULA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority (the "Authority"), the EASTERN MUNICIPAL WATER DISTRICT, a public agency organized and existing pursuant to Division 20 of the California Water Code (the "EMWD"), and SB ALTAIR, LLC, a Delaware limited liability company (the "Company"), and relates to the proposed formation of the TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 23-01 (ALTAIR) (the "CFD"), for the purpose of financing certain public facilities, including sewer facilities to be ultimately owned and operated by EMWD.

RECITALS
A. The Company is developing and owns the property described in Exhibit A hereto (the "Property") which is located in the City of Temecula, California, and is located within the boundaries of the EMWD and the proposed CFD.

B. Pursuant to the request of Company, the Board of Directors of the Authority has initiated proceedings to form the CFD pursuant to the provisions of the Mello -Roos Community Facilities Act of 1982, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code (the "Act").

C. The Company has requested and proposed that the CFD be formed for the purpose of providing the means of financing the acquisition of various public facilities, including (i) certain public facilities to be constructed, owned and operated by EMWD, which are described in further detail on Exhibit B (the "EMWD Facilities"), in lieu of the payment of certain sewer financial participation charges and sewer treatment capacity charges of EMWD (collectively, the "EMWD Fees") incident to the development of homes to occur in the CFD; and (ii) certain water and sewer facilities to be constructed by the Company and acquired by EMWD (the "Acquisition Facilities"). The EMWD Fees do not include meters, processing fees, construction water and other EMWD charges.

D. In conjunction with the issuance of permits for the construction of homes on the Property and/or receipt of water meters for such homes, the Company may elect to advance EMWD Facilities costs in lieu of payment of EMWD Fees (the "Advances") before Bond Proceeds (defined herein) are available in sufficient amounts to pay for EMWD Facilities. In such case, the Company shall be entitled to (i) reimbursement of such Advances limited to the Advances not yet used by EMWD to pay costs of the EMWD Facilities (the Advances being considered an interest free loan by the Company with no repayment obligation except to the extent there are Bond Proceeds received by or made available to EMWD as described herein, all as further described in Section 3 below), and (ii) credit against EMWD Fees which would otherwise be due to EMWD equal to the amount of Bond Proceeds disbursed to EMWD or at the direction of EMWD for EMWD Facilities, all as further described herein. 20009.23:J19365

E. The Company has not yet determined that it will finance the EMWD Facilities in lieu of payment of the EMWD Fees, and/or the Acquisition Facilities, and the parties hereto acknowledge that this Agreement is for the purpose of meeting the requirements of the Act.

F. The Act effectively provides that the CFD may finance the EMWD Facilities and the Acquisition Facilities only pursuant to a joint community facilities agreement adopted pursuant to Government Code Section 53316.2.

G. In connection with the proceedings to form the CFD, the Authority will, as permitted by Section 53350 of the Act, designate the property initially included in the CFD as Improvement Area No. 1 of the CFD ("Improvement Area No. 1"), and will provide for a future annexation area for the CFD that identifies property that may in the future be annexed to the CFD; and
H. The Authority and EMWD have determined that entering into this Agreement to enable the CFD to finance some or all of the EMWD Facilities and the Acquisition Facilities will be beneficial to the residents of each entity and, therefore, desire to enter into this joint community facilities agreement pursuant to Government Code Section 53316.2.

I. Nothing contained herein shall be construed as requiring the Company to take any specific action, or for the Authority to form the CFD or to issue any special tax bonds for the CFD.

AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. Recitals. Each of the above recitals is incorporated herein and is true and correct.

2. Proceedings for the Formation of CFD; Costs of Formation. The Board of Directors of Authority shall have the jurisdiction to and shall be solely responsible for undertaking the proceedings pursuant to the Act to consider the formation of the CFD and the authorization for the CFD to levy special taxes within the CFD and to incur bonded indebtedness.

Notwithstanding the forgoing, if and when the Board of Directors of the Authority determines to issue special tax bonds for the CFD, the Board of Directors of the Authority shall take such actions in its reasonable discretion to ensure that the total effective property tax rate within the CFD (including the special tax rate for the CFD) does not exceed two and one -tenth percent (2.10%) of the projected value of the property subject to the special taxes when developed, determined at the time of the sale of the Bonds. The Authority shall not include EMWD's name on property tax bills that include the special taxes for property within the CFD.

EMWD is not directly or indirectly approving or responsible in any way whatsoever for the levy of special taxes within the CFD, nor is EMWD directly or indirectly approving or responsible in any way whatsoever for the issuance or administration of bonds that may be issued by the Authority for the CFD. EMWD shall not be responsible in any way whatsoever for the costs of formation of the CFD or of the issuance of any special tax bonds for the CFD. -2-

The Authority agrees that any funds advanced by the Developer to EMWD to pay costs of EMWD related to the review and approval by EMWD of this Agreement shall, at the written request of the Company provided to the Authority prior to issuance by the Authority of the special tax bonds for the CFD, be included in the costs of issuance funded from the proceeds of such bonds and reimbursed to the Company promptly following the issuance of such bonds.

3. Use of Bond Proceeds. Prior to the sale of bonds issued by the Authority for the CFD (the "Bonds"), the Company shall notify EMWD of the amount of proceeds of the Bonds ("Bond Proceeds") that are estimated to be reserved or otherwise available to fund EMWD Facilities, and the amount of Bond Proceeds that are expected to be reserved or available to finance Acquisition Facilities.

To the extent Bond proceeds are made available to EMWD to finance EMWD Facilities, but only to such extent, the Company may request payment from the Authority executing and submitting a request for payment, in substantially the form attached hereto as Exhibit C (the "Disbursement Request"), executed by the Company and countersigned by EMWD. Upon receipt of such Disbursement Request, the Authority will cause the fiscal agent for the Bonds to promptly wire transfer (or pay in another mutually acceptable manner) to EMWD such requested funds to the extent that Bond proceeds are available for such purpose.

Upon such notice and EMWD's receipt of such disbursement of funds relating to EMWD Facilities, the Company shall be deemed to have satisfied the applicable EMWD Fees with respect to the number of dwelling units or lots for which the EMWD Fees would otherwise have been required in an amount equal to the amount of such disbursement. EMWD agrees to use Bond proceeds transferred to it within three years of the date of the issuance of the Bonds for the construction or acquisition of EMWD Facilities which shall consist of public infrastructure improvements owned by a governmental entity in which no nongovernmental entity has any special legal entitlements, which improvements have a useful life of five years or more, and are otherwise identified on Exhibit B hereto.

Nothing in this Section 3 shall prohibit the Company from using its own funds to pay all or any portion of the EMWD Fees for any dwelling unit or lot in the CFD or to pay costs of the Acquisition Facilities. If the Bond proceeds available for purposes of this Agreement are less than the amount of EMWD Fees required to be paid by the Company for the development of all of the property within the CFD, the Company, in its discretion, may submit a Disbursement Request to use available Bond proceeds to pay a pro rata portion of the EMWD Fees for any dwelling unit or lot, and use its own funds to pay the balance of the EMWD Fees due, so long as EMWD reasonably expects to expend all of the available Bond Proceeds for EMWD Facilities and Acquisition Facilities prior to the earlier of the date which is 3 years after the date the Bonds are issued or the date of completion of construction of homes in the CFD.

Nothing herein shall relieve the Company from paying EMWD Fees to the extent Bond Proceeds are not made available to EMWD to finance EMWD Facilities.

To the extent Bond Proceeds are made available to pay costs of Acquisition Facilities, the Company may request payment from the Authority as described in Section 4 below. -3-

Notwithstanding the foregoing, EMWD shall maintain written records as to the investment and disposition of any Bond proceeds remitted to it under this Section 3, and will make such records available to the Treasurer of the Authority upon the Treasurer's written request. The Authority shall have no responsibility or obligation whatsoever with respect to the construction or operation of any of the EMWD Facilities or the Acquisition Facilities, or with respect to any investment or use by EMWD of funds remitted to it pursuant to this Agreement.

4. Acquisition Facilities. The requirements of this Section 4 shall apply to any Acquisition Facility for which a Payment Request (defined below) is submitted to EMWD pursuant to this Section 4.
(a) Design Plans and Specifications. All plans, specifications and bid documents for the Acquisition Facility ("Plans") constructed or to be constructed by the Company shall be prepared by the Company at the Company's initial expense, subject to approval by EMWD. Costs for preparation of the Plans shall be included in the acquisition price. Reimbursement of costs for plan revisions will be considered on a case by case basis. The Company shall not award bids for construction, or commence or cause commencement of construction, of any Acquisition Facility until the Plans and bidding documents for such Acquisition Facility have been approved by EMWD. The bid opening for the Acquisition Facility shall be coordinated with and take place at EMWD's offices, with EMWD personnel in attendance.
(b) Construction of Acquisition Facilities. A qualified engineering firm (the "Field Engineer") shall be employed by the Company to provide all field engineering surveys determined to be necessary by the EMWD's inspection personnel. Field Engineer shall promptly furnish to EMWD a complete set of grade sheets listing all locations, offsets, etc., in accordance with good engineering practices, and attendant data and reports resulting from Field Engineer's engineering surveys and/or proposed facility design changes. EMWD shall have the right, but not the obligation, to review, evaluate and analyze whether such results comply with applicable specifications.

A full-time soil testing firm, approved by EMWD, shall be employed by the Company to conduct soil compaction testing and certification. The Company shall promptly furnish results of all such compaction testing to EMWD for its review, evaluation and decision as to compliance with applicable specifications. In the event the compaction is not in compliance with applicable specifications, the Company shall be fully liable and responsible for the costs of achieving compliance. A final report certifying all required compaction in accordance with the specifications shall be a condition of final acceptance of the Acquisition Facility.

The costs of all surveying, testing and reports associated with the Acquisition Facility furnished and constructed by the Company's contractor(s) shall be included in the acquisition price.

EMWD shall not be responsible for conducting any environmental, archaeological, biological, or cultural studies or any mitigation requirements that may be requested by appropriate Federal, State, and/or local agencies with respect to the Acquisition Facility. Any -4-

such work shall be paid for and conducted by the Company and included in the acquisition price of the Acquisition Facility.
(c) EMWD Public Works Requirements. In order that the Acquisition Facility may be properly and readily acquired by EMWD, the Company shall comply with all of the following requirements with respect to the Acquisition Facility, and the Company shall provide such proof to the EMWD as EMWD may reasonably require and at such intervals and in such form as EMWD may reasonably require, that the following requirements have been satisfied as to the Acquisition Facility:
i. The Company shall prepare a bid package for review, comment and approval by the General Manager of EMWD or his designee (the "EMWD Representative"). ii. The Company shall, after obtaining at least three sealed bids for the construction of the Acquisition Facility in conformance with the procedures and requirements of EMWD, submit to EMWD written evidence of such competitive bidding procedure, including evidence of the means by which bids were solicited, a listing of all responsive bids and their amounts, and the name or names of the contractor or contractors to whom the Company proposes to award the contracts for such construction, which shall be the lowest responsible bidder.
iii. The EMWD Representative shall attend the bid opening. If unable to attend the bid opening, the EMWD Representative shall approve or disapprove of a contractor or contractors, in writing, within five (5) business days after receipt from the Company of the name or names of such contractor or contractors recommended by the Company. If the EMWD Representative disapproves of any such contractor; the Company shall select the next lowest responsible bidder from the competitive bids received who is acceptable to the EMWD Representative.
iv. The specifications and bid and contract documents shall require all such contractors to pay prevailing wages and to otherwise comply with applicable provisions of the Labor Code, the Government Code and the Public Contract Code relating to public works projects and as required by the procedures and standards of EMWD with respect to the construction of its public works projects.

V. The Company shall submit faithful performance and payment bonds conforming in all respects to the requirements set forth in EMWD's "Standard Water and/or Sewer Facilities and Service Agreement." The following documents shall be submitted to EMWD along with the performance and payment bonds:
(1) The original, or a certified copy, of the unrevoked appointment, power of attorney, bylaws, or other instrument entitling or authorizing the person who executed the bond to do so;
(2) A certified copy of the certificate of authority of the insurer issued by the State of California's Insurance Commissioner; and
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(3) Copies of the insurer's most recent annual and quarterly statements filed with the Department of Insurance.
vi. The Company and its contractor and subcontractors shall be required to provide proof of insurance coverage throughout the term of the construction of the Acquisition Facility, which they will construct in conformance with EMWD's standard procedures and requirements. EMWD's insurance requirements are set out in Section 7(n) herein.
vii. The Company and all such contractors shall comply with such other requirements relating to the construction of the Acquisition Facility which EMWD may impose by written notification delivered to the Company and each such contractor at the time either prior to the receipt of bids by the Company for the construction of such Acquisition Facility or, to the extent required as a result of changes in applicable laws, during the progress of construction thereof. In accordance with Section 4(f), the Company shall be deemed the awarding body and shall be solely responsible for compliance and enforcement of the provisions of the Labor Code, Government Code, and Public Contract Code.
viii. A "Change Order' is an order from the Company to a contractor authorizing a change in the work to be performed. The Company shall receive comments from the EMWD Representative prior to the Company's approval of any Change Order. The EMWD Representative shall comment on or deny the Change Order request within five (5) business days of receipt of all necessary information. EMWD's comments to a Change Order shall not be unreasonably delayed, conditioned or withheld. The Company shall not be entitled to include in the acquisition price costs associated with a Change Order that have not been approved by the EMWD Representative. (d) Inspection; Completion of Construction. EMWD shall have primary responsibility for inspecting the Acquisition Facility to assure that the work is being accomplished in accordance with the Plans. Such inspection does not include inspection for compliance with safety requirements by the Company's contractor(s). EMWD's personnel shall be granted access to each construction site at all reasonable times for the purpose of accomplishing such inspection. Upon satisfaction of EMWD's inspectors, the Company shall notify EMWD in writing that an Acquisition Facility has been completed in accordance with the Plans.

Within five (5) business days of receipt of written notification from EMWD inspectors that an Acquisition Facility has been completed in accordance with the Plans, the EMWD Representative shall notify the Company in writing that such Acquisition Facility has been satisfactorily completed. Upon receiving such notification, the Company shall file a Notice of Completion with the County of Riverside Recorder's Office, pursuant to the provisions of Section 3093 of the Civil Code. The Company shall furnish to EMWD a duplicate copy of each such Notice of Completion showing thereon the date of filing with the County of Riverside (the "County").

EMWD will in turn file a notice with the County for acceptance. (e) Liens. With respect to the Acquisition Facility, upon the earlier of (i) receipt of all applicable lien releases, or (ii) expiration of the time for the recording of claim of liens as M

prescribed by Sections 3115 and 3116 of the Civil Code, the Company shall provide to EMWD such evidence or proof as EMWD shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment for the construction of the Acquisition Facility have been paid, and that no claims of liens have been recorded by or on behalf of any such person, firm or corporation.
(f) Acquisition; Acquisition Price; Source of Funds. The costs eligible to be included in the acquisition price of the Acquisition Facility (the "Actual Costs") shall include:
i. The actual hard costs for the construction of such Acquisition Facility as established by EMWD-approved construction contracts and approved Change Orders, including costs of payment, performance and maintenance bonds and insurance costs, pursuant to this Agreement;
ii. The design and engineering costs of such Acquisition Facility including, without limitation, the costs incurred in preparing the Plans. Costs for plan revisions will be considered on a case by case basis;
iii. The costs of environmental evaluations and public agency permits and approvals attributable to the Acquisition Facility;
iv. Costs incurred by the Company for construction management and supervision of such Acquisition Facility, not to exceed five percent (5 %) of the actual construction cost, subject to prior approval by EMWD of any construction management or supervision contract with respect to the Acquisition Facility;
v. Professional costs associated with the Acquisition Facility such as engineering, inspection, construction staking, materials, testing and similar professional services; and vi. Costs approved by EMWD of acquiring from an unrelated third party any real property or interests therein required for the Acquisition Facility including, without limitation, temporary construction easements, temporary by-pass road and maintenance easements.

Provided the Company has complied with the requirements of this Agreement, EMWD agrees to execute and submit to the Authority a Payment Request for payment of the acquisition price of the completed Acquisition Facility to the Company or its designee within thirty (30) days after the Company's satisfaction of the preconditions to such payment stated herein.

As a condition to EMWD' s execution of the Payment Request for the acquisition price, the property ownership of the completed Acquisition Facility shall be transferred to EMWD by grant deed, bill of sale or such other documentation as EMWD may require free and clear of all taxes, liens, encumbrances, and assessments, but subject to any exceptions determined by EMWD to not interfere with the actual or intended use of the land or interest therein (including the lien of a community facilities district so long as the subject property is exempt from taxation or is otherwise not taxable by such community facilities district). Upon the transfer of property ownership of the Acquisition Facility or any portion thereof to EMWD, EMWD shall be -7-

responsible for the maintenance of such Acquisition Facility or the portion transferred.

Notwithstanding the foregoing, the acquisition price of an Acquisition Facility may be paid prior to transfer of property ownership and acceptance of the Acquisition Facility if it is substantially completed at the time of payment. The Acquisition Facility shall be considered "substantially complete" when it has been reasonably determined by EMWD to be usable, subject to final completion of such items as the final lift or any other items not essential to the primary use or operation of the Acquisition Facility.

For purposes of determining the acquisition price to be paid by the CID for the acquisition of each Acquisition Facility by EMWD, the value of such Acquisition Facility shall include the construction costs specified in EMWD-approved contracts and EMWD-approved change orders conforming to this Section 4, as hereinbefore specified. EMWD approval is a condition prior to initiation of contract work. However, if EMWD reasonably determines that the additional Actual Costs are excessive and that the value of the Acquisition Facility is less than the total amount of such Actual Costs and such construction costs, the price to be paid for the acquisition of the Acquisition Facility shall be the value thereof as determined by the EMWD Engineer Representative, subject, however, to the Company's right to appeal to EMWD's Board of Directors.

Upon completion of the construction of an Acquisition Facility, the Company shall deliver or cause to be delivered to EMWD a Payment Request in substantially the form of Exhibit "D," attached hereto, copies of the contract(s) with the contractor(s) who have constructed the Acquisition Facility and other relevant documentation with regard to the payments made to such contractor(s) and each of them for the construction of the Acquisition Facility, documentation evidencing payment of prevailing wages, and shall also provide to EMWD invoices and purchase orders with respect to all equipment, materials and labor purchased for the construction of the Acquisition Facility. EMWD shall require the EMWD Engineer Representative to complete its determination of the acquisition price of the Acquisition Facility as promptly as is reasonably possible.

Notwithstanding the preceding prov1s10ns of this Section, the source of funds for the acquisition of the Acquisition Facility or any portion thereof shall be funds on deposit in an account within the Improvement Fund for the Bonds established for purposes of paying for the costs of Acquisition Facilities. If no such funds are available, EMWD shall not be required to acquire the Acquisition Facility from the Company. In such event, the Company shall complete the design and construction and offer to EMWD Property Ownership of such portions of the Acquisition Facility as are required to be constructed by the Company as a condition to recordation of subdivision maps for the Property, but need not construct any portion of the Acquisition Facility which it is not so required to construct. Reimbursement for these facilities would be made pursuant to the "Standard Water and/or Sewer Facilities and Service Agreement(s)" by and between EMWD and the Company.
(g) Easements and/or Fee Title Property Ownership Deeds. The Company shall, at the time EMWD acquires the Acquisition Facility as provided in Section 4(f) hereof, grant or cause to be granted to EMWD, by appropriate instruments prescribed by EMWD, all easements across private property and/or fee title property ownership deeds which may be reasonably necessary for the proper operation and maintenance of such Acquisition Facility, or any part thereof.

(h) Permits. The Company shall be responsible for obtaining all necessary construction permits from the City of Temecula (the "City") covering construction and installation of the Acquisition Facility. EMWD will request the City to issue an "operate and maintain permit" to EMWD, which will become effective upon the completion of the Acquisition Facility and acceptance of property ownership therewith by EMWD.
(i) Maintenance. Prior to the transfer of property ownership of an Acquisition Facility by the Company to EMWD, as provided in Section 4(f) hereof, the Company shall be responsible for the maintenance thereof and shall require its contractor(s) to repair all facilities damaged by any party, prior to acceptance by EMWD and/or make corrections determined to be necessary by EMWD's inspection personnel.
0) Inspection of Records. EMWD shall have the right to review all books and records of the Company pertaining to the costs and expenses incurred by the Company for the design and construction of the Acquisition Facility during normal business hours by making arrangements with the Company. The Company shall have the right to review all books and records of EMWD pertaining to costs and expenses incurred by EMWD for services of the EMWD Engineer Representative by making arrangements with EMWD.
(k) Property Ownership of Improvements. Notwithstanding the fact that some or all of the Acquisition Facility may be constructed in dedicated street rights -of -way or on property which has been or will be dedicated to EMWD, each Acquisition Facility shall be and remain the property of the Company until acquired by EMWD as provided in this Agreement. (1) Materials and Workmanship Warranty. Upon the completion of the acquisition of an Acquisition Facility by EMWD, the performance bond related to such individual Acquisition Facility provided by the Company pursuant to Section 4(c)(v) hereof, shall be reduced by 90%, and the remaining 10% shall serve as a maintenance bond to guarantee that such Acquisition Facility will be free from defects due to faulty workmanship or materials for a period of one year.

Release of performance and payment bonds is addressed in the Standard Water and/or Sewer Facilities and Service Agreement, by and between EMWD and the Company. (m) Independent Contractor. In performing this Agreement with respect to the Acquisition Facilities, the Company is an independent contractor and not the agent of EMWD, the CFD or the Authority. EMWD shall not have any responsibility for payment to any contractor, subcontractor or supplier of the Company. It is not intended by the Parties that this Agreement create a partnership or joint venture among them and this Agreement shall not otherwise be construed.
(n) Insurance Requirements. Neither the Company nor its contractor shall commence work on an Acquisition Facility under this Agreement prior to obtaining all insurance required hereunder with a company or companies acceptable to EMWD, nor shall the Company's contractor allow any subcontractor to commence work on its subcontract until all insurance required of the subcontractor has been obtained.
91 The Company shall, during the life of this Agreement, notify EMWD in writing of any incident giving rise to any potential bodily injury or property damage claim and any resultant settlements, whether in conjunction with this or any other project which may affect the limits of the required coverage, as soon as is reasonable and practical.

Both the Company and its contractor shall conform in every respect to the requirements set forth in the Standard Water and/or Sewer Facilities and Service Agreement, by and between EMWD and the Company.

5. Ownership of EMWD Facilities and Acquisition Facilities. The EMWD Facilities and Acquisition Facilities shall be and remain the property of EMWD.

6. Other Public Utility Facilities. EMWD shall not acquire from the Company or construct the water, electric, natural gas and telephone underground public utility improvements to be installed in the street rights -of -way within the tracts into which the Property will be subdivided. The Company shall construct all such improvements and make such arrangements with respect to refunding of the cost of the installation of such improvements with the utility companies that will own and operate same as is permitted by the rules of such companies.

7. Indemnification. The Company shall assume the defense of, indemnify and save harmless, EMWD, its directors, officers, employees and agents, and the Authority, its members, directors, officers, employees and agents, and each and every one of them from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subject or put, by reason of, or resulting from this Agreement or the issuance of the Bonds; provided, however that the Company shall not be required to indemnify any person or entity as to damages resulting from willful misconduct of such person or entity or their agents or employees.

8. Termination. The provisions of this Agreement related to the funding of the EMWD Facilities shall terminate and be of no further force or effect if Bonds are not sold by December 31, 2035. If for any reason the Bonds are not issued by such date, this Agreement shall terminate and be of no further force and effect. If not earlier terminated in accordance with the foregoing, this Agreement shall terminate on the date which is five years after the later of (i) the date on which EMWD has fully expended any Bond funds remitted to it (and any investment earning thereon) to pay costs of EMWD Facilities, or (ii) five years after the last Acquisition Facilities has been paid for with Bond Proceeds.

9. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy-two (72) hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows:
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Authority/CFD: Temecula Public Financing Authority
c/o City of Temecula
41000 Main Street
Temecula, CA 92589
Attention: Director of Finance
EMWD: Eastern Municipal Water District
2270 Trumble Road
Post Office Box 8300
Perris, CA 92572-8300
Attention: Special Funds Division
Company: SB Altair, LLC
c/o Brookfield Properties
3200 Park Center Drive, Suite 1000
Costa Mesa, CA 92626
Attention: Colin Koch
with a copy to: O'Neil LLP
19900 MacArthur Boulevard, Suite 1050
Irvine, CA 92612
Attention: John P. Yeager, Esq.

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

10. No Obligation. The parties agree that the Company has no obligations hereunder until or unless the Authority issues the Bonds and allocates a portion of the proceeds of the Bonds specifically to fund the EMWD Facilities and/or Acquisition Facilities.

11. Application of the Agreement to Improvement Area No. 1 and to Property annexed to the CFD. This Agreement shall apply to the CFD, to Improvement Area No. 1 and to any property annexed to the CFD.

12. Amendment. This Agreement may be amended at any time but only in writing signed by each party hereto.

13. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the matters provided for herein and supersedes all prior agreements and negotiations between the parties with respect to the subject matter of this Agreement.

14. Exhibits. All exhibits attached hereto are incorporated into this Agreement by reference.

15. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible.
-11-

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

17. No Third Party Beneficiaries. No person or entity shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than EMWD, the Authority, the CFD and the Company (and their respective successors and assigns), any rights, remedies, obligations or liabilities under or by reason of this Agreement.

18. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California.

19. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument. -12-

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
20009.23:J19365

TEMECULA PUBLIC FINANCING AUTHORITY
0 Aaron Adams,
Executive Director
[signature page to CFD 23-01 - Joint Community Facilities Agreement - EMWD] S-1

EASTERN MUNICIPAL WATER DISTRICT
Los
General Manager
[signature page to CFD 23-01 - Joint Community Facilities Agreement - EMWD] S-2

SB ALTAIR, LLC,
a Delaware limited liability company
By: Brookfield Temecula, LLC, a
Delaware limited liability company,
its Operations Manager
as
Name:

Its:
[signature page to CFD 23-01 - Joint Community Facilities Agreement - EMWD] S-3

EXHIBIT A

PROPERTY DESCRIPTION
Riverside County Assessor's Parcel Numbers:
940-310-015
940-310-016
940-310-044
940-310-045
940-310-046
940-310-047
940-310-048
940-310-013
940-320-001
940-320-002
940-320-003
940-320-004
940-320-005
940-320-006
940-320-007
922-210-049
A-1

EXHIBIT B

DESCRIPTION OF EMWD FACILITIES
"EMWD Facilities" means sewer facilities included in EMWD's sewer capacity and connection fee programs used to finance expansion projects except for those in -tract facilities that are contributed by the Company. EMWD Facilities include, but are not limited to: sewer transmission pipelines, sewer treatment plants, disposal ponds, pumping plants, lift stations, water reservoirs, including all costs of site acquisition, planning, design, engineering, legal services, materials testing, coordination, surveying, construction staking, construction, inspection and any and all appurtenant facilities relating to the foregoing.

B-1

EXHIBIT C

DISBURSEMENT REQUEST FORM FOR FUNDING OF

EMWD FACILITIES IN LIEU OF PAYMENT OF EMWD FEES
Sequence No.

EMWD SA#

1. The Temecula Public Financing Authority (the "Authority") is hereby requested to pay from the Bond proceeds to Eastern Municipal Water District ("EMWD"), as Payee, the sum set forth in 3 below.

2. The undersigned certifies that the amount requested for funding of EMWD Facilities in lieu of payment of EMWD Fees, has not formed the basis of prior request or payment, and is being made with respect to the connection of the property described in Exhibit A to the Agreement described below, to the EMWD system.

3. Amount requested: $ For Lot Nos.

Wire transfer instructions for remission of funds to EMWD:

4. The amount set forth in 3 above is authorized and payable pursuant to the terms of the Joint Community Facilities Agreement among the Authority, EMWD and SB Altair, LLC, dated as of January _, 2024 (the "Agreement").

By entering into Agreement and requisitioning funds that may include proceeds of bonds issued by the Authority for the CFD (the "Bonds") as described above, EMWD is not passing upon, determining or assuming the tax-exempt status of the Bonds for federal or State income tax purposes.

Capitalized terms used but not defined herein have the respective meanings given to them in the Agreement.

SB ALTAIR, LLC,
a Delaware limited liability company
By:

Its:

EASTERN MUNICIPAL WATER DISTRICT
C-1

By:

Its:
c-2

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S VINCENT MORGAN DR.� z
Mull
SITE

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CALRA� NIA
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NOT TO SCALE
s
ems.
s

LINE TABLE
LINE #
LENGTH

DIRECTION
L1
127.79'
S54° 10' 10"W
L2

53.39'
S81 ° 15' 1 1 "W

CURVE TABLE
CURVE #
RADIUS
DELTA
LENGTH
C 1
488.00'
2°06' 1 1"

17.91 '
C2
261.00'
52°42'02"
240.07'
C3
1266.00'
6°23'21 "
141.17'
C4
1268.00'
2° 16'02"

50.18'

PROPOSED BOUNDARY MAP

TEMECULA PUBLIC FINANCING AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 23-01 (ALTAIR) AND
IMPROVEMENT AREA NO. 1 OF THE TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 23-01 (ALTAIR)

COUNTY OF RIVERSIDE, STATE OF CALIFORNIA
SECTION 11, TOWNSHIP 8 SOUTH, RANGE 3 WEST, SAN BERNARDINO BASE AND MERIDIAN S42°07'53"E
155.17'
633.24,
Ng2°03'11 E

RIDGE PARK
DRIVE
492 85,
N89°33'48"E 162.03'
S07°50'36"W 6.06'
DISTRICT AND IMPROVEMENT AREA NO. 1

65.446± Ac. GROSS
N66°
43 S2
73,37 S7 ,

THIS BOUNDARY MAP CORRECTLY SHOWS THE BOUNDARIES
OF THE COMMUNITY FACILITIES DISTRICT. PARCEL

NUMBERS ARE RIVERSIDE COUNTY ASSESSOR'S PARCEL
NUMBERS. FOR DETAIL CONCERNING THE LINES AND

DIMENSIONS OF LOTS OR PARCELS REFER TO THE COUNTY
ASSESSOR'S MAPS FOR FISCAL YEAR 2023-2024.

N88°54'59"W 80.80'
S84°47'55"W 113.51'—\
S88°09'20"W(R)
S81° 45' 59" W(R)C3�
S83° 31' 13" W(R)C4
S85°17'32"E 122.97'
53°45'58"E 270.17'
R=189.00'
A= 96° 18'57"
L=317.71'
N89°33'48"E 234.32'
R=47.00' 0= 38°04'20" L=31.23'
33°58'33"E 348.60'
S45°31'03"E 17.97'
S82733' 17" W(R)
\-S45°31'03"E 253.95'

SHEET I OF I

I HEREBY CERTIFY THAT THE WITHIN MAP SHOWING PROPOSED

BOUNDARIES OF THE TEMECULA PUBLIC FINANCING AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 23-01 (ALTAIR) AND
IMPROVEMENT AREA No. 1 THEREOF, COUNTY OF RIVERSIDE,

STATE OF CALIFORNIA, WAS APPROVED BY THE BOARD OF

DIRECTORS AT A REGULAR MEETING THEREOF, HELD ON THE
____ DAY OF 20__,
BY ITS RESOLUTION N0. ______________.
-----------------------------

SECRETARY OF THE BOARD OF DIRECTORS,

TEMECULA PUBLIC FINANCING AUTHORITY

FILED IN THE OFFICE OF THE SECRETARY OF THE BOARD OF

DIRECTORS OF TEMECULA PUBLIC FINANCING AUTHORITY, CITY OF

TEMECULA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA THIS ---- DAY OF 20__,
----------------------------------------

SECRETARY OF THE BOARD OF DIRECTORS,

TEMECULA PUBLIC FINANCING AUTHORITY
o� RECORDED THIS DAY OF 20__ AT
THE HOUR OF O'CLOCK —.M., IN BOOK PAGE

OF MAPS OF ASSESSMENT AND COMMUNITY FACILITIES

DISTRICTS IN THE OFFICE OF THE COUNTY RECORDED IN THE
Cl COUNTY OF RIVERSIDE, STATE OF CALIFORNIA.
c2 FEE: DOCUMENT N0.— — — — — — — —
,11
S81° 5— — L2
1 " = 250'
250 0 250 500 750
DISTRICT AND IMPROVEMENT AREA No. 1

PETER ALDANA, ASSESSOR, COUNTY CLERK, RECORDER
m
LEGEND:

DEPUTY

PROPOSED DISTRICT AND
IMPROVEMENT NO.1 BOUNDARY
940-310-013(PORTION)
940-310-015 XXX—XXX—XXX ASSESSOR'S PARCEL NUMBER
940-310-016
940-310-044
940-310-045
940-310-046
940-310-047
940-310-048 W.O.: 201801 10

I HEREBY CERTIFY THAT THE WITHIN MAP SHOWING

THE PROPOSED BOUNDARIES OF THE POTENTIAL

ANNEXATION AREA OF THE TEMECULA PUBLIC

FINANCING AUTHORITY COMMUNITY FACILITIES
DISTRICT NO. 23-01 (ALTAIR), COUNTY

OF RIVERSIDE, STATE OF CALIFORNIA, WAS APPROVED

BY THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC

FINANCING AUTHORITY AT A REGULAR MEETING THEREOF,
HELD ON THE DAY OF , 20 ,
BY ITS RESOLUTION NO.

SECRETARY

TEMECULA PUBLIC FINANCING AUTHORITY

FILED IN THE OFFICE OF THE SECRETARY OF THE

TEMECULA PUBLIC FINANCING AUTHORITY
THIS DAY OF , 20

SECRETARY

TEMECULA PUBLIC FINANCING AUTHORITY
l�
CFD 23-01
ANNEXATION 1 ,.

VICINITY MAP /

NOT TO SCAL
LEGEND
City of
/ Temecula
I
I
u�
�f
Riv, erside�Co. _
San Diego Co.

ANNEXATION AREA BOUNDARY

BOUNDARIES - POTENTIAL ANNEXATION AREA

TEMECULA PUBLIC FINANCING AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 23-01 (ALTAIR)

COUNTY OF RIVERSIDE, STATE OF CALIFORNIA
940-310-015
940-310-016
940-310-045
940-310-046
940-310-047

THIS ANNEXATION MAP CORRECTLY SHOWS THE BOUNDARIES OF THE ANNEXATION AREA. PARCEL NUMBERS ARE RIVERSIDE COUNTY ASSESSOR'S PARCEL NUMBERS.

Webb FOR DETAILS CONCERNING THE LINES AND DIMENSIONS OF LOTS OR PARCELS

MUNICIPAL FINANCE
REFER TO THE COUNTY ASSESSOR'S MAPS FOR FISCAL YEAR 2023-24. 940-310-048
940-310-044

RECORDED THIS

AT THE HOUR OF

PAGE OF MAPS

FACILITIES DISTRICTS

RECORDER, IN THE
CALIFORNIA.

SHEET 1 OF 1
DAY OF , 20

O'CLOCK M IN BOOK

OF ASSESSMENT AND COMMUNITY

IN THE OFFICE OF THE COUNTY

COUNTY OF RIVERSIDE, STATE OF
FEE: NO.:

PETER ALDANA, ASSESSOR, COUNTY CLERK, RECORDER
DEPUTY

NOT TO SCALE
M: I GIS-AssessmentI Temecula I CFD23-01_Annexation_Boundary. mxd

Item No. 14

TEMECULA PUBLIC FINANCING AUTHORITY/CITY COUNCIL

AGENDA REPORT
TO: Executive Director/Board of Directors
City Manager/City Council Members
FROM: Aaron Adams, Authority Executive Director/City Manager DATE: February 13, 2024
SUBJECT: Approve Issuance of Special Tax Bonds for Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) PREPARED BY: Jennifer Hennessy, City Director of Finance/Authority Treasurer RECOMMENDATION: That the City Council hold a public hearing relating to the proposed issuance of special tax bonds for the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms), and that the Board of Directors and the City Council adopt the resolutions entitled:

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

TEMECULA MAKING FINDINGS WITH RESPECT TO AND

APPROVING THE ISSUANCE OF BONDS BY THE

TEMECULA PUBLIC FINANCING AUTHORITY
RESOLUTION NO. TPFA

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE

TEMECULA PUBLIC FINANCING AUTHORITY

AUTHORIZING THE ISSUANCE OF SPECIAL TAX BONDS
FOR COMMUNITY FACILITIES DISTRICT NO. 20-01
(HEIRLOOM FARMS), AND APPROVING OTHER RELATED

DOCUMENTS AND ACTIONS
BACKGROUND: In 2021, the Temecula Public Financing Authority (the "Authority") Community Facilities District No. 20-01 (Heirloom Farms) (the "CFD") was formed by the Authority to finance various public improvements described in the proceedings for the formation of the CFD.

The Authority has now received a request from Meritage Homes of California, Inc. (the "Developer") to issue special tax bonds for the CFD (the "2024 Bonds), payable from a Special Tax A levied on property in the CFD in order to provide funds to finance costs of improvements authorized to be financed by the CFD.

In February of 2020, the Developer submitted to City of Temecula (the "City") a check in the amount of $75,000 (the "Deposit"), to be used by the City to pay costs of the City and the Authority in connection with the formation of the CFD and the issuance of the 2024 Bonds. Pursuant to a Deposit/Reimbursement Agreement (the "Agreement"), entered into in March of 2020 by the Developer, the City and the Authority, funds advanced by the Developer for CFD costs, including the Deposit, will be reimbursed to the Developer from proceeds of the issuance of the 2024 Bonds.

The 2024 Bonds are proposed to be issued pursuant to a Fiscal Agent Agreement setting forth the various terms and provisions for the 2024 Bonds. The 2024 Bonds are expected to be offered to investors for sale pursuant to a Preliminary Official Statement, and are expected to be sold to Stifel, Nicolaus & Company, Incorporated, the underwriter for the 2024 Bonds, pursuant to a Bond Purchase Agreement, subject to parameters set forth in the Authority Resolution authorizing the issuance of the 2024 Bonds, the title of which is set forth above. Those parameters allow for the issuance of up to $14,000,000 of 2024 Bonds for the CFD. The Authority will enter into a Continuing Disclosure Agreement for the 2024 Bonds, which will require that the Authority provide certain ongoing information for the CFD on annual basis until the 2024 Bonds have been paid in full. City Staff and consultants have reviewed the documents described above and they are now in a form ready for approval by the Board of Directors so that the sale and issuance of the 2024 Bonds can occur.

Section 6586.5 of the California Government Code requires that the City, following the conduct of a public hearing, approve the financing of public improvements with proceeds of the 2024 Bonds, and make a finding of significant benefit from such financing. A notice of the public hearing for the 2024 Bonds has been duly published in accordance with the requirements of the Government Code.

At the time of the formation of the CFD, the Authority and the City entered into a Joint Community Facilities Agreement relating to improvements and services to be funded by the CFD, but to be owned and provided by the City, and the Authority and the Developer entered into an Acquisition Agreement (the "Acquisition Agreement") pursuant to which the Developer has agreed to construct some of the improvements authorized to be funded by the CFD; and the Authority now desires to enter into amendments to those two agreements.

If the City Council holds the public hearing and adopts the City Resolution, and the Board of Directors adopts the Resolution authorizing the issuance of the 2024 Bonds, it is anticipated that the sale of the 2024 Bonds will occur late February 2024 and close mid -March 2024.

SPECIFIC ACTIONS: The City Council to hold the public hearing and the City Council and Board of Directors to consider the adoption of their respective Resolutions.

FISCAL IMPACT: None. The 2024 Bonds will not be obligations of the City, or general obligations of the Authority, but will be limited obligations of the Authority for the CFD payable solely from special taxes levied on land in the CFD and amounts held under the Fiscal Agent Agreement for the 2024 Bonds.

ATTACHMENTS: 1. City Council Resolution — Issuance of Bonds

2. TPFA Resolution — Issuance of Special Tax Bonds

3. Fiscal Agent Agreement

4. Preliminary Official Statement (including Continuing Disclosure Agreements as Appendix E)

5. Bond Purchase Agreement

6. First Amendment to Joint Community Facilities Agreement

7. First Amendment to Acquisition Agreement

RESOLUTION NO. 2024-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY

OF TEMECULA MAKING FINDINGS WITH RESPECT TO

AND APPROVING THE ISSUANCE OF BONDS BY THE

TEMECULA PUBLIC FINANCING AUTHORITY

THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS:

Section 1. The City of Temecula (the "City"), the Temecula Community Services District and the Temecula Housing Authority are parties to a Joint Exercise of Powers Agreement which established the Temecula Public Financing Authority (the "Authority") for the purpose, among others, of issuing bonds to finance public capital improvements.

Section 2. The Board of Directors of the Authority has formed the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) (the "CFD"), and the Authority intends to issue bonds of the Authority for the CFD (the "Bonds") to finance various public improvements within the City of Temecula (the "Improvements").

Section 3. The City Council has on this date held a duly noticed public hearing with respect to the financing of the Improvements with the proceeds of the Bonds, as required by Section 6586.5(a) of the California Government Code.

Section 4. The City Council hereby finds that significant public benefits will arise from the financing of the Improvements with the proceeds of the Bonds, in accordance with Section 6586 of the California Government Code.

Section 5. The City Council hereby approves the financing of the Improvements with the proceeds of the Bonds, and the issuance of the Bonds by the Authority for the CFD.

Section 6. The City and the Authority are parties to a Joint Community Facilities Agreement — City relating to services and improvements authorized to be provided by the City and financed by the CFD, and the City and the Authority now desire to enter into a First Amendment to Joint Community Facilities Agreement — City (the "First Amendment").

Section 7. The City Council approves the First Amendment in the form on file with the City Clerk. The City Manager is hereby authorized to execute and deliver the First Amendment in said form, with such additions thereto or changes therein as are approved by the City Manager upon consultation with the City Attorney and Bond Counsel to the Authority, the approval of such additions or changes, to be conclusively evidenced by the execution and delivery of the First Amendment by the City Manager.

Section 8. This Resolution shall take effect upon adoption.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 1 P day of February, 2024.

James Stewart, Mayor
ATTEST:

Randi Johl, City Clerk
[SEAL]

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss

CITY OF TEMECULA )
I, Randi Johl, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 2024- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 13th day of February, 2024, by the following vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

Randi Johl, City Clerk

RESOLUTION NO. TPFA 2024-

A RESOLUTION OF THE BOARD OF DIRECTORS OF

THE TEMECULA PUBLIC FINANCING AUTHORITY

AUTHORIZING THE ISSUANCE OF SPECIAL TAX
BONDS FOR COMMUNITY FACILITIES DISTRICT NO.
20-01 (HEIRLOOM FARMS), AND APPROVING OTHER

RELATED DOCUMENTS AND ACTIONS

THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:

Section 1. This Board of Directors has conducted proceedings under and pursuant to the Mello -Roos Community Facilities Act of 1982 (the "Law"), to form the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) (the "District"), to authorize the levy of special taxes upon the land within the District, and to issue bonds secured by the special taxes the proceeds of which are to be used to finance certain public improvements (the "Facilities"), all as described in the Resolutions entitled "A Resolution of the Board of Directors of the Temecula Public Financing Authority of Formation of Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms), Authorizing the Levy of a Special Tax Within the District, and Preliminarily Establishing an Appropriations Limit for the District" (the "Resolution of Formation") and "A Resolution of the Board of Directors of the Temecula Public Financing Authority Determining the Necessity to Incur Bonded Indebtedness Within Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms)," which Resolutions were adopted by this Board of Directors on April 13, 2021.

Section 2. Pursuant to the Resolutions described in Section 1, an election was held within the District on April 13, 2021 and the then qualified elector of the District approved the propositions of the incurrence of the bonded debt, the establishment of the appropriations limit and the levy of the special tax by more than two-thirds of the votes cast at said special election.

Section 3. At the time of the formation of the District, the Authority and the City of Temecula (the "City") entered into a Joint Community Facilities Agreement - City, dated as of March 1, 2021 (the "City JCFA") relating to improvements and services to be funded by the District, but to be owned and provided, respectively, by the City; and the Authority and Meritage Homes of California, Inc. ("Meritage") entered into an Acquisition Agreement, dated as of February 23, 2021 (the "Acquisition Agreement") pursuant to which Meritage has agreed to construct some of the improvements authorized to be funded by the District; and the Authority now desires to enter into amendments to those two agreements.

Section 4. There have been submitted to this Board of Directors for its approval an amendment to the City JCFA (the "First Amendment to Joint Community Facilities Agreement — City"), an amendment to the Acquisition Agreement (the "First Amendment to Acquisition Agreement"), a Fiscal Agent Agreement (the "Fiscal Agent Agreement") providing for the issuance of the Bonds (as defined in Section 8 below) and the use of the proceeds of the Bonds to finance the Facilities, as well as a Preliminary Official Statement (the "Preliminary Official Statement") describing the Bonds, a bond purchase agreement to be used in connection with the

sale of the Bonds (the "Purchase Contract") and a Continuing Disclosure Agreement relating to the Bonds (the "Continuing Disclosure Agreement"), and this Board of Directors, with the aid of City of Temecula staff, has reviewed said documents and found them to be in proper order.

Section 5. On April 24, 2001, the Board of Directors adopted Resolution No. TPFA 01- 02 approving local goals and policies for community facilities districts (the "Goals and Policies") and the proposed Bonds are consistent with the Goals and Policies.

Section 6. Pursuant to Section 5852.1 of the California Government Code, certain information relating to the Bonds is set forth in Exhibit A attached to this Resolution, and such information is hereby disclosed and made public.

Section 7. Following the adoption of this Resolution, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Bonds and the levy of said special taxes as contemplated by this Resolution and the documents referred to herein exist, have happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Law.

Section 8. Pursuant to the Law, this Resolution and the Fiscal Agent Agreement, special tax bonds of the Temecula Public Financing Authority (the "Authority") for the District in an aggregate principal amount not to exceed $14,000,000 are hereby authorized to be issued, such bonds to be designated the "Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) 2024 Special Tax Bonds" (the "Bonds"). The Bonds shall be executed in the form set forth in and otherwise as provided in the Fiscal Agent Agreement.

The Board of Directors hereby finds and determines that (a) the Bonds satisfy the requirements of Section 53345.8(a) of the Law in that the appraised value of the real property in the District is more than three times the principal amount of the Bonds, based upon the appraised value of the real property in the District as determined by Integra Realty Resources in its appraisal of the property in the District subject to the levy of the special taxes for the District; (b) the Bonds, when issued, will be in compliance with the applicable requirements of the Goals and Policies; and (c) the District and the Bonds are consistent with the requirements set forth in Section VIII E. of the City of Temecula's Budget and Fiscal Policies as contained in the City's Fiscal Year 2023-24 Annual Operating Budget. The Board of Directors further finds that the sale of the Bonds at negotiated sale as contemplated by the Purchase Contract will result in a lower overall cost.

Section 9. The Fiscal Agent Agreement with respect to the Bonds, in the form presented to the Board of Directors at this meeting, is hereby approved. The Executive Director, the Assistant Executive Director and the Treasurer (each, a "Designated Officer"), each acting alone, are hereby authorized to execute and deliver the Fiscal Agent Agreement in said form, with such additions thereto or changes therein as are approved by the Designated Officer executing the Fiscal Agent Agreement upon consultation with the Authority's General Counsel and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Fiscal Agent Agreement by a Designated Officer. The Secretary is hereby authorized to countersign the Fiscal Agent Agreement. The date, manner of payment, interest rate or rates, interest payment dates, denominations, form, registration privileges, manner N

of execution, place of payment, terms of redemption and other terms of the Bonds shall be as provided in the Fiscal Agent Agreement as finally executed.

Section 10. The Purchase Contract between the Authority and Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), in the form presented to the Board of Directors at this meeting, is hereby approved. The Designated Officers, each acting alone, are hereby authorized to accept the offer of the Underwriter to purchase the Bonds contained in the Purchase Contract; provided that the aggregate principal amount of the Bonds sold thereby is not in excess of $14,000,000, the true interest cost of the Bonds is not in excess of 6.50% and the Underwriter's discount is not in excess of 1.50% of the aggregate principal amount of the Bonds.

The Designated Officers, each acting alone, are hereby authorized to execute and deliver the Purchase Contract in said form (if the requirements of the preceding sentence are satisfied), with such additions thereto or changes therein as are recommended or approved by the Designated Officer executing the Purchase Contract upon consultation with the Authority's General Counsel and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Purchase Contract by a Designated Officer. The Secretary does not need to countersign the Purchase Contract.

Section 11. The Preliminary Official Statement, in the form presented to the Board of Directors at this meeting, is hereby approved. The Designated Officers are hereby authorized, for and in the name and on behalf of the Authority, to make changes to the Preliminary Official Statement prior to its dissemination to prospective investors, and to bring the Preliminary Official Statement into the form of a final official statement (the "Official Statement") including such additions thereto or changes therein as are recommended or approved by any such officer upon consultation with Authority's General Counsel and Disclosure Counsel. The Executive Director is hereby authorized and directed to execute and deliver the Official Statement. The Underwriter is hereby authorized to distribute copies of the Preliminary Official Statement to persons who may be interested in the purchase of the Bonds and is directed to deliver copies of the Official Statement to all actual purchasers of the Bonds.

The Designated Officers, each acting alone, are hereby authorized to execute a certificate or certificates to the effect that the Official Statement and the Preliminary Official Statement were deemed "final" as of their respective dates for purposes of Rule 15c2-12 of the Securities Exchange Act of 1934, and each Designated Officer is authorized to so deem such statements final.

Section 12. The Continuing Disclosure Agreement related to the Bonds, in the form appended as Appendix E to the Preliminary Official Statement, is hereby approved. The Designated Officers, each acting alone, are hereby authorized, for and in the name of and on behalf of the Authority, to execute and deliver the Continuing Disclosure Agreement in said form, with such additions thereto or changes therein as are deemed necessary, desirable or appropriate by the Designated Officer executing the Continuing Disclosure Agreement upon consultation with the Authority's General Counsel and Disclosure Counsel, the approval of such changes to be conclusively evidenced by the execution and delivery by a Designated Officer of the Continuing Disclosure Agreement. The Secretary does not need to countersign the Continuing Disclosure Agreement.
3 Section 13. The Authority hereby covenants, for the benefit of the Bondowners, to commence and diligently pursue to completion any foreclosure action regarding delinquent installments of any amount levied as a special tax for the payment of interest or principal of the Bonds, said foreclosure action to be commenced and pursued as more completely set forth in the Fiscal Agent Agreement.

Section 14. The Bonds, when executed, shall be delivered to the Fiscal Agent for authentication. The Fiscal Agent (as defined in the Fiscal Agent Agreement) is hereby requested and directed to authenticate the Bonds by executing the Fiscal Agent's certificate of authentication and registration appearing thereon, and to deliver the Bonds, when duly executed and authenticated, to the Underwriter in accordance with written instructions executed on behalf of the Authority by a Designated Officer, which instructions each Designated Officer acting alone is hereby authorized, for and in the name and on behalf of the Authority, to execute and deliver to the Fiscal Agent. Such instructions shall provide for the delivery of the Bonds to the Underwriter upon payment of the purchase price therefor.

Section 15. The First Amendment to Joint Community Facilities Agreement — City, between the City and the Authority and the First Amendment to Acquisition Agreement between the Authority and Meritage, in the respective forms presented to the Board of Directors at this meeting, are hereby approved. The Designated Officers, each acting alone, are hereby authorized to execute and deliver the First Amendment to Joint Community Facilities Agreement — City and the First Amendment to Acquisition Agreement in said forms, with such additions thereto or changes therein as are approved by the Designated Officer executing the documents upon consultation with the Authority's General Counsel and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the documents by a Designated Officer.

Section 16. The firm of Webb Municipal Finance, LLC is hereby designated as special tax consultant to the Authority for the Bonds and the law firm of Quint & Thimmig LLP is hereby confirmed as Bond Counsel and Disclosure Counsel to the Authority for the Bonds. The Executive Director is hereby authorized to execute an agreement with Webb Municipal Finance, LLC, and an addendum to the Agreement for Bond Counsel and Disclosure Counsel Services, dated March 10, 2020, with Quint & Thimmig LLP, in each case for their services in connection with the Bonds, each in a form acceptable to the Authority's General Counsel.

Section 17. All actions heretofore taken by the officers and agents of the Authority with respect to the establishment of the District and the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and the proper officers of the Authority (including the Designated Officers and the Secretary) are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Bonds in accordance with this Resolution, and any certificate, agreement, and other document described in the documents herein approved.

Whenever in this Resolution any officer of the Authority is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer shall be absent or unavailable.
4 Section 18. This Resolution shall take effect upon its adoption.

PASSED, APPROVED, AND ADOPTED by the Board of Directors of the Temecula Public Financing Authority this 13th day of February, 2024.

James Stewart, Chair
ATTEST:

Randi Johl, Secretary
[SEAL]

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss

CITY OF TEMECULA )
I, Randi Johl, Secretary of the Temecula Public Financing Authority, do hereby certify that the foregoing Resolution No. TPFA 2024- was duly and regularly adopted by the Board of Directors of the Temecula Public Financing Authority at a meeting thereof held on the 13th day of February, 2024, by the following vote:

AYES: BOARD MEMBERS:

NOES: BOARD MEMBERS:

ABSTAIN: BOARD MEMBERS:

ABSENT: BOARD MEMBERS:

Randi Johl, Secretary

EXHIBIT A
GOVERNMENT CODE SECTION 5852.1 DISCLOSURE
The following information consists of estimates that have been provided by Fieldman, Rolapp & Associates, Inc., the Authority's Municipal Advisor, which have been represented to have been provided in good faith:
(A) True Interest Cost of the Bonds: 5.06%
(B) Finance Charges: $497,980
(C) Net Proceeds to be Received: $11,118,573 (net of Finance Charges, reserves or capitalized interest)
(D) Total Payment Amount through Maturity (sum of all Bond debt service): $26,177,725 The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates on January 23, 2024.

The principal amount of the Bonds, the true interest cost of the Bonds, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Bonds being different than the date used for purposes of such estimates, (b) the actual principal amount of Bonds sold being different from the estimated amount used for purposes of such estimates, (c) the actual principal amortization of the Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates on the Bonds at the time of sale of the Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the Authority's financing plan, or a combination of such factors. The actual date of sale of the Bonds and the actual principal amount of the Bonds sold will be determined based on the timing of the need for proceeds of the Bonds and other factors. The actual interest rates on the Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the principal of the Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the Authority.

Exhibit A

Quint & Thimmig LLP

FISCAL AGENT AGREEMENT
by and between the

TEMECULA PUBLIC FINANCING AUTHORITY
and
U. S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Fiscal Agent
dated as of March 1, 2024
relating to:

Temecula Public Financing Authority
Community Facilities District No. 20-01
(Heirloom Farms)
2024 Special Tax Bonds
11/30/23
12/27/23
1/15/24
1/23/24
1/25/24
20009.25:J19412

TABLE OF CONTENTS

ARTICLE I

STATUTORY AUTHORITY AND DEFINITIONS
Section 1.01.

Authority for this Agreement....................................................................................................................... 3 Section 1.02.

Agreement for Benefit of Owners of the Bonds......................................................................................... 3 Section1.03.

Definitions....................................................................................................................................................... 3 ARTICLE II

THE BONDS
Section 2.01.

Principal Amount; Designation..................................................................................................................13 Section 2.02.

Terms of the 2024 Bonds..............................................................................................................................13 Section2.03.

Redemption...................................................................................................................................................14 Section2.04.

Form of Bonds...............................................................................................................................................18 Section2.05.

Execution of Bonds.......................................................................................................................................18 Section2.06.

Transfer of Bonds.........................................................................................................................................18 Section2.07.

Exchange of Bonds.......................................................................................................................................19 Section2.08.

Bond Register................................................................................................................................................19 Section2.09.

Temporary Bonds.........................................................................................................................................19 Section 2.10.

Bonds Mutilated, Lost, Destroyed or Stolen............................................................................................. 20 Section2.11.

Limited Obligation....................................................................................................................................... 20 Section2.12.

No Acceleration............................................................................................................................................ 20 Section2.13.

Book -Entry System....................................................................................................................................... 20 Section 2.14.

Issuance of Parity Bonds............................................................................................................................. 22 ARTICLE III
ISSUANCE OF 2024 BONDS
Section 3.01.

Issuance and Delivery of 2024 Bonds........................................................................................................ 24 Section 3.02.

Pledge of Special Tax Revenues................................................................................................................. 24 Section3.03.

Validity of Bonds.......................................................................................................................................... 24 ARTICLE IV

FUNDS AND ACCOUNTS
Section 4.01.

Application of Proceeds of Sale of 2024 Bonds and Other Moneys ....................................................... 25 Section4.02.

Improvement Fund...................................................................................................................................... 25 Section4.03.

Costs of Issuance Fund................................................................................................................................ 27 Section4.04.

Reserve Fund................................................................................................................................................ 28 Section4.05.

Bond Fund..................................................................................................................................................... 29 Section4.06.

Special Tax Fund.......................................................................................................................................... 31 Section 4.07.

Administrative Expense Fund.................................................................................................................... 33 Section 4.08.

Delinquency Maintenance Fund................................................................................................................ 33 ARTICLE V

OTHER COVENANTS OF THE AUTHORITY
Section5.01.

Punctual Payment........................................................................................................................................ 35 Section5.02.

Limited Obligation....................................................................................................................................... 35 Section 5.03.

Extension of Time for Payment.................................................................................................................. 35 Section 5.04.

Against Encumbrances................................................................................................................................ 35 Section5.05.

Books and Records....................................................................................................................................... 35 Section 5.06.

Protection of Security and Rights of Owners............................................................................................ 35 Section5.07.

Compliance with Act................................................................................................................................... 36 Section 5.08.

Collection of Special Tax Revenues........................................................................................................... 36 Section 5.09.

Covenant to Foreclose.................................................................................................................................. 37 Section 5.10.

Further Assurances...................................................................................................................................... 37 Section 5.11.

Private Activity Bond Limitations.............................................................................................................. 38 Section 5.12.

Federal Guarantee Prohibition................................................................................................................... 38 Section 5.13.

Rebate Requirement..................................................................................................................................... 38 Section5.14.

No Arbitrage................................................................................................................................................. 38 mo

Section 5.15.

Yield of the 2024 Bonds............................................................................................................................... 38 Section 5.16.

Maintenance of Tax-Exemption.................................................................................................................. 39 Section 5.17.

Continuing Disclosure to Owners.............................................................................................................. 39 Section 5.18.

Reduction of Special Taxes.......................................................................................................................... 39 Section 5.19.

Limits on Special Tax Waivers and Bond Tenders................................................................................... 39 Section5.20.

No Additional Bonds................................................................................................................................... 39 Section 5.21.

Authority Bid at Foreclosure Sale.............................................................................................................. 39 ARTICLE VI

INVESTMENTS, DISPOSITION OF INVESTMENT PROCEEDS, LIABILITY OF THE AUTHORITY Section 6.01.

Deposit and Investment of Moneys in Funds........................................................................................... 40 Section6.02.

Limited Obligation....................................................................................................................................... 41 Section 6.03.

Liability of Authority................................................................................................................................... 41 Section 6.04.

Employment of Agents by Authority ........................................................................................................ 42 ARTICLE VII

THE FISCAL AGENT
Section 7.01.

Appointment of Fiscal Agent...................................................................................................................... 43 Section 7.02.

Liability of Fiscal Agent............................................................................................................................... 44 Section7.03.

Information................................................................................................................................................... 46 Section 7.04.

Notice to Fiscal Agent.................................................................................................................................. 46 Section 7.05.

Compensation, Indemnification................................................................................................................. 46 ARTICLE VIII

MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01.

Amendments Permitted.............................................................................................................................. 48 Section8.02.

Owners' Meetings........................................................................................................................................ 49 Section 8.03.

Procedure for Amendment with Written Consent of Owners............................................................... 49 Section8.04.

Disqualified Bonds....................................................................................................................................... 49 Section 8.05.

Effect of Supplemental Agreement............................................................................................................ 50 Section 8.06.

Endorsement or Replacement of Bonds Issued After Amendments..................................................... 50 Section 8.07.

Amendatory Endorsement of Bonds......................................................................................................... 50 ARTICLE IX

MISCELLANEOUS
Section 9.01.

Benefits of Agreement Limited to Parties................................................................................................. 51 Section 9.02.

Successor is Deemed Included in All References to Predecessor........................................................... 51 Section 9.03.

Discharge of Agreement.............................................................................................................................. 51 Section 9.04.

Execution of Documents and Proof of Ownership by Owners.............................................................. 52 Section 9.05.

Waiver of Personal Liability ....................................................................................................................... 52 Section 9.06.

Notices to and Demands on Authority and Fiscal Agent....................................................................... 52 Section 9.07.

State Reporting Requirements.................................................................................................................... 53 Section9.08.

Partial Invalidity ........................................................................................................................................... 54 Section9.09.

Unclaimed Moneys...................................................................................................................................... 54 Section9.10.

Applicable Law............................................................................................................................................. 55 Section9.11.

Conflict with Act.......................................................................................................................................... 55 Section 9.12.

Conclusive Evidence of Regularity ............................................................................................................ 55 Section 9.13.

Payment on Business Day........................................................................................................................... 55 Section9.14.

Counterparts................................................................................................................................................. 55 Section 9.15.

Electronic Transactions................................................................................................................................ 55 EXHIBIT A - FORM OF 2024 BOND

FISCAL AGENT AGREEMENT
Temecula Public Financing Authority
Community Facilities District No. 20-01
(Heirloom Farms)
2024 Special Tax Bonds
THIS FISCAL AGENT AGREEMENT (the "Agreement"), dated as of March 1, 2024, is by and between the Temecula Public Financing Authority, a joint exercise of powers authority organized and existing under and by virtue of the laws of the State of California (the "Authority") for and on behalf of the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) (the "District"), and U.S. Bank Trust Company, National Association, a national banking association duly organized and existing under the laws of the United States of America, as fiscal agent (the "Fiscal Agent").

RECITALS:

WHEREAS, the Board of Directors of the Authority has formed the District under the provisions of the Mello -Roos Community Facilities Act of 1982, as amended (Section 53311, et seq. of the California Government Code) (the "Act") and Resolution No. TPFA 2021-03 of the Board of Directors of the Authority adopted on April 13, 2021 (the "Resolution of Formation"); WHEREAS, the Board of Directors of the Authority, as the legislative body for the District, is authorized under the Act to levy special taxes to pay for the costs of the District and to authorize the issuance of bonds secured by said special taxes under the Act; WHEREAS, under the provisions of the Act, on February 13, 2024 the Board of Directors of the Authority adopted its Resolution No. TPFA 2024- (the "Resolution"), which resolution authorized the issuance and sale of the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) 2024 Special Tax Bonds (the "2024 Bonds") in an aggregate principal amount of not to exceed $17,000,000, and authorized the execution of this Agreement;
WHEREAS, it is in the public interest and for the benefit of the Authority, the District, the persons responsible for the payment of special taxes to be levied in the District and the owners of the 2024 Bonds that the Authority enter into this Agreement to provide for the issuance of the 2024 Bonds, the disbursement of proceeds of the 2024 Bonds, the disposition of the special taxes securing the 2024 Bonds and the administration and payment of the 2024 Bonds; and
WHEREAS, the Authority has determined that all things necessary to cause the 2024 Bonds, when executed by the Authority for and on behalf of the District and issued as in the Act, the Resolution and this Agreement provided, to be legal, valid and binding and special obligations of the Authority for and on behalf of the District in accordance with their terms, and -1-

all things necessary to cause the creation, authorization, execution and delivery of this Agreement and the creation, authorization, execution and issuance of the 2024 Bonds, subject to the terms hereof, have in all respects been duly authorized.

AGREEMENT:

NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
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ARTICLE I

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

Section 1.02. Agreement for Benefit of Owners of the Bonds. The provisions, covenants and agreements herein set forth to be performed by or on behalf of the Authority shall be for the equal benefit, protection and security of the Owners of the Bonds. All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. Any action by any Owner to enforce the provisions of this Agreement shall be for the equal benefit and protection of all Owners of the Bonds.

The Fiscal Agent may become the Owner of any of the Bonds in its own or any other capacity with the same rights it would have if it were not Fiscal Agent.

Section 1.03. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof. "Acquisition Account" means the account by that name established by Section 4.02(A) within the Improvement Fund.
"Acquisition Agreement" means the Acquisition Agreement, dated as of February 23, 2021, between the Authority and the Developer, as originally executed and as it may be amended from time to time in accordance with its terms. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq. of the California Government Code. "Administrative Expenses" means costs directly related to the administration of the District consisting of the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the Treasurer or designee thereof or both) and the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Fiscal Agent; fees and costs of the Fiscal Agent (including its legal counsel) in the discharge of the duties required of it under this Agreement; the costs of the Authority, the City or any designee of either the Authority or the City of complying with the disclosure provisions of the Act, the Continuing Disclosure Agreement and this Agreement, including those related to public inquiries regarding the Special Tax and disclosures to Bondowners and the Original Purchaser; the costs of the Authority, the City or any designee of either the Authority or the City related to an appeal of the Special Tax; any amounts required to be -3-

rebated to the federal government in order for the Authority to comply with Section 5.13; an allocable share of the salaries of the City staff directly related to the foregoing and a proportionate amount of City general administrative overhead related thereto. Administrative Expenses shall also include amounts advanced by the Authority or the City for any administrative purpose of the District, including costs related to prepayments of Special Taxes, recordings related to such prepayments and satisfaction of Special Taxes, amounts advanced to ensure compliance with Section 5.13, administrative costs related to the administration of any joint community facilities agreement regarding the District, and the costs of commencing and pursuing foreclosure of delinquent Special Taxes. Administrative Expenses shall include any such expenses incurred in prior years but not yet paid. "Administrative Expense Fund" means the fund by that name established by Section

4.07(A) hereof.
"Agreement" means this Fiscal Agent Agreement, as it may be amended or supplemented from time to time by any Supplemental Agreement adopted pursuant to the provisions hereof.
"Annual Debt Service" means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled (including by reason of the provisions of Section 2.03(A)(ii) providing for mandatory sinking payments), and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking payment due in such Bond Year pursuant to Section

2.03(A)(ii)).
"Auditor" means the auditor/controller of the County, or such other official at the County who is responsible for preparing property tax bills. "Authority" means the Temecula Public Financing Authority and any successor thereto. "Authority Attorney" means any attorney or firm of attorneys employed by the Authority or the City in the capacity of general counsel to the Authority. "Authorized Denominations" means $5,000 and integral multiples thereof. "Authorized Officer" means the Chair, Executive Director, Treasurer or Secretary of the Authority, or any other officer or employee of the Authority or the City authorized by the Board of Directors of the Authority or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer. "Beneficial Owner" has the meaning given to such term in Section 2.13 hereof. "Bond Counsel" means any other attorney or firm of attorneys acceptable to the Authority and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities. "Bond Fund" means the fund by that name established by Section 4.05(A) hereof. -4-

"Bond Register" means the books for the registration and transfer of Bonds maintained by the Fiscal Agent under Section 2.08 hereof.
"Bond Year" means the one-year period beginning on September 2nd in each year and ending on September 1st in the following year, except that the first Bond Year shall begin on the Closing Date and end on September 1, 2024.
"Bonds" means the 2024 Bonds, and, if the context requires, any Parity Bonds, at any time Outstanding under this Agreement or any Supplemental Agreement. "Business Day" means any day other than (i) a Saturday or a Sunday, or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office are authorized or obligated by law or executive order to be closed. "CDIAC" means the California Debt and Investment Advisory Commission of the office of the State Treasurer of the State of California or any successor agency or bureau thereto. "Capitalized Interest Account" means the account by that name established within the Bond Fund by Section 4.05(A) hereof.
"City" means the City of Temecula, California.
"City Account" means the account by that name established by Section 4.02(A) within the Improvement Fund.
"Closing Date" means March _, 2024, being the date upon which there is a physical delivery of the 2024 Bonds in exchange for the amount representing the purchase price of the 2024 Bonds by the Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the 2024 Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the 2024 Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code.
"Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement pertaining to the 2024 Bonds, dated as of March 1, 2024, between the Authority and Webb Municipal Finance, LLC as dissemination agent, as originally executed and as it may be amended from time to time in accordance with the terms thereof. "Costs of Issuance" means items of expense payable or reimbursable directly or indirectly by the Authority or the City and related to the authorization, sale and issuance of the 2024 Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent including its first annual administration fee, fees and expenses of Fiscal Agent's counsel, expenses incurred by the City or the Authority in connection with the -5-

issuance of the 2024 Bonds, special tax consultant fees and expenses, Bond (underwriter's) discount, legal fees and charges, including bond counsel and disclosure counsel, municipal advisor's fees, appraisal fees, charges for execution, transportation and safekeeping of the 2024 Bonds, and other costs, charges and fees in connection with the foregoing. hereof.
"Costs of Issuance Fund" means the fund by that name established by Section 4.03(A) "County" means the County of Riverside, California.
"DMF Requirement" means an amount equal to $200,000.00. "DTC" means The Depository Trust Company, New York, New York, and its successors and assigns.
"Debt Service" means the scheduled amount of interest and amortization of principal (including principal payable by reason of Section 2.03(A)(ii)) on the Bonds and the scheduled amount of interest and amortization of principal payable on any Parity Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Delinquency Maintenance Fund" means the fund established and administered under Section 4.08 hereof.
"Depositor if means (i) initially, DTC, and (ii) any other Securities Depository acting as Depository pursuant to Section 2.13.
"Developer" means Meritage Homes of California, Inc.
"District" means the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms), formed by the Authority under the Act and the Resolution of Formation.
"EMWD" means the Eastern Municipal Water District.
"EMWD Account" means the account by that name established by Section 4.02(A) within the Improvement Fund.
"Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arms length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply

contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security --State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States.
"Federal Securities" means any of the following which are non -callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent: direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury) and obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America, including, without limitation, such of the foregoing which are commonly referred to as "stripped" obligations and coupons. "Fiscal Agent" means the Fiscal Agent appointed by the Authority and acting as an independent fiscal agent with the duties and powers herein provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01.
"Fiscal Year" means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive. "Improvement Fund" means the fund by that name created by and held by the Fiscal Agent pursuant to Section 4.02(A) hereof.
"Independent Financial Consultant" means any consultant or firm of such consultants appointed by the Authority, the City or the Treasurer, and who, or each of whom: (i) is judged by the person or entity that approved them to have experience in matters relating to the issuance and/or administration of bonds under the Act; (ii) is in fact independent and not under the domination of the Authority; (iii) does not have any substantial interest, direct or indirect, with or in the Authority, or any owner of real property in the District, or any real property in the District; and (iv) is not connected with the City or the Authority as an officer or employee of the City or the Authority, but who may be regularly retained to make reports to the City or the Authority.
"Information Services" means the Electronic Municipal Market Access System (referred to as "EMMA"), a facility of the Municipal Securities Rulemaking Board (at http://emma.msrb.org); and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with respect to called bonds as the Authority may designate in an Officer's Certificate delivered to the Fiscal Agent.
"Interest Payment Dates" means March 1 and September 1 of each year, commencing September 1, 2024.
-7-

"Joint Community Facilities Agreement - EMWD" means the Joint Community Facilities Agreement - EMWD, dated as of March 17, 2021, among the Authority, EMWD and the Developer.
"Joint Community Facilities Agreement - School District" means the Joint Community Facilities Agreement - School District, dated as of March 16, 2021, among the Authority, the School District and the Developer.
"Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. "Mood" means Moody's Investors Service, and any successor thereto. "Officer's Certificate" means a written certificate of the Authority signed by an Authorized Officer of the Authority.
"Ordinance" means any ordinance of the Authority levying the Special Taxes. "Original Purchaser" means Stifel, Nicolaus & Company, Incorporated, the first purchaser of the 2024 Bonds from the Authority.
"Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.04) all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Authority pursuant to this Agreement or any Supplemental Agreement. "Owner" or "Bondowner" means any person who is the registered owner of any particular Outstanding Bond.
"Parity Bonds" means bonds issued by the Authority for the District and secured on a parity with any then Outstanding Bonds pursuant to Section 2.14 hereof. "Participating Underwriter" shall have the meaning ascribed thereto in the Continuing Disclosure Agreement.
"Permitted Investments" means any of the following, but only to the extent that the same are acquired at Fair Market Value:
(a) Federal Securities.
(b) Registered state warrants or treasury notes or bonds of the State of California (the "State"), including bonds payable solely out of the revenues from a revenue - producing property owned, controlled, or operated by the State or by a department, board, agency, or authority of the State, which are rated in one of the two highest short- H

term or long-term rating categories by either Moody's or S&P, and which have a maximum term to maturity not to exceed three years.
(c) Unsecured certificates of deposit, time deposits and bankers' acceptance of any bank the short-term obligations of which are rated on the date of purchase "A-1+" or better by S&P and "P-1" by Moody's and or certificates of deposit (including those of the Fiscal Agent, its parent and its affiliates) secured at all times by collateral that may be used by a national bank for purposes of satisfying its obligations to collateralize pursuant to federal law which are issued by commercial banks, savings and loan associations or mutual savings bank whose short-term obligations are rated on the date of purchase A-1 (or its equivalent) or better by S&P or Moody's. (d) Commercial paper which at the time of purchase is of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided by either Moody's or S&P, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America and that have total assets in excess of five hundred million dollars ($500,000,000) and that have an "A" or higher rating for the issuer's debentures, other than commercial paper, by either Moody's or S&P, provided that purchases of eligible commercial paper may not exceed 180 days' maturity nor represent more than 10 percent of the outstanding commercial paper of an issuing corporation. Purchases of commercial paper may not exceed 20 percent of the total amount invested pursuant to this definition of Permitted Investments. (e) A repurchase agreement with a state or nationally charted bank or trust company or a national banking association or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, provided that all of the following conditions are satisfied: (1) the agreement is secured by any one or more of the securities described in subdivision (a) of this definition of Permitted Investments, (2) the underlying securities are required by the repurchase agreement to be held by a bank, trust company, or primary dealer having a combined capital and surplus of at least one hundred million dollars ($100,000,000) and which is independent of the issuer of the repurchase agreement, and (3) the underlying securities are maintained at a market value, as determined on a marked -to -market basis calculated at least weekly, of not less than 103 percent of the amount so invested. (f) An investment agreement or guaranteed investment contract with, or guaranteed by, a financial institution the long-term unsecured obligations of which are rated Aa2 and "AA" or better, respectively, by Moody's and S&P at the time of initial investment. The investment agreement shall be subject to a downgrade provision with at least the following requirements: (1) the agreement shall provide that within five business days after the financial institutions long-term unsecured credit rating has been withdrawn, suspended, other than because of general withdrawal or suspension by Moody's or S&P from the practice of rating that debt, or reduced below "AA-" by S&P or below "Aa3" by Moody's (these events are called "rating downgrades") the financial institution shall give notice to the Authority and, within the five-day period, and for as long as the rating downgrade is in effect, shall deliver in the name of the Authority or the Fiscal Agent to the Authority or the Fiscal Agent Federal Securities allowed as 0 investments under subdivision (a) of this definition of Permitted Investments with aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement invested with the financial institution at that time, and shall deliver additional allowed federal securities as needed to maintain an aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement within three days after each evaluation date, which shall be at least weekly, and (2) the agreement shall provide that, if the financial institutions long-term unsecured credit rating is reduced below "A3" by Moody's or below "A-" by S&P, the Fiscal Agent or the Authority may, upon not more than five business days' written notice to the financial institution, withdraw the investment agreement, with accrued but unpaid interest thereon to the date, and terminate the agreement. (g) The Local Agency Investment Fund of the State of California. (h) Investments in a money market fund (including any funds of the Fiscal Agent or its affiliates and including any funds for which the Fiscal Agent or its affiliates provides investment advisory or other management services) rated in the highest rating category (without regard to plus (+) or minus (-) designations) by Moody's or S&P. (i) Any other lawful investment for City funds.
"Principal Office" means the corporate trust office of the Fiscal Agent set forth in Section

9.06, except for the purpose of maintenance of the Bond Register and presentation of Bonds for payment, transfer or exchange, such term shall mean the office at which the Fiscal Agent conducts its corporate agency business, or such other or additional offices as may be designated by the Fiscal Agent.
"Project" means the facilities eligible to be funded by the District, as more particularly described in the Resolution of Formation.
"Rate and Method of Apportionment of Special Taxes" means the rate and method of apportionment of special taxes for the District, as approved pursuant to the Resolution of Formation, and as it may be modified from time to time in accordance with the Act. "Record Date" means the fifteenth day of the month next preceding the month of the applicable Interest Payment Date, whether or not such day is a Business Day. "Refunding Bonds" means bonds issued by the Authority for the District the net proceeds of which are used to refund all or a portion of the then Outstanding Bonds; provided that the debt service on the Refunding Bonds in any Bond Year is not in excess of the debt service on the Bonds being refunded and the final maturity of the Refunding Bonds is not later than the final maturity of the Bonds being refunded.
hereof.
"Reserve Fund" means the fund by that name established pursuant to Section 4.04(A) -10-

"Reserve Requirement" means, as of any date of calculation, an amount equal to the least of (i) the then Maximum Annual Debt Service, (ii) one hundred twenty-five percent (125%) of the then average Annual Debt Service, or (iii) ten percent (10%) of the then principal amount of the Outstanding Bonds. The Reserve Requirement as of the Closing Date is $ "Resolution" means Resolution No. TPFA 2024- adopted by the Board of Directors of the Authority on February 13, 2024.
"Resolution of Formation" means Resolution No. TPFA 2021-03, adopted by the Board of Directors of the Authority on April 13, 2021.
"S&P" means S&P Global Ratings, and any successor thereto. "School District" means the Temecula Valley Unified School District. "School District Account" means the account by that name established by Section

4.02(A) within the Improvement Fund.
"Securities Depositories" means The Depository Trust Company, 55 Water Street, New York, New York 10041-0099, Fax (212) 855-7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Authority may designate in an Officers Certificate delivered to the Fiscal Agent.
"Special Tax A" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes.
"Special Tax B" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes.
"Special Tax C" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes.
"Special Tax Fund" means the fund by that name established by Section 4.06(A) hereof. "Special Tax Prepayments" means the proceeds of any prepayments of Special Tax A received by the Authority, as calculated pursuant to the Rate and Method of Apportionment of the Special Taxes, less any administrative fees or penalties collected as part of any such prepayment.
"Special Tax Prepayments Account" means the account by that name established within the Bond Fund by Section 4.05(A) hereof.
"Special Tax Revenues" means the proceeds of the Special Taxes received by the Authority, including any scheduled payments and any prepayments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon. "Special Tax Revenues" does -11-

not include any penalties collected in connection with delinquent Special Taxes, which amounts may be deposited to the Administrative Expense Fund or otherwise disposed of as determined by the Treasurer consistent with any applicable provisions of the Act. "S]pecial Taxes" means the Special Tax A levied within the District pursuant to the Act, the Ordinance, the Rate and Method of Apportionment of Special Taxes and this Agreement.

Special Tax B and Special Tax C are not included in "Special Taxes" for purposes of this Agreement.
"Supplemental Agreement" means an agreement the execution of which is authorized by a resolution which has been duly adopted by the Authority under the Act and which agreement is amendatory of or supplemental to this Agreement, but only if and to the extent that such agreement is specifically authorized hereunder. "Tax Consultant" means any independent financial or tax consultant retained by the Authority or the City for the purpose of computing the Special Taxes. "Treasurer" means the Treasurer of the Authority or such other officer or employee of the Authority performing the functions of the chief financial officer of the Authority. "2024 Bonds" means the Bonds so designated and authorized to be issued under Section

2.01 hereof.
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ARTICLE II

THE BONDS
Section 2.01. Principal Amount; Designation. 2024 Bonds in the aggregate principal amount of Million Hundred Thousand Dollars
($ ) are authorized to be issued by the Authority for and on behalf of the District under and subject to the terms of the Resolution and this Agreement, the Act and other applicable laws of the State of California. The 2024 Bonds are hereby designated as the "Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) 2024 Special Tax Bonds."
Section 2.02. Terms of the 2024 Bonds.
(A) Form; Denominations. The 2024 Bonds shall be issued in fully registered form without coupons in Authorized Denominations. The 2024 Bonds shall be lettered and numbered in a customary manner as determined by the Fiscal Agent. (B) Date of 2024 Bonds. The 2024 Bonds shall be dated the Closing Date. (C) CUSIP Identification Numbers. "CUSIP" identification numbers shall be imprinted on the 2024 Bonds, but such numbers shall not constitute a part of the contract evidenced by the 2024 Bonds and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the 2024 Bonds. In addition, failure on the part of the Authority or the Fiscal Agent to use such CUSIP numbers in any notice to Owners shall not constitute an event of default or any violation of the Authority's contract with such Owners and shall not impair the effectiveness of any such notice. (D) Maturities, Interest Rates. The 2024 Bonds shall mature and become payable on September 1 in each of the years, and shall bear interest at the rates per annum as follows:

Maturity Date
(September 11 Principal Amount Interest Rate
(E) Interest. The 2024 Bonds shall bear interest at the rates set forth above payable on the Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. Each 2024 Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such 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 -13-

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 2024 Bond, interest is in default thereon, such 2024 Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. (F) Method of Payment. Interest on the 2024 Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on the Interest Payment Dates by first class mail to the registered Owner thereof at such registered Owner's address as it appears on the Bond Register maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date, or by wire transfer (i) to the Depository (so long as the Bonds are in book -entry form pursuant to Section

2.13), or (ii) to an account within the United States made on such Interest Payment Date upon written instructions of any Owner of $1,000,000 or more in aggregate principal amount of Bonds received before the applicable Record Date, which instructions shall continue in effect until revoked in writing, or until such Bonds are transferred to a new Owner. The principal of the 2024 Bonds and any premium on the 2024 Bonds are payable by check in lawful money of the United States of America upon surrender of the 2024 Bonds at the Principal Office of the Fiscal Agent. All 2024 Bonds paid by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent. The Fiscal Agent shall destroy the canceled 2024 Bonds and issue a certificate of destruction thereof to the Authority upon the Authority's request.

Section 2.03. Redemption.
(A) Redemption Dates.
(i) Optional Redemption. The 2024 Bonds maturing on or after September 1, are subject to optional redemption prior to their stated maturity on any Interest Payment Date occurring on or after September 1, as a whole, or in part in an amount equal to $5,000 or any integral multiple thereof and among maturities so as to maintain substantially level debt service on the Bonds, and by lot within a maturity, at a redemption price equal to the principal amount of the 2024 Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.
(ii) Mandatory Sinking Payment Redemption. The 2024 Bonds maturing on September 1, are subject to mandatory sinking payment redemption in part on September 1, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:
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Redemption Date
(September 11 Sinking Payments
The 2024 Bonds maturing on September 1, are subject to mandatory sinking payment redemption in part on September 1, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:

Redemption Date
(September 1) Sinking Payments
The 2024 Bonds maturing on September 1, are subject to mandatory sinking payment redemption in part on September 1, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:

Redemption Date
(September 11 Sinking Payments
The amounts in the foregoing tables shall be reduced to the extent practicable so as to maintain level debt service on the 2024 Bonds, as a result of any prior partial redemption of the 2024 Bonds pursuant to Section 2.03(A)(i) above or Section 2.03(A)(iii) below, as specified in writing by the Treasurer to the Fiscal Agent. (iii) Redemption From Special Tax Prepayments. Special Tax Prepayments and any corresponding transfers from the Reserve Fund pursuant to Section 4.05(B)(ii) and Section 4.04(F), respectively, shall be used to redeem 2024 Bonds in whole, or in part in an amount equal to $5,000 or any integral multiple thereof, on the next Interest Payment Date for which notice of redemption can timely be given under Section 2.03(D), by lot within a maturity and allocated among maturities of the 2024 Bonds so as to maintain substantially level debt service on the Bonds, at a redemption price (expressed as a percentage of the principal amount of the 2024 Bonds to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption:

Redemption Dates Redemption Prices
any Interest Payment Date from September 1,
to and including March 1, %
September 1, and March 1,
September 1, and March 1,
September 1, and any Interest Payment
Date thereafter
(B) Notice to Fiscal Agent. The Authority shall give the Fiscal Agent written notice of its intention to redeem 2024 Bonds pursuant to subsection (A)(i) or (A)(iii) not less than forty-five (45) days prior to the applicable redemption date, or such lesser number of days as the Fiscal Agent shall allow. Notwithstanding the foregoing, no notice need be given by the Authority to the Fiscal Agent in connection with a redemption of the Bonds pursuant to Section (A)(ii) by reason of mandatory sinking payments.
(C) Purchase of Bonds in Lieu of Redemption. In lieu of redemption under Section

2.03(A), moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2024 Bonds, upon the filing with the Fiscal Agent of an Officer's Certificate requesting such purchase prior to the selection of 2024 Bonds for redemption, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer's Certificate may provide, but in no event may 2024 Bonds be purchased at a -16-

price in excess of the principal amount thereof, plus interest accrued to the date of purchase and any premium which would otherwise be due if such 2024 Bonds were to be redeemed in accordance with this Agreement.
(D) Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, or by such other means as is acceptable to the recipient thereof, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the Securities Depositories, to one or more Information Services (or by such other means as permitted by such services), and to the respective registered Owners of any 2024 Bonds designated for redemption, at their addresses appearing on the Bond Register; 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 2024 Bonds.

Such notice shall state the redemption date and the redemption price and, if less than all of the then Outstanding 2024 Bonds are to be called for redemption, shall designate the CUSIP numbers and, if applicable, Bond numbers of the 2024 Bonds to be redeemed by giving the individual CUSIP number and, if applicable, Bond number of each 2024 Bond to be redeemed or if Bond numbers have been assigned by the Fiscal Agent to the 2024 Bonds shall state that all 2024 Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the 2024 Bonds of one or more maturities have been called for redemption, shall state as to any 2024 Bond called in part the principal amount thereof to be redeemed, and shall require that such 2024 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 2024 Bonds will not accrue from and after the redemption date.

Notwithstanding the foregoing, in the case of any redemption of the 2024 Bonds under Section 2.03(A)(i) above, the notice of redemption may state that the redemption is conditioned upon receipt by the Fiscal Agent of sufficient moneys to redeem the 2024 Bonds on the anticipated redemption date, and that the redemption shall not occur if by no later than the scheduled redemption date sufficient moneys to redeem the 2024 Bonds have not been deposited with the Fiscal Agent. In the event that the Fiscal Agent does not receive sufficient funds by the scheduled redemption date to so redeem the 2024 Bonds to be redeemed, the Fiscal Agent shall send written notice to the owners of the 2024 Bonds, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated, and the 2024 Bonds for which notice of redemption was given shall remain Outstanding for all purposes of this Agreement.

Upon the payment of the redemption price of 2024 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 2024 Bonds being redeemed with the proceeds of such check or other transfer.

Whenever provision is made in this Agreement for the redemption of less than all of the 2024 Bonds (other than a redemption pursuant to Section 2.03(A)(ii)), the Fiscal Agent shall select the 2024 Bonds to be redeemed, from all 2024 Bonds or such given portion thereof not previously called for redemption, among maturities as directed in writing by the Treasurer -17-

(who shall specify 2024 Bonds to be redeemed so as to maintain substantially level debt service on the Bonds), and by lot within a maturity in any manner which the Fiscal Agent deems appropriate.

Upon surrender of 2024 Bonds redeemed in part only, the Authority shall execute and the Fiscal Agent shall authenticate and deliver to the Owner, at the expense of the Authority, a new 2024 Bond or 2024 Bonds, of the same series and maturity, of Authorized Denominations in aggregate principal amount equal to the unredeemed portion of the 2024 Bond or 2024 Bonds. (E) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the 2024 Bonds so called for redemption shall have been deposited in the Bond Fund, such 2024 Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice.
(F) Redemption of Parity Bonds. Redemption provisions, if any, pertaining to any Parity Bonds shall be set forth in the Supplemental Agreement providing for such Parity Bonds.

Section 2.04. Form of Bonds. The 2024 Bonds, the form of Fiscal Agent's certificate of authentication and the form of assignment, to appear thereon, shall be substantially in the forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Agreement, the Resolution and the Act.

Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the Authority by the manual or facsimile signatures of its Chair and Secretary. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the Owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the Owner. Any Bond may be signed and attested on behalf of the Authority by such persons as at the actual date of the execution of such Bond shall be the proper officers of the Authority although at the nominal date of such Bond any such person shall not have been such officer of the Authority.

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

Section 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred in Authorized Denominations, upon the Bond Register 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. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the Authority. The Fiscal

Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer.

Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for like aggregate principal amount of the same series and maturity of Authorized Denomination(s).

No transfers of Bonds shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption, (ii) with respect to a Bond after such Bond has been selected for redemption, or (iii) between a Record Date and the succeeding Interest Payment Date.

Section 2.07. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount of Bonds of Authorized Denominations and of the same series and maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the Authority. The Fiscal Agent shall collect from the Owner requesting such exchange any tax or other governmental charge required to be paid with respect to such exchange.

No exchanges of Bonds shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption, (ii) with respect to a Bond after such Bond has been selected for redemption, or (iii) between a Record Date and the succeeding Interest Payment Date.

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

The Authority and the Fiscal Agent will treat the Owner of any Bond whose name appears on the Bond Register as the absolute Owner of such Bond for any and all purposes, and the Authority and the Fiscal Agent shall not be affected by any notice to the contrary. The Authority and the Fiscal Agent may rely on the address of the Bondowner as it appears in the Bond Register for any and all purposes.

Section 2.09. Temporary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such Authorized Denominations as may be determined by the Authority, and may contain such reference to any of the provisions of this Agreement as may be appropriate. Every temporary Bond shall be executed by the Authority upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal -19-

Agent shall designate, and the Fiscal Agent shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of Authorized Denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Agreement as definitive Bonds authenticated and delivered hereunder.

Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be canceled by it and destroyed by the Fiscal Agent who shall deliver a certificate of destruction thereof to the Authority.

If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to the Fiscal Agent and indemnity for the Authority and the Fiscal Agent satisfactory to the Fiscal Agent shall be given, the Authority, at the expense of the Owner, shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Authority may require payment of a sum not exceeding the actual cost of preparing each new Bond delivered under this Section and of the expenses which may be incurred by the Authority and the Fiscal Agent for the preparation, execution, authentication and delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement.

Section 2.11. Limited Obligation. All obligations of the Authority under this Agreement and the Bonds shall be special obligations of the Authority, payable solely from the Special Tax Revenues and the funds pledged therefore hereunder. Neither the faith and credit nor the taxing power of the Authority (except with respect to the levy of Special Taxes in the District, to the limited extent set forth herein) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds. The City has no obligations whatsoever under this Agreement or otherwise with respect to the Bonds.

Section 2.12. No Acceleration. The principal of the Bonds shall not be subject to acceleration hereunder. Nothing in this Section shall in any way prohibit the redemption of Bonds under Section 2.03 hereof, or the defeasance of the Bonds and discharge of this Agreement under Section 9.03 hereof.

Section 2.13. Book-Entryystem. DTC shall act as the initial Depository for the 2024 Bonds. One 2024 Bond for each maturity of the 2024 Bonds shall be initially executed, authenticated, and delivered as set forth herein with a separate fully registered certificate (in print or typewritten form). Upon initial execution, authentication, and delivery, the ownership of the 2024 Bonds shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC or such nominee as DTC shall appoint in writing. -20-

The representatives of the Authority and the Fiscal Agent are hereby authorized to take any and all actions as may be necessary and not inconsistent with this Agreement to qualify the Bonds for the Depository's book -entry system, including the execution of the Depository's required representation letter.

With respect to Bonds registered in the Bond Register in the name of Cede & Co., as nominee of DTC, neither the Authority nor the Fiscal Agent shall have any responsibility or obligation to any broker -dealer, bank, or other financial institution for which DTC holds Bonds as Depository from time to time (the "DTC Participants') or to any person for which a DTC Participant acquires an interest in the Bonds (the "Beneficial Owners"). Without limiting the immediately preceding sentence, neither the Authority nor the Fiscal Agent shall have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co., or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed in the event the Authority elects to redeem the Bonds in part, (iv) the payment to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any amount with respect to the principal of or interest on the Bonds, or (v) any consent given or other action taken by the Depository as Owner of the Bonds.

Except as set forth above, the Fiscal Agent may treat as and deem DTC to be the absolute Owner of each Bond for which DTC is acting as Depository for the purpose of payment of the principal of and interest on such Bonds, for the purpose of giving notices of redemption and other matters with respect to such Bonds, for the purpose of registering transfers with respect to such Bonds, and for all purposes whatsoever. The Fiscal Agent shall pay all principal of and interest on the Bonds only to or upon the order of the Owners as shown on the Bond Register, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to the principal of and interest on the Bonds to the extent of the amounts so paid.

No person other than an Owner, as shown on the Bond Register, shall receive a physical Bond. Upon delivery by DTC to the Fiscal Agent of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the transfer provisions in Section 2.06 hereof, references to "Cede & Co." in this Section 2.13 shall refer to such new nominee of DTC.

DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Fiscal Agent during any time that the Bonds are Outstanding, and discharging its responsibilities with respect thereto under applicable law.

The Authority may terminate the services of DTC with respect to the Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the Bonds or that continuation of the system of book -entry transfers through DTC is not in the best interest of the Beneficial Owners, and the Authority shall mail notice of such termination to the Fiscal Agent.

Upon the termination of the services of DTC as provided in the previous paragraph, and if no substitute Depository willing to undertake the functions hereunder can be found which is willing and able to undertake such functions upon reasonable or customary terms, or if the -21-

Authority determines that it is in the best interest of the Beneficial Owners of the 2024 Bonds that they be able to obtain certificated 2024 Bonds, the 2024 Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or names the Owners shall designate at that time, in accordance with Section 2.06.

To the extent that the Beneficial Owners are designated as the transferee by the Owners, in accordance with Section 2.06, the 2024 Bonds will be delivered to such Beneficial Owners as soon as practicable.

Section 2.14. Issuance of Parity Bonds. The Authority may issue one or more series of Parity Bonds, in addition to the 2024 Bonds authorized under Section 2.01 hereof, by means of a Supplemental Agreement and without the consent of any Bondowners, upon compliance with the provisions of this Section 2.14. Only bonds that comply with the requirements of this Section 2.14 shall be Parity Bonds, and such Parity Bonds shall constitute Bonds hereunder and shall be secured by a lien on the Special Tax Revenues and funds pledged for the payment of the Bonds hereunder on a parity with all other Bonds Outstanding hereunder.

The Authority may issue Parity Bonds subject to the following specific conditions precedent:
(A) Current Compliance. The Authority shall be in compliance in all material respects on the date of issuance of the Parity Bonds with all covenants set forth in this Agreement and all Supplemental Agreements, and the principal amount of the Parity Bonds shall not cause the Authority to exceed the maximum authorized indebtedness of the District under the provisions of the Act.
(B) Payment Dates. The Supplemental Agreement providing for the issuance of such Parity Bonds shall provide that interest thereon shall be payable on March 1 and September 1, and principal thereof shall be payable on September 1 in any year in which principal is payable (provided that there shall be no requirement that any Parity Bonds pay interest on a current basis).
(C) Funds and Accounts; Reserve Fund Deposit. The Supplemental Agreement providing for the issuance of such Parity Bonds may provide for the establishment of separate funds and accounts, and shall provide for a deposit to the Reserve Fund (or to a separate account created for such purpose) in an amount necessary so that the amount on deposit in the Reserve Fund (together with the amount in any such separate account), following the issuance of such Parity Bonds, is at least equal to the Reserve Requirement. (D) Refunding Bonds. The Parity Bonds must be Refunding Bonds. (E) Officer's Certificate. The Authority shall deliver to the Fiscal Agent an Officer's Certificate certifying that the conditions precedent to the issuance of such Parity Bonds set forth in subsections (A), (B), (C) and (D) of this Section 2.14 have been satisfied. In delivering such Officers Certificate, the Authorized Officer that executes the same may conclusively rely upon such certificates of the Fiscal Agent, the Tax -22-

Consultant and others selected with due care, without the need for independent inquiry or certification.

Nothing in this Section 2.14 shall prohibit the Authority from issuing bonds or otherwise incurring debt secured by a pledge of Special Tax Revenues subordinate to the pledge thereof under Section 3.02 of this Agreement.
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ARTICLE III
ISSUANCE OF 2024 BONDS
Section 3.01. Issuance and Delivery of 2024 Bonds. At any time after the execution of this Agreement, the Authority may issue the 2024 Bonds for the District in the aggregate principal amount set forth in Section 2.01 and deliver the 2024 Bonds to the Original Purchaser.

The Authorized Officers of the Authority are hereby authorized and directed to deliver any and all documents and instruments necessary to cause the issuance of the 2024 Bonds in accordance with the provisions of the Act, the Resolution and this Agreement, to authorize the payment of Costs of Issuance from the proceeds of the 2024 Bonds, to authorize withdrawals from the accounts within the Improvement Fund, and to do and cause to be done any and all acts and things necessary or convenient for delivery of the 2024 Bonds to the Original Purchaser.

Section 3.02. Pledge of Special Tax Revenues. The Bonds shall be secured by a first pledge of all of the Special Tax Revenues (other than the Special Tax Revenues to be deposited to the Administrative Expense Fund pursuant to clause (i) of the second paragraph of Section

4.06(A)) and all moneys deposited in the Bond Fund (including the Special Tax Prepayments Account and the Capitalized Interest Account therein), the Reserve Fund and, until disbursed as provided herein, in the Special Tax Fund and the Delinquency Maintenance Fund. The Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided herein) are hereby dedicated to the payment of the principal of, and interest and any premium on, the Bonds as provided herein and in the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 9.03.

Amounts in the Administrative Expense Fund, the accounts within the Improvement Fund, the Costs of Issuance Fund, and the Special Tax Revenues to be deposited to the Administrative Expense Fund pursuant to clause (i) of the second paragraph of Section 4.06(A), are not pledged to the repayment of the Bonds. Special Tax B and Special Tax C are not pledged to the repayment of the Bonds. The Project is not in any way pledged to pay the Debt Service on the Bonds. Any proceeds of condemnation or destruction of any portion of the Project are not pledged to pay the Debt Service on the Bonds and are free and clear of any lien or obligation imposed hereunder.

Section 3.03. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be dependent upon the performance by any person of such persons obligation(s) with respect to the Project.
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ARTICLE IV

FUNDS AND ACCOUNTS
Section 4.01. Application of Proceeds of Sale of 2024 Bonds and Other Moneys. The proceeds of the purchase of the 2024 Bonds by the Original Purchaser (being $ ) shall be paid to the Fiscal Agent, who shall forthwith set aside, pay over and deposit such proceeds on the Closing Date as follows:
(A) deposit $ in the Costs of Issuance Fund;
(B) deposit $ in the Reserve Fund (being an amount equal to the initial Reserve Requirement);
(C) deposit $
Fund;
(D) deposit $.

Fund;
in the Acquisition Account within the Improvement
in the City Account within the Improvement Fund;
(E) deposit $2,397,576.50 in the EMWD Account within the Improvement Fund; (F) deposit $4,741,039.99 in the School District Account within the Improvement (G) deposit $ in the Delinquency Maintenance Fund; and
(H) deposit $ in the Capitalized Interest Fund.

The Fiscal Agent may establish a temporary fund or account in its records to facilitate any of the deposits or transfers referred to in this Section 4.01.

Section 4.02. Improvement Fund
(A) Establishment of Improvement Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) 2024 Improvement Fund (the "Improvement Fund"), and within the Improvement Fund a City Account, an EMWD Account, a School District Account and an Acquisition Account. Deposits shall be made to the accounts within the Improvement Fund as required by Sections 4.01(C), (D), (E), (F), Section 4.03(B), clause (iv) of the second paragraph of Section 4.06(A) and Section 4.08(C) and (E). Moneys in the accounts within the Improvement Fund shall be held by the Fiscal Agent for the benefit of the Authority, and shall be disbursed for the payment or reimbursement of costs of the Project. (B) Procedure for Disbursement. Disbursements from the Acquisition Account of the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer's Certificate, which shall: (a) set forth the amount required to be disbursed, the purpose for which the -25-

disbursement is to be made (which shall be for amounts owed by the Authority under the Acquisition Agreement in respect of Project costs, or otherwise to pay Project costs incurred by any other entity that constructs portions of the Project), that the disbursement is a proper expenditure from the Improvement Fund, and the person to which the disbursement is to be paid; and (b) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer's Certificate previously filed requesting a disbursement. In making disbursements from the Acquisition Account of the Improvement Fund, the Fiscal Agent shall use amounts deposited thereto pursuant to Section 4.01(C) and any proceeds of any Parity Bonds deposited thereto, and any investment earnings on such amounts, before using any amounts deposited to the Acquisition Account of the Improvement Fund pursuant to clause (iv) of the second paragraph of Section 4.06(A) and any investment earnings thereon.

Disbursements from the City Account of the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer's Certificate which shall: (i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made (which shall be for payment of a Project cost or to reimburse expenditures of the Authority, the City or any other party for Project costs previously paid), that the disbursement is a proper expenditure from the City Account of the Improvement Fund, and the person to which the disbursement is to be paid; and (ii) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer's Certificate previously filed requesting a disbursement.

Disbursements from the EMWD Account of the Improvement Fund shall be made by the Fiscal Agent upon receipt of a certificate executed by the Developer and EMWD in the form of Exhibit C to the Joint Community Facilities Agreement - EMWD which shall set forth the amount required to be disbursed.

Disbursements from the School District Account of the Improvement Fund shall be made by the Fiscal Agent upon receipt of a certificate executed by the Developer and the School District in the form of Exhibit C to the Joint Community Facilities Agreement - the School District which shall set forth the amount required to be disbursed.

Each such Officer's Certificate or other certificate submitted to the Fiscal Agent as described in this Section 4.02(B) shall be sufficient evidence to the Fiscal Agent of the facts stated therein, and the Fiscal Agent shall have no duty to confirm the accuracy of such facts. (C) Investment. Moneys in the accounts within the Improvement Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits from the investment and deposit of amounts in the City Account and the Acquisition Account of the Improvement Fund shall be retained in those accounts of the Improvement Fund, respectively, to be used for the purposes of the respective account. Interest earnings and profits from the investment and deposit of amounts in the EMWD Account and the School District Account of the Improvement Fund shall be transferred on each Interest Payment Date or on any other date upon receipt by the Fiscal Agent of an Officer's Certificate requesting such transfers to the City Account of the Improvement Fund to be used for the purposes of the City Account of the Improvement Fund.
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(D) Closing of Accounts in the Improvement Fund. On the earlier of (i) the date of receipt by the Fiscal Agent of an Officer's Certificate to the effect that the Developer has notified the Authority in writing that no further disbursements will be made from the EMWD Account, or (ii) March 1, 2027, the Fiscal Agent shall transfer all amounts then on deposit in the EMWD Account to the Acquisition Account to be used for the purposes of such account, or, if the Acquisition Account has theretofore been closed, to the Bond Fund to be used to pay Debt Service on the Bonds on the next Interest Payment Date, and following such transfer the EMWD Account shall be closed.

On the earlier of (i) the date of receipt by the Fiscal Agent of an Officer's Certificate to the effect that the Developer has notified the Authority in writing that no further disbursements will be made from the School District Account, or (ii) March 1, 2027, the Fiscal Agent shall transfer all amounts then on deposit in the School District Account to the Acquisition Account to be used for the purposes of such account, or, if the Acquisition Account has theretofore been closed, to the Bond Fund to be used to pay Debt Service on the Bonds on the next Interest Payment Date, and following such transfer the School District Account shall be closed.

Upon receipt by the Fiscal Agent of an Officer's Certificate to the effect that all improvements to be funded from the City Account have been completed or that no further withdrawals will be made from the City Account, any amounts remaining on deposit in the City Account shall be transferred by the Fiscal Agent to the Acquisition Account, or, if the Acquisition Account has theretofore been closed, to the Bond Fund to be used to pay Debt Service on the Bonds on the next Interest Payment Date, and when no amounts remain on deposit in the Acquisition Account the Acquisition Account shall be closed.

Upon the filing of an Officer's Certificate stating that the Project has been completed and that all costs of the Project have been paid, or that any such costs are not required to be paid from the Acquisition Account, the Fiscal Agent shall transfer the amount, if any, remaining in the Acquisition Account to the Bond Fund to be used to pay Debt Service on the Bonds on the next Interest Payment Date, and when no amounts remain on deposit in the Acquisition Account the Acquisition Account shall be closed.

Section 4.03. Costs of Issuance Fund.
(A) Establishment of Costs of Issuance Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) 2024 Costs of Issuance Fund (the "Costs of Issuance Fund"), to the credit of which a deposit shall be made as required by Section 4.01(A).

Moneys in the Costs of Issuance Fund shall be held by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance.
(B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees, signed by the Treasurer and delivered to the Fiscal Agent on the Closing Date, or otherwise in an Officer's Certificate delivered to the Fiscal Agent after the Closing Date. The Fiscal Agent shall pay all Costs of Issuance after receipt of an invoice from -27-

any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee pursuant to an Officer's Certificate requesting payment of Costs of Issuance. The Fiscal Agent shall maintain the Costs of Issuance Fund for a period of 90 days from the date of delivery of the 2024 Bonds and then shall transfer any moneys remaining therein, including any investment earnings thereon, to the Acquisition Account of the Improvement Fund.
(C) Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund.

Section 4.04. Reserve Fund.
(A) Establishment of Fund. There is hereby established as a separate fund to be held by the Fiscal Agent the Temecula Public Financing Authority Community Facilities District No. 20- 01 (Heirloom Farms) Reserve Fund (the "Reserve Fund"), to the credit of which a deposit shall be made as required by Section 4.01(B) equal to the Reserve Requirement as of the Closing Date for the 2024 Bonds, and deposits shall be made as provided in clause (ii) of the second paragraph of Section 4.06(A) and clause (ii) of Section 4.06(B). Moneys in the Reserve Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of principal of, and interest and any premium on, the Bonds and shall be subject to a lien in favor of the Owners of the Bonds.
(B) Use of Reserve Fund. Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or, in accordance with the provisions of this Section, for the purpose of redeeming Bonds from the Bond Fund.
(C) Transfer Due to Deficiency in Bond Fund. Whenever transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent shall provide written notice thereof to the Treasurer, specifying the amount withdrawn. (D) Transfer of Excess of Reserve Requirement. Whenever, on the Business Day prior to any September 1 occurring on or after September 1, 2024, or on any other date at the request of the Treasurer, the amount in the Reserve Fund exceeds the Reserve Requirement, the Fiscal Agent shall provide written notice to the Treasurer of the amount of the excess and shall transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of interest on the Bonds on the next Interest Payment Date in accordance with Section 4.05.
(E) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund equals or exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall upon the written direction of the Treasurer transfer the

amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with Section 2.03 and 4.05, as applicable, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred to the Authority to be used for any lawful purpose under the Act.

Notwithstanding the foregoing, no amounts shall be transferred from the Reserve Fund pursuant to this Section 4.04(E) until after (i) the calculation of any amounts due to the federal government pursuant to Section 5.13 following payment of the Bonds and withdrawal of any such amount from the Reserve Fund for purposes of making such payment to the federal government, and (ii) payment of any fees and expenses due to the Fiscal Agent. (F) Transfer Upon Special Tax Prepayment. Whenever Special Taxes are prepaid and Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 2.03(A)(iii) and 4.05(B)(ii), funds in the Reserve Fund in the amount of any applicable "Reserve Fund Credit," as such term is defined in and otherwise determined in accordance with Section H of the Rate and Method of Apportionment of Special Taxes, shall be transferred on the Business Day prior to the redemption date by the Fiscal Agent to the Bond Fund to be applied to the redemption of the Bonds pursuant to Section 2.03(A)(iii). The Treasurer shall deliver to the Fiscal Agent an Officer's Certificate specifying any amount to be so transferred, and the Fiscal Agent may rely on any such Officer's Certificate.
(G) Transfer to Pay Rebate. Amounts in the Reserve Fund shall be withdrawn, at the written request of an Authorized Officer, for purposes of paying any rebate liability under Section 5.13.
(H) Investment. Moneys in the Reserve Fund shall be invested in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Reserve Fund to be used for the purposes of such fund, including any of the purposes specified in this Section 4.04.

Section 4.05. Bond Fund.
(A) Establishment of Bond Fund, Capitalized Interest Account and Special Tax Prepayments Account. There is hereby established as a separate fund to be held by the Fiscal Agent, the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) Bond Fund (the "Bond Fund"), to the credit of which deposits shall be made as required by Section 4.02(D), Section 4.04, clause (ii) of the second paragraph of Section

4.06(A) and Section 4.06(B), and any other amounts required to be deposited therein by this Agreement or the Act. There is also hereby created in the Bond Fund a separate account held by the Fiscal Agent, the Special Tax Prepayments Account, to the credit of which deposits shall be made as provided in clause (iii) of the second paragraph of Section 4.06(A). There is also hereby created in the Bond Fund, a separate account held by the Fiscal Agent, the Capitalized Interest Account, to the credit of which a deposit shall be made as provided in Section 4.01(F). -29-

Moneys in the Bond Fund and the account therein shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds. Notwithstanding the foregoing, amounts in the Bond Fund may be used for the purposes set forth in Section

2.03(C).
(B) Disbursements. (i) Bond Fund Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal, and interest and any premium, then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments set forth in Section 2.03(A)(ii), or a redemption of the Bonds required by Section 2.03(A)(i) or (iii), such payments to be made in the priority listed in the second succeeding paragraph.

Notwithstanding the foregoing, (a) amounts in the Bond Fund as a result of a transfer pursuant to Section 4.02(D) shall be used to pay the principal of and interest on the Bonds prior to the use of any other amounts in the Bond Fund for such purpose; and (b) amounts in the Bond Fund as a result of a transfer pursuant to clause (ii) of the second paragraph of Section 4.06(A) shall be immediately disbursed by the Fiscal Agent to pay past due amounts owing on the Bonds.

In the event that amounts in the Bond Fund are insufficient for the purposes set forth in the preceding paragraph, the Fiscal Agent shall withdraw (i) from the Delinquency Maintenance Fund to the extent of any funds therein, and then (ii) from the Reserve Fund to the extent of any funds therein amounts to cover the amount of such Bond Fund insufficiency. Amounts so withdrawn from the Delinquency Maintenance Fund or the Reserve Fund shall be deposited in the Bond Fund.

If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments provided for in the first sentence of the first paragraph of this Section 4.05(B)(i), the Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments, and then to payment of principal due on the Bonds by reason of sinking payments. Each such payment shall be made ratably to the Owners of the Bonds based on the then Outstanding principal amount of the Bonds, if there are insufficient funds to make the corresponding payment for all of the then Outstanding Bonds. Any sinking payment not made as scheduled shall be added to the sinking payment to be made on the next sinking payment date.
(ii) Special Tax Prepayments Account Disbursements. Moneys in the Special Tax Prepayments Account shall be transferred by the Fiscal Agent to the Bond Fund on the next date for which notice of redemption of Bonds can timely be given under Section

2.03(A)(iii), and notice to the Fiscal Agent can timely be given under Section 2.03(B), and shall be used (together with any amounts transferred pursuant to Section 4.04(F)) to redeem Bonds on the redemption date selected in accordance with Section 2.03. (iii) Capitalized Interest Account Disbursements. Moneys in the Capitalized Interest Account shall be transferred to the Bond Fund on the Business Day prior to -30-

September 1, 2024. Following such transfer, the Capitalized Interest Account shall be closed.
(C) Investment. Moneys in the Bond Fund, the Special Tax Prepayments Account and the Capitalized Interest Account shall be invested and deposited in accordance with Section

6.01. Interest earnings and profits resulting from the investment and deposit of amounts in the Bond Fund, the Special Tax Prepayments Account and the Capitalized Interest Account shall be retained in the Bond Fund, the Special Tax Prepayments Account and the Capitalized Interest Account, respectively, to be used for purposes of such fund and accounts.

Section 4.06. Special Tax Fund.
(A) Establishment of Special Tax Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) Special Tax Fund (the "Special Tax Fund"). The Authority shall transfer or cause to be transferred to the Fiscal Agent, as soon as practicable following receipt, all Special Tax Revenues received by the Authority, which amounts shall be deposited by the Fiscal Agent to the Special Tax Fund. In addition, the Fiscal Agent shall deposit in the Special Tax Fund amounts to be transferred thereto pursuant to Section 4.07(B) hereof.

Notwithstanding the foregoing,
(i) the first Special Tax Revenues collected by the Authority in any Fiscal Year, in an amount equal to the portion of such Fiscal Year's Special Tax levy for Administrative Expenses (but not to exceed, in any Fiscal Year, $30,000.00), shall be deposited by the Treasurer in the Administrative Expense Fund;
(ii) any Special Tax Revenues constituting the collection of delinquencies in payment of Special Taxes shall be separately identified by the Treasurer and shall be deposited by the Fiscal Agent first, in the Bond Fund to the extent needed to pay any past due debt service on the Bonds; second, so long as the Delinquency Maintenance Fund has not theretofore been closed pursuant to Section 4.08(E), to the Delinquency Maintenance Fund to the extent needed to increase the amount then on deposit in the Delinquency Maintenance Fund up to the DMF Requirement; third, to the Administrative Expense Fund to the extent that amounts in such fund were used to pay costs related to the collection of such delinquencies; fourth, to the Reserve Fund to the extent needed to increase the amount then on deposit in the Reserve Fund up to the then Reserve Requirement, and fifth, to the Special Tax Fund for use as described in Section

4.06(B) below;
(iii) any proceeds of Special Tax Prepayments shall be transferred by the Treasurer to the Fiscal Agent for deposit by the Fiscal Agent (as specified in writing by the Treasurer to the Fiscal Agent) directly in the Special Tax Prepayments Account established pursuant to Section 4.05(A); and
(iv) any Special Tax Revenues constituting the portion, if any, of the Special Tax A Requirement (as defined in the Rate and Method of Apportionment), that is to pay -31-

directly for the acquisition or construction of any portion of the Project shall be separately identified by the Authority and shall be deposited by the Fiscal Agent in the Acquisition Account of the Improvement Fund so long as the Acquisition Account of the Improvement Fund has not theretofore been closed pursuant to Section 4.02(D), and if the Acquisition Account of the Improvement Fund has been closed, then such amount shall be retained by the Authority to be used to pay Project costs.

In addition to the foregoing, in the event that the Authority receives proceeds of Special Tax levies that constitute amounts that are not Special Tax Revenues (because they constitute penalties and/or interest excluded from the definition of Special Tax Revenues in Section 1.03), if the amount then on deposit in the Delinquency Maintenance Fund is not an amount equal to the DMF Requirement, the Authority shall remit such amounts to the Fiscal Agent, for deposit by the Fiscal Agent in the Delinquency Maintenance Fund, until the amount in the Delinquency Maintenance Fund is at least equal to the then DMF Requirement.

Moneys in the Special Tax Fund shall be held by the Fiscal Agent for the benefit of the Authority and the Owners of the Bonds, shall be disbursed as provided below and, pending disbursement, shall be subject to a lien in favor of the Owners of the Bonds and the Authority. (B) Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority (i) to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Capitalized Interest Account, the accounts within the Improvement Fund, the Reserve Fund and the Special Tax Prepayments Account to the Bond Fund pursuant to Sections 4.02(D), 4.04(D), (E), and (F), and 4.05(B)(ii) and (iii), such that the amount in the Bond Fund equals the principal (including any sinking payment), premium, if any, and interest due on the Bonds on such Interest Payment Date, and (ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement.

In addition to the foregoing, if in any Fiscal Year there are sufficient funds in the Special Tax Fund to make the foregoing transfers to the Bond Fund and the Reserve Fund in respect of the Interest Payment Dates occurring in the Bond Year that commences in such Fiscal Year, the Treasurer may transfer any amount in the Special Tax Fund in excess of the amount needed to make such transfers to the Bond Fund and the Reserve Fund (i) to the Administrative Expense Fund, from time to time, if monies are needed to pay Administrative Expenses in excess of the amount then on deposit in the Administrative Expense Fund; (ii) to such other fund or account established to pay debt service on or administrative expenses with respect to any bonds or other debt secured by a pledge of Special Tax Revenues subordinate to the pledge thereof under Section 3.02 of this Agreement; or (iii) to such other fund or account established by the Authority to be used for any lawful purpose under the Act and otherwise in accordance with the provisions of the Rate and Method of Apportionment of Special Taxes. (C) Investment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof. -32-

Section 4.07. Administrative Expense Fund.
(A) Establishment of Administrative Expense Fund. There is hereby established as a separate fund to be held by the Treasurer, the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) Administrative Expense Fund (the "Administrative Expense Fund"), to the credit of which deposits shall be made as required by Sections 4.01(C) and 4.03(B), and clause (i) of the second paragraph of Section 4.06(A). Moneys in the Administrative Expense Fund shall be held by the Treasurer for the benefit of the Authority, and shall be disbursed as provided below.
(B) Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn by the Treasurer and paid to the Authority or its order upon receipt by the Treasurer of an Officer's Certificate stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense or Costs of Issuance, and the nature of such Administrative Expense or Costs of Issuance. Amounts transferred from the Costs of Issuance Fund to the Administrative Expense Fund pursuant to Section 4.03(B) shall be separately identified at all times, and shall be expended for purposes of the Administrative Expense Fund prior to the use of amounts transferred to the Administrative Expense Fund from the Special Tax Fund pursuant to Section 4.06(B).

Annually, on the last day of each Fiscal Year, the Treasurer shall withdraw any amounts then remaining in the Administrative Expense Fund in excess of $30,000.00 that have not otherwise been allocated to pay Administrative Expenses incurred but not yet paid, and which are not otherwise encumbered, and transfer such amounts to the Fiscal Agent for deposit by the Fiscal Agent in the Special Tax Fund.
(C) Investment. Moneys in the Administrative Expense Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Treasurer in the Administrative Expense Fund to be used for the purposes thereof.

Section 4.08. Delinquency Maintenance Fund.
(A) Establishment of Delinquency Maintenance Fund. There is hereby established as a separate fund to be held by the Fiscal Agent the "Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) Delinquency Maintenance Fund," to the credit of which a deposit shall be made as required by Section 4.01(G), which is equal to the initial DMF Requirement., Deposits also shall be made to the Delinquency Maintenance Fund as provided in subclause second of clause (ii) of the second paragraph of Section 4.06(A) and the third paragraph of Section 4.06(A). Moneys in the Delinquency Maintenance Fund shall be held therein by the Fiscal Agent for the benefit of the Owners of the Bonds and the Authority, and shall be subject to a lien in favor of the Owners of the Bonds and the Authority. (B) Transfer Due to Deficiency in Bond Fund. Whenever the amount in the Bond Fund is insufficient to pay the principal of, premium, if any, and interest on the Bonds on any Interest Payment Date due to a deficiency in the Bond Fund, the Fiscal Agent shall transfer the amount -33-

so needed from the Delinquency Maintenance Fund to the Bond Fund as specified in Section

4.05(B) (i).
(C) Withdrawal of Excess Over DMF Requirement. On any date, upon the receipt by the Fiscal Agent of an Officer's Certificate requesting the same, the Fiscal Agent shall transfer the amount specified in such Officer's Certificate from the Delinquency Maintenance Fund to the Acquisition Account of the Improvement Fund so long as the amount to remain in the Delinquency Maintenance Fund following such withdrawal is at least equal to the DMF Requirement.
(D) Investment. Moneys in the Delinquency Maintenance Fund shall be invested in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Delinquency Maintenance Fund to be used for the purposes of such fund.
(E) Closing of Fund. At such time as an Authorized Officer files a certificate with the Fiscal Agent to the effect that (i) all of the 321 homes in the District have been sold to individual homebuyers, and (ii) the Special Tax delinquency rate as of the most recent June 30 is not greater than five percent (5%), the Fiscal Agent shall transfer all amounts then in the Delinquency Maintenance Fund to the Acquisition Account of the Improvement Fund, and the Delinquency Maintenance Fund shall be closed.
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ARTICLE V

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

Section 5.02. Limited Obligation. The Bonds are limited obligations of the Authority on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund (including the Capitalized Interest Account and the Special Tax Prepayments Account therein), the Reserve Fund and, until disbursed as provided herein, the Special Tax Fund and the Delinquency Maintenance Fund.

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

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

Section 5.05. Books and Records. The Authority will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Authority, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Administrative Expense Fund and to the Special Tax Revenues.

Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.

Section 5.06. Protection of Security and Rights of Owners. The Authority will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the Authority, the Bonds shall be incontestable by the Authority. -35-

Section 5.07. Compliance with Act. The Authority will comply with all applicable provisions of the Act and law in administering the District; provided that the Authority shall have no obligation to advance any of its own funds for any purpose whatsoever under this Agreement or otherwise with respect to the Bonds.

Section 5.08. Collection of Special Tax Revenues. The Authority shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes.

On or within five (5) Business Days of each June 1, the Fiscal Agent shall provide the Treasurer with a notice stating the amount then on deposit in the Bond Fund (including any amounts in the Capitalized Interest Account or the Special Tax Prepayments Account therein) and the Reserve Fund, and informing the Authority that the Special Taxes may need to be levied pursuant to the Ordinance as necessary to provide for the debt service to become due on the Bonds in the calendar year that commences in the Fiscal Year for which the levy is to be made, and Administrative Expenses and replenishment (if necessary) of the Reserve Fund so that the balance therein equals the Reserve Requirement. The receipt of or failure to receive such notice by the Treasurer shall in no way affect the obligations of the Treasurer under the following two paragraphs. Upon receipt of such notice, the Treasurer shall communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year.

The Treasurer shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each July 15 that the Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which the Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the Treasurer shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next real property tax roll.

The Treasurer shall fix and levy the amount of Special Taxes within the District required for the payment of principal of and interest on any outstanding Bonds of the District becoming due and payable during the ensuing year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses (including amounts necessary to discharge any obligation under Section 5.13) during such year, taking into account the balances in such funds and in the Special Tax Fund. The Special Taxes so levied shall not exceed the maximum amounts as provided in the Rate and Method of Apportionment of Special Taxes.

The Special Taxes, when levied, shall be payable and be collected 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 time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property; provided that, pursuant to and in accordance with the Ordinance, the Special Taxes may be collected by means of direct billing of the property owners within the District, in which event the Special Taxes shall become delinquent if not paid when due pursuant to said billing. -36-

Section 5.09. Covenant to Foreclose. Pursuant to Section 53356.1 of the Act, the Authority hereby covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following paragraph. The Treasurer shall notify the Authority Attorney of any such delinquency of which the Treasurer is aware, and the Authority Attorney shall commence, or cause to be commenced, such proceedings.

On or about June 15 of each Fiscal Year, the Treasurer shall compare the amount of Special Taxes theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the Authority, and:
(A) Individual Delinquencies. If, as of any June 15, the Treasurer determines that any single parcel subject to the Special Tax A in the District is delinquent in the payment of Special Taxes in the aggregate amount of $7,500.00 or more, then the Treasurer shall promptly send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner, and (if the delinquency remains uncured) foreclosure proceedings shall be commenced by the Authority within 90 days after the notice of delinquency has been sent.
(B) Aggregate Delinquencies. If the Treasurer determines that, as of any June 15, the total amount of delinquent Special Tax for the then current Fiscal Year for the entire District (including the total of delinquencies under subsection (A) above), exceeds 5% of the total Special Tax due and payable for the then current Fiscal Year, the Treasurer shall promptly notify or cause to be notified property owners who are then delinquent in the payment of Special Tax A (and demand immediate payment of the delinquency), and the Authority shall commence foreclosure proceedings within 90 days after the notices of delinquency have been sent.

The Treasurer and the Authority Attorney, as applicable, are hereby authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel (including a charge for Authority staff time) in conducting foreclosure proceedings shall be an Administrative Expense hereunder.

Section 5.10. Further Assurances. The Authority will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Agreement.
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Section 5.11. Private Activity Bond Limitations. The Authority shall assure that the proceeds of the 2024 Bonds are not so used as to cause the 2024 Bonds to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code.

Section 5.12. Federal Guarantee Prohibition. The Authority shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the 2024 Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code.

Section 5.13. Rebate Requirement. The Authority shall take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the 2024 Bonds.

If necessary, the Authority may use amounts in the Reserve Fund, amounts on deposit in the Administrative Expense Fund, and any other funds available to the District, including amounts advanced by the Authority or the City, in its respective sole discretion, to be repaid by the District as soon as practicable from amounts described in the preceding clauses, to satisfy its obligations under this Section 5.13. The Treasurer shall take note of any investment of monies hereunder in excess of the yield on the 2024 Bonds, and shall take such actions as are necessary to ensure compliance with this Section 5.13, such as increasing the portion of the Special Tax levy for Administration Expenses as appropriate to have funds available in the Administrative Expense Fund to satisfy any rebate liability under this Section 5.13.

In order to provide for the administration of this Section 5.13, the Treasurer may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the Treasurer may deem appropriate and in addition, and without limitation of the provisions of Sections 6.02, 6.03 and 6.04, the Treasurer may rely conclusively upon and be fully protected from all liability in relying upon the opinions, determinations, calculations and advice of such agents, attorneys and consultants employed hereunder. Any fees or expenses incurred by the Authority or the City under or pursuant to this Section 5.13 shall be Administrative Expenses.

The Fiscal Agent may rely conclusively upon the Authority's determinations, calculations and certifications required by this Section. The Fiscal Agent shall have no responsibility to independently make any calculation or determination or to review the Authority's calculations hereunder.

Section 5.14. No Arbitrage. The Authority shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the proceeds of the 2024 Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the 2024 Bonds would have caused the 2024 Bonds to be "arbitrage bonds" within the meaning of section 148 of the Code.

Section 5.15. Yield of the 2024 Bonds. In determining the yield of the 2024 Bonds to comply with Section 5.13 and 5.14 hereof, the Authority will take into account redemption

(including premium, if any) in advance of maturity based on the reasonable expectations of the Authority, as of the Closing Date, regarding prepayments of Special Taxes and use of prepayments for redemption of the Bonds, without regard to whether or not prepayments are received or 2024 Bonds redeemed.

Section 5.16. Maintenance of Tax -Exemption. The Authority shall take all actions necessary to assure the exclusion of interest on the 2024 Bonds from the gross income of the Owners of the 2024 Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the 2024 Bonds.

Section 5.17. Continuing Disclosure to Owners. In addition to its obligations under Section 9.07, the Authority hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Agreement, failure of the Authority to comply with the Continuing Disclosure Agreement shall not be considered a default hereunder; however, any Participating Underwriter or any holder or Beneficial Owner (as defined in Section 2.13) of the Bonds may take such actions as may be necessary and appropriate to compel performance by the Authority of its obligations thereunder, including seeking mandate or specific performance by court order.

Section 5.18. Reduction of Special Taxes. The Authority covenants and agrees to not consent or conduct proceedings with respect to a reduction in the maximum Special Taxes that may be levied in the District on Developed Property (as defined in the Rate and Method of Apportionment of Special Taxes) below an amount, for any Fiscal Year, equal to 110% of the aggregate of the Debt Service due on the Bonds in such Fiscal Year, plus a reasonable estimate of Administrative Expenses for such Fiscal Year. It is hereby acknowledged that Bondowners are purchasing the Bonds in reliance on the foregoing covenant, and that said covenant is necessary to assure the full and timely payment of the Bonds.

Section 5.19. Limits on Special Tax Waivers and Bond Tenders. The Authority covenants not to exercise its rights under the Act to waive delinquency and redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the owners of the Bonds and further covenants not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the Authority having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds remaining Outstanding following such tender.

Section 5.20. No Additional Bonds. Except as expressly permitted by Section 2.14 hereof, the Authority shall not issue any additional bonds secured by (A) a pledge of Special Taxes on a parity with or senior to the pledge thereof under Section 3.02 hereof; or (B) any amounts in any funds or accounts established hereunder.

Section 5.21. Authority Bid at Foreclosure Sale. The Authority will not bid at a foreclosure sale of property in respect of delinquent Special Taxes unless it expressly agrees to take the property subject to the lien for Special Taxes imposed by the District and that the Special Taxes levied on the property are payable while the Authority owns the property. -39-

ARTICLE VI

INVESTMENTS, DISPOSITION OF INVESTMENT PROCEEDS, LIABILITY

OF THE AUTHORITY
Section 6.01. Deposit and Investment of Moneys in Funds. Moneys in any fund or account created or established by this Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer's Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments. In the absence of any such Officer's Certificate, the Fiscal Agent shall invest, to the extent reasonably practicable, any such moneys in Permitted Investments described in clause (h) of the definition thereof in Section 1.03; provided, however, that any such investment shall be made by the Fiscal Agent only if, prior to the date on which such investment is to be made, the Fiscal Agent shall have received an Officer's Certificate specifying a specific money market fund into which the funds shall be invested and, if no such Officer's Certificate is so received, the Fiscal Agent shall hold such moneys uninvested. The Treasurer shall make note of any investment of funds hereunder in excess of the yield on the Bonds, so that appropriate actions can be taken to assure compliance with Section 5.13.

Moneys in any fund or account created or established by this Agreement and held by the Treasurer shall be invested by the Treasurer in any Permitted Investment, which in any event by its terms matures prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of this Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts. Whenever in this Agreement any moneys are required to be transferred by the Authority to the Fiscal Agent, such transfer may be accomplished by transferring a like amount of Permitted Investments.

The Fiscal Agent and its affiliates or the Treasurer may act as sponsor, advisor, depository, principal or agent in the acquisition or disposition of any investment. Neither the Fiscal Agent nor the Treasurer shall incur any liability for losses arising from any investments made pursuant to this Section. The Fiscal Agent shall not be required to determine the legality of any investments.

Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to this Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Agreement or the Code) at Fair Market Value. The Fiscal Agent shall have no duty in connection with the determination of Fair Market Value other than to follow the investment direction of an Authorized Officer in any written direction of any Authorized Officer. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under the applicable provisions of the Code and (unless valuation is undertaken at least annually) investments in the subaccounts within the Reserve Fund shall be valued at their present value (within the meaning -40-

of section 148 of the Code). The Fiscal Agent shall not be liable for verification of the application of such sections of the Code.

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

The Fiscal Agent or the Treasurer, as applicable, shall sell at Fair Market Value, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Treasurer shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith.

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

Section 6.02. Limited Obligation. The Authority's obligations hereunder are limited obligations of the Authority on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Special Tax Fund, the Bond Fund (including the Capitalized Interest Account and the Special Tax Prepayments Account therein) and the Reserve Fund created hereunder.

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

In the absence of bad faith, the Authority, including the Treasurer, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Authority and conforming to the requirements of this Agreement. The Authority, including the Treasurer, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts.
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No provision of this Agreement shall require the Authority to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

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

The Authority shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactory established, if disputed.

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

Section 6.04. Employment of Agents by Authority. In order to perform its duties and obligations hereunder, the Authority and/or the Treasurer may employ such persons or entities as it deems necessary or advisable. The Authority shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities. -42-

ARTICLE VII

THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent. U.S. Bank Trust Company, National Association is hereby appointed Fiscal Agent and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Fiscal Agent. The permissive rights of the Fiscal Agent to do things enumerated in this Agreement shall not be construed as a duty and, with respect to such permissive rights, the Fiscal Agent shall not be answerable for other than its negligence or willful misconduct.

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

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

The Fiscal Agent may at any time resign by giving written notice to the Authority and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the Authority shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent. Upon such acceptance, the successor Fiscal Agent shall be vested with all rights and powers of its predecessor hereunder without any further act.

If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section within forty-five (45) days after the Fiscal Agent shall have given to the Authority written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent or any Owner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent. -43-

If, by reason of the judgment of any court, or reasonable agency, the Fiscal Agent is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Fiscal Agent hereunder shall be assumed by and vest in the Treasurer of the Authority in trust for the benefit of the Owners. The Authority covenants for the direct benefit of the Owners that its Treasurer in such case shall be vested with all of the rights and powers of the Fiscal Agent hereunder, and shall assume all of the responsibilities and perform all of the duties of the Fiscal Agent hereunder, in trust for the benefit of the Owners of the Bonds. In such event, the Treasurer may designate a successor Fiscal Agent qualified to act as Fiscal Agent hereunder.

Section 7.02. Liability of Fiscal Agent. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the Authority, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Agreement or of the Bonds, or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful default. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds.

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

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

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

The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or -44-

indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

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

The Fiscal Agent shall have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received, and its liability shall be limited to the proper accounting for such funds as it shall actually receive.

The Fiscal Agent may consult with counsel, who may be counsel of or to the Authority, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.

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

Whether or not herein expressly provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Fiscal Agent shall be subject to the provisions of this Section 7.02, and extend to the directors, officers and employees of the Fiscal Agent.

The Fiscal Agent shall not be required to give any bonds or surety in respect of the execution of the duties created hereby or the powers granted hereunder.

The Fiscal Agent agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods; provided, however, that the Fiscal Agent shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the Authority elects to give the Fiscal Agent e-mail or facsimile instructions (or instructions by a similar electronic method) and the Fiscal Agent in its discretion elects to act upon such instructions, the Fiscal Agent's reasonable understanding of such instructions shall be deemed controlling. The Fiscal Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Fiscal Agent's reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Authority agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Fiscal Agent, including without limitation the risk of interception and misuse by third parties.
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The Fiscal Agent shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of enforced delay ("unavoidable delay') in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, acts of god or of the public enemy or terrorists, acts of a government, fires, floods, epidemics, pandemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Fiscal Agent.

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

The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Bond Fund (including the Capitalized Interest Account and the Special Tax Prepayments Account therein), the Reserve Fund, the Special Tax Fund, the accounts within the Improvement Fund and the Costs of Issuance Fund. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Authority and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing upon reasonable prior notice.

Section 7.04. Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed in good faith by it to be genuine and to have been signed or presented by the proper party or proper parties.

The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.

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

Section 7.05. Compensation, Indemnification. The Authority shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent -46-

under this Agreement, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Agreement, but the Fiscal Agent shall not have a lien therefor on any funds at any time held by it under this Agreement. The Authority further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless against any costs, expenses, claims or liabilities whatsoever, including without limitation fees and expenses of its attorneys, which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. The obligation of the Authority under this Section shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement, but any monetary obligation of the Authority arising under this Section shall be limited solely to amounts on deposit in the Administrative Expense Fund.
-47-

ARTICLE VIII

MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted. This Agreement and the rights and obligations of the Authority and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the Authority to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the Authority of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Owners of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or this Agreement), or (iii) reduce the percentage of Bonds required for the amendment hereof. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent.

This Agreement and the rights and obligations of the Authority and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:
(A) to add to the covenants and agreements of the Authority in this Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the Authority; (B) to make modifications not adversely affecting any Outstanding series of Bonds of the Authority in any material respect;
(C) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Agreement, or in regard to questions arising under this Agreement, as the Authority or the Fiscal Agent may deem necessary or desirable and not inconsistent with this Agreement, and which shall not adversely affect the rights of the Owners of the Bonds; (D) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from gross federal income taxation of interest on the Bonds; and
(E) in connection with the issuance of Parity Bonds under and pursuant to Section 2.14.

The Fiscal Agent may in its discretion, but shall not be obligated to, enter into any such Supplemental Agreement authorized by this Section which materially adversely affects the

Fiscal Agent's own rights, duties or immunities under this Fiscal Agent Agreement or otherwise with respect to the Bonds or any agreements related thereto.

Section 8.02. Owners' Meetings. The Authority may at any time call a meeting of the Owners. In such event the Authority is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof, and to fix and adopt rules and regulations for the conduct of said meeting.

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

Such Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed.

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

Section 8.04. Disqualified Bonds. Bonds owned or held for the account of the Authority, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of -49-

any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article VIII, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Article VIII; provided, however, that the Fiscal Agent shall not be deemed to have knowledge that any Bond is owned or held by the Authority unless the Authority is the registered Owner or the Fiscal Agent has received written notice that any other registered Owner is an Owner for the account of the Authority.

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

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

Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. -50-

ARTICLE IX

MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties. Nothing in this Agreement, expressed or implied, is intended to give to any person other than the Authority, the Fiscal Agent and the Owners, any right, remedy, claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.

Section 9.02. Successor is Deemed Included in All References to Predecessor. Whenever in this Agreement or any Supplemental Agreement either the Authority or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the Authority or the Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.

Section 9.03. Discharge of Agreement. The Authority shall have the option to pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of, and interest and any premium on, such Bonds Outstanding, as and when the same become due and payable;
(B) by depositing with the Fiscal Agent, at or before maturity, money which, together with the amounts then on deposit in the funds and accounts provided for in Sections 4.04 and 4.05 is fully sufficient to pay such Bonds Outstanding, including all principal, interest and redemption premiums; or
(C) by irrevocably depositing with the Fiscal Agent cash and Federal Securities in such amount as the Authority shall determine as confirmed by Bond Counsel or an independent certified public accountant will, together with the interest to accrue thereon and moneys then on deposit in the fund and accounts provided for in Sections 4.04 and

4.05, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates.

If the Authority shall have taken any of the actions specified in (A), (B) or (C) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the Authority, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Special Taxes and other funds provided for in this Agreement and all other obligations of the Authority under this Agreement with respect to such Bonds Outstanding shall cease and terminate. Notice of such election shall be filed with the Fiscal Agent. Notwithstanding the -51-

foregoing, the obligation of the Authority to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon, all amounts owing to the Fiscal Agent pursuant to Section 7.05, and otherwise to assure that no action is taken or failed to be taken if such action or failure adversely affects the exclusion of interest on the Bonds from gross income for federal income tax purposes, shall continue in any event.

Upon compliance by the Authority with the foregoing with respect to all Bonds Outstanding, any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, which are not required for the purposes of the preceding paragraph, shall be paid over to the Authority and any Special Taxes thereafter received by the Authority shall not be remitted to the Fiscal Agent but shall be retained by the Authority to be used for any purpose permitted under the Act.

Section 9.04. Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing.

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

Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books.

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

Section 9.05. Waiver of Personal Liability. No Boardmember, Councilmember, officer, official, agent or employee of the Authority, the City or the District shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such Boardmember, Councilmember, officer, official, agent or employee from the performance of any official duty provided by law.

Section 9.06. Notices to and Demands on Authority and Fiscal Agent. Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the Authority may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Authority with the Fiscal Agent) as follows:
-52-

Temecula Public Financing Authority
c/o City of Temecula
41000 Main Street
Temecula, CA 92590
Attn: Director of Finance
Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Authority to or on the Fiscal Agent may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Fiscal Agent with the Authority) as follows (provided that any such notice shall not be effective until actually received by the Fiscal Agent):

U.S. Bank Trust Company, National Association
633 W. Fifth Street, 24th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Services
Reference: Temecula CFD 20-01 (Heirloom Farms)
Section 9.07. State Reporting Requirements. The following requirements shall apply to the Bonds, in addition to those requirements under Section 5.17:
(A) Annual Reporting. Not later than October 30 of each calendar year, beginning with the October 30, 2024, and in each calendar year thereafter until the October 30 following the final maturity of the Series 2023 Bonds, the Treasurer shall cause the information required by California Government Code Section 53359.5(b) to be supplied to CDIAC. The annual reporting shall be made using such form or forms as may be prescribed by CDIAC.

No later than January 31 of each calendar year, the City agrees to provide to CDIAC the annual report information required by Section 8855(k)(1) of the California Government Code. Such annual report shall be made using such form or forms as may be prescribed by CDIAC.

Additionally, no later than January 31 of each calendar year, the City agrees to provide to the California State Controller, Division of Accounting and Reporting, the annual report information required by Section 12463.2 of the California Government Code.
(B) Other Reporting. If at any time the Fiscal Agent fails to pay principal and interest due on any scheduled payment date for the Bonds, or if funds are withdrawn from the Reserve Fund to pay principal and interest on the Bonds, the Fiscal Agent shall notify the Treasurer of such failure or withdrawal in writing. The Treasurer shall notify CDIAC and the Original Purchaser of such failure or withdrawal within 10 days of such failure or withdrawal, and the Authority shall provide notice under the Continuing Disclosure Agreement of such event as required thereunder. -53-

(C) S]pecial Tax Reporting. The Treasurer shall file a report with the Authority no later than January 1, 2025, and at least once a year thereafter, which annual report shall contain: (i) the amount of Special Taxes collected and expended with respect to the District, (ii) the amount of Bond proceeds collected and expended with respect to the District, and (iii) the status of the Project. It is acknowledged that the Special Tax Fund and the Special Tax Prepayments Account are the accounts into which Special Taxes collected on the District will be deposited for purposes of Section 50075.1(c) of the California Government Code, and the funds and accounts listed in Section 4.01 are the funds and accounts into which Bond proceeds will be deposited for purposes of Section 53410(c) of the California Government Code, and the annual report described in the preceding sentence is intended to satisfy the requirements of Sections 50075.1(d), 50075.3 and 53411 of the California Government Code.
(D) Amendment. The reporting requirements of this Section 9.07 shall be amended from time to time, without action by the Authority or the Fiscal Agent (i) with respect to subparagraphs (A) and (B) above, to reflect any amendments to Section 53359.5(b) or Section 53359.5(c) of the Act, and (ii) with respect to subparagraph (C) above, to reflect any amendments to Section 50075.1, 50075.3, 53410 or 53411 of the California Government Code. Notwithstanding the foregoing, any such amendment shall not, in itself, affect the Authority's obligations under the Continuing Disclosure Agreement. The Authority shall notify the Fiscal Agent in writing of any such amendments which affect the reporting obligations of the Fiscal Agent under this Agreement.
(E) No Liability. None of the Authority and its officers, agents and employees, the Treasurer or the Fiscal Agent shall be liable for any inadvertent error in reporting the information required by this Section 9.07.

The Treasurer shall provide copies of any of such reports to any Bondowner upon the written request of a Bondowner and payment by the person requesting the information of the cost of the Authority to produce such information and pay any postage or other delivery cost to provide the same, as determined by the Treasurer. The term "Bondowner" for purposes of this Section 9.07 shall include any Beneficial Owner (as defined in Section 2.13) of the Bonds.

Section 9.08. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The Authority hereby declares that it would have adopted this Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Agreement may be held illegal, invalid or unenforceable.

Section 9.09. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the payments of such principal, interest and premium have become payable, if such moneys was held by the Fiscal Agent at such date, shall be repaid by -54-

the Fiscal Agent to the Authority as its absolute property free from any pledge or lien under this Agreement, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Owners shall look only to the Authority for the payment of the principal of, and interest and any premium on, such Bonds. Any right of any Owner to look to the Authority for such payment shall survive only so long as required under applicable law.

Section 9.10. Applicable Law. This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California.

Section 9.11. Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Act as in effect on the Closing Date, the provision of the Act shall prevail over the conflicting provision of this Agreement.

Section 9.12. Conclusive Evidence of Regularity. Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes.

Section 9.13. Payment on Business Day. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Agreement is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date.

Section 9.14. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.

Section 9.15. Electronic Transactions. The transactions described in this Agreement may be conducted and the related documents may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. -55-

IN WITNESS WHEREOF, the Authority caused this Fiscal Agent Agreement to be executed all as of March 1, 2024.

Attest:

TEMECULA PUBLIC FINANCING
AUTHORITY, for and on behalf of

TEMECULA PUBLIC FINANCING

AUTHORITY COMMUNITY FACILITIES
DISTRICT NO.20-01 (HEIRLOOM FARMS)
0 Randi Johl,
Secretary
Aaron Adams,
Executive Director
[Signature page to Fiscal Agent Agreement - CFD 20-01 (Heirloom Farms)] 20009.25:J19412
S-1

U. S. BANK TRUST COMPANY,

NATIONAL ASSOCIATION,
as Fiscal Agent
5-3
Authorized Officer
[Signature page to Fiscal Agent Agreement - CFD 20-01 (Heirloom Farms)] 20009.25:J19412
S-2

No.

EXHIBIT A
f��] Diu C�T�►�:7►•[�i:��7►i7

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

COUNTY OF RIVERSIDE

TEMECULA PUBLIC FINANCING AUTHORITY
COMMUNITY FACILITIES DISTRICT NO.20-01
(HEIRLOOM FARMS)
2024 SPECIAL TAX BOND

INTEREST RATE

MATURITY DATE

BOND DATE
CUSIP
September 1,
March _, 2024
87972Y
REGISTERED OWNER:

PRINCIPAL AMOUNT:

DOLLARS
The Temecula Public Financing Authority (the "Authority") for and on behalf of the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) (the "District"), for value received, hereby promises to pay solely from the Special Tax (as hereinafter defined) to be collected in the District or amounts in certain of the funds and accounts held under the Agreement (as hereinafter defined), to the registered owner named above, or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount set forth above, and to pay interest on such principal amount from the Bond Date set forth above, or from the most recent interest payment date to which interest has been or duly provided for, semiannually on March 1 and September 1, commencing September 1, 2024, at the interest rate set forth above, until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable to the registered owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office (as defined in the Agreement referred to below) of U.S. Bank Trust Company, National Association (the "Fiscal Agent"). Interest on this Bond shall be paid by check of the Fiscal Agent mailed on each interest payment date to the registered owner hereof as of the close of business on the 15th day of the month preceding the month in which the interest payment date occurs (the "Record Date") at such registered owner's address as it appears on the registration books maintained by the Fiscal Agent, or (i) if the Bonds are in book -entry -only form, or (ii) otherwise upon written request filed with the Fiscal Agent prior to any Record Date by a registered owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to the depository for the Bonds or to an account in the United States designated by such registered owner in such written request, respectively.

A-1

This Bond is one of a duly authorized issue of bonds in the aggregate principal amount of $ approved by a resolution of the Board of Directors of the Authority adopted on February 13, 2024 (the "Resolution'), and being issued pursuant to the provisions of Section 53311 et seq. of the California Government Code (the "Act"), for the purpose of financing certain public facilities within and in the vicinity of the District (the "Project"), and is one of the first series of such bonds designated "Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) 2024 Special Tax Bonds" (the "Bonds"). The creation of the Bonds and the terms and conditions thereof are provided for in the Fiscal Agent Agreement, dated as of March 1, 2024, between the Authority and the Fiscal Agent (the "Agreement") and this reference incorporates the Resolution and the Agreement herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Resolution and in the Agreement, additional bonds may be issued by the Authority from time to time secured by a lien on funds held under the Agreement on a parity with the lien securing the Bonds. The Resolution is adopted and the Agreement is entered into under and this Bond is issued under, and all are to be construed in accordance with, the laws of the State of California.

Pursuant to the Act, the Agreement and the Resolution, the principal of and interest on this Bond are payable solely from the annual Special Tax A authorized under the Act to be collected within the District (the "Special Tax") and certain funds held under the Agreement.

The Authority is also authorized to levy a Special Tax B and a Special Tax C on property in the District, which Special Tax B and Special Tax C are not pledged, and will not be used, to pay the debt service on the Bonds.

Interest on this Bond shall be payable from the interest payment date next preceding the date of authentication hereof, 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 Bond Date set forth above; provided, however, that if at the time of authentication of this Bond, interest is in default hereon, this Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment hereon.

Any tax for the payment hereof shall be limited to the Special Tax, except to the extent that provision for payment has been made by the Authority, as may be permitted by law. The Bonds do not constitute obligations of the Authority for which the Authority is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described hereinabove. The City of Temecula has no liability or obligations whatsoever with respect to the District, the Bonds or the Agreement.

The Bonds maturing on or after September 1, are subject to redemption prior to their stated maturity on any interest payment date occurring on or after September 1, , as a whole, or in part in an amount equal to $5,000 or any integral multiple thereof and among maturities as provided in the Agreement, and by lot within a maturity, at a redemption price A-2

equal to the principal amount of the Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium The Bonds maturing on September 1, , are subject to mandatory sinking payment redemption in part on September 1, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:

Redemption Date
(September 11 Sinking Pam
The Bonds maturing on September 1, , are subject to mandatory sinking payment redemption in part on September 1, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:

Redemption Date
(September 1) Sinking Pam
The Bonds maturing on September 1, , are subject to mandatory sinking payment redemption in part on September 1, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:

Redemption Date
(September 1U Sinking Payments
A-3

The Bonds maturing on September 1, , are subject to mandatory sinking payment redemption in part on September 1, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:

Redemption Date
(September 11 Sinking Pam
The Bonds are also subject to redemption from the proceeds of Special Tax Prepayments and any corresponding transfers from the Reserve Fund pursuant to the Agreement, on any Interest Payment Date, in whole, or in part in any amount equal to $5,000 or any integral multiple thereof and among maturities as specified in the Agreement, and by lot within a maturity, at a redemption price (expressed as a percentage at the principal amount of the Bonds to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption:

Redemption Dates Redemption Prices
any Interest Payment Date from September 1,
to and including March 1, %
September 1, and March 1,
September 1, and March 1,
September 1, and any Interest Payment
Date thereafter
Notice of redemption with respect to the Bonds to be redeemed shall be given to the registered owners thereof, in the manner, to the extent and subject to the provisions of the Agreement. Notices of optional redemption may be conditioned upon receipt by the Fiscal Agent of sufficient moneys to redeem the Bonds on the anticipated redemption date, and if the Fiscal Agent does not receive sufficient funds by the scheduled redemption date the redemption shall not occur and the Bonds for which notice of redemption was given shall remain outstanding for all purposes of the Agreement.

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

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

No transfer or exchange hereof shall be valid for any purpose unless made by the registered owner, by execution of the form of assignment endorsed hereon, and authenticated A-4

as herein provided, and the principal hereof, interest hereon and any redemption premium shall be payable only to the registered owner or to such owner's order. The Fiscal Agent shall require the registered owner requesting transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfer or exchange hereof shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption, (ii) with respect to a Bond after such Bond has been selected for redemption, or (iii) between a Record Date and the succeeding interest payment date. Exchanges may only be made for Bonds in authorized denominations, as provided in the Agreement.

The Agreement and the rights and obligations of the Authority thereunder may be modified or amended as set forth therein. The Agreement contains provisions permitting the Authority to make provision for the payment of the interest on, and the principal and premium, if any, of the Bonds so that such Bonds shall no longer be deemed to be outstanding under the terms of the Agreement.

The Bonds are not general obligations of the Authority, but are limited obligations payable solely from the revenues and funds pledged therefor under the Agreement. Neither the faith and credit of the Authority or the State of California or any political subdivision thereof is pledged to the payment of the Bonds.

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

Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Fiscal Agent for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.

IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed, happened and been performed in due time, form and manner as required by law, and that the amount of this Bond does not exceed any debt limit prescribed by the laws or Constitution of the State of California.

A-5

IN WITNESS WHEREOF, Temecula Public Financing Authority has caused this Bond to be dated the Bond Date set forth above, to be signed by the facsimile signature of its Chair and countersigned by the facsimile signature of its Secretary.

ATTEST:

TEMECULA PUBLIC FINANCING

AUTHORITY
James Stewart,
Chair
Randi Johl,
Secretary

FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the Resolution and in the Agreement which has been authenticated on 2024.

U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Fiscal Agent
Authorized Signatory
:..

ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within -registered Bond and hereby irrevocably constitute(s) and appoints(s) attorney,
to transfer the same on the registration books of the Fiscal Agent with full power of substitution in the premises.

Dated:

Signature Guaranteed: Signature:

Note: Signature(s) must be guaranteed by an eligible Note: The signature(s) on this Assignment must guarantor. correspond with the name(s) as written on
the face of the within Bond in every
particular without alteration or enlargement
or any change whatsoever.

A-7

PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY 2024

NEW ISSUE - BOOK ENTRY ONLY NOT RATED
w In the opinion of Quint & Thimmig LLP, Larkspur, California, Bond Counsel, subject however, to certain qualifications -a described in this Official Statement, under existing law, interest on the 2024 Bonds is excludable from gross income of the owners :? thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals under the Internal Revenue Code of 1986, as amended. However, interest on the 2024 Bonds may m > N affect the corporate alternative minimum tax for certain corporations. In the further opinion of Bond Counsel, interest on the o -a '0 2024 Bonds is exempt from personal income taxation imposed by the State of California. See "TAX MATTERS." -0 o•,
3 L 0
$12,470,000*
0 c o TEMECULA PUBLIC FINANCING AUTHORITY
o COMMUNITY FACILITIES DISTRICT NO.20-01
o — (HEIRLOOM FARMS)
E � 0 2024 SPECIAL TAX BONDS
i U_ 7
O Q)
N Dated: Date of Issuance Due: September 1, as shown on inside cover 0�00
o The Temecula Public Financing Authority (the "Authority"), for and on behalf of the Temecula Public Financing Authority m Community Facilities District No. 20-01 (Heirloom Farms) (the "District'), is issuing the above -captioned 2024 Special Tax Bonds o o (the "2024 Bonds") pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (constituting Section 53311 et seq. o of the California Government Code) (the "Act'), and a Fiscal Agent Agreement, dated as of March 1, 2024 (the "Fiscal Agent E o Z6 Agreement'), by and between the Authority, for and on behalf of the District, and U.S. Bank Trust Company, National c c Association, as fiscal agent (the "Fiscal Agent').
0 6 The 2024 Bonds are payable from the proceeds of an annual Special Tax A (as defined in the Fiscal Agent Agreement) being o levied on property located within the District and from certain funds pledged under the Fiscal Agent Agreement. The Special

0.2 Tax A is being levied according to a rate and method of apportionment of Special Taxes. See "SECURITY FOR THE 2024 is BONDS —Special Taxes" and Appendix B - 'Rate and Method." � c �
E Interest on the 2024 Bonds is payable on March 1 and September 1 of each year, commencing on September 1, 2024. The 2024 Ew° o Bonds will be issued in book -entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of a U) The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the 2024 Bonds. o m ° Individual purchases of the 2024 Bonds will be made in book -entry form only. See "THE 2024 BONDS —General Provisions" E .0 o.
m � 3 and Appendix G - "DTC and the Book -Entry Only System." 00 3
o c The 2024 Bonds are subject to redemption prior to maturity. See "THE 2024 BONDS —Redemption." c =3
n E s The Authority may issue additional bonds for the District that would be secured by a lien on the Special Tax Revenues (as o2 -a defined in the Fiscal Agent Agreement) and by funds pledged under the Fiscal Agent Agreement for the payment of the 2024 oa o Bonds on a parity with the 2024 Bonds, but any such parity bonds must be Refunding Bonds, as defined in the Fiscal Agent " r 3 Agreement. See "SECURITY FOR THE 2024 BONDS —Issuance of Additional Bonds." U ... O
N — N
i NONE OF THE FAITH AND CREDIT OF THE DISTRICT, THE AUTHORITY OR THE STATE OF CALIFORNIA OR OF o ANY OF ITS POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE 2024 BONDS. EXCEPT FOR THE SPECIAL o TAX A, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2024 BONDS. THE 2024 BONDS ARE NEITHER c m :9 GENERAL NOR SPECIAL OBLIGATIONS OF THE AUTHORITY, NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT

ARE LIMITED OBLIGATIONS OF THE AUTHORITY FOR THE DISTRICT, PAYABLE SOLELY FROM PROCEEDS OF

0. SPECIAL TAX A AND CERTAIN AMOUNTS PLEDGED THEREFOR UNDER THE FISCAL AGENT AGREEMENT, AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.
o 0
c F t This cover page contains certain information for quick reference only. Investors should read the entire Official Statement to oo � obtain information essential to the making of an informed investment decision with respect to the 2024 Bonds. See the section of o this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of certain risk factors that should be considered, in E 3 addition to the other matters discussed herein, in considering the investment quality of the 2024 Bonds.

E o
o ` MATURITY SCHEDULE
cCoc
o 5 o (see inside cover)
O U
NThe 2024 Bonds are offered when, as and if issued by the Authority for the District, subject to approval as to their legality by o .? Quint & Thimmig LLP, Larkspur, California, Bond Counsel, and certain other conditions. Certain legal matters with respect to m -'- the 2024 Bonds will be passed upon for the Authority by Richards, Watson & Gershon, A Professional Corporation, Los Angeles, E _0 m California, in its capacity as general counsel to the Authority, and by Quint & Thimmig LLP, Larkspur, California, acting as mw Disclosure Counsel to the Authority. Certain legal matters will be passed upon for the Underwriter by Stradling Yocca Carlson & o Rauth, a Professional Corporation, Newport Beach, California. It is anticipated that the 2024 Bonds in definitive form will be E � available for delivery to DTC on or about March 13, 2024.

EFE m o
O
STIFEL
a go F0 The date of this Official Statement is March 2024.

Q) O T
:E E m Preliminary, subject to change.

$12,470,000*

TEMECULA PUBLIC FINANCING AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 20-01
(HEIRLOOM FARMS)
2024 SPECIAL TAX BONDS
Maturity Schedule
$ Serial Bonds; CUSIP Prefix: 87972Y(1)
Maturity Date Principal Interest
(September 1) Amount Rate Yield Price
$ % Term Bonds due September 1, Price
$ % Term Bonds due September 1, Price
$ % Term Bonds due September 1, Price
$ % Term Bonds due September 1, 2054 Price
CUSIP
Suffix(')
to Yield % CUSIPM: 87972Y
to Yield % CUSIPM: 87972Y
to Yield % CUSIPM: 87972Y
to Yield % CUSIPM: 87972Y
Preliminary, subject to change.
(1) Copyright American Bankers Association. CUSIP numbers have been assigned by an independent company not affiliated with the Authority and are included solely for the convenience of the owners of the 2024 Bonds. Neither the Authority nor the Underwriter is responsible for the selection or use of these CUSIP numbers, and no representation is made as to their correctness. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2024 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 2024 Bonds.

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
The information contained in this Official Statement has been obtained from sources that are believed to be reliable. No representation, warranty or guarantee, however, is made by the Underwriter as to the accuracy or completeness of any information in this Official Statement, including, without limitation, the information contained in the Appendices, and nothing contained in this Official Statement should be relied upon as a promise or representation by the Underwriter.

Neither the Authority nor the Underwriter has authorized any dealer, broker, salesperson or other person to give any information or make any representations with respect to the offer or sale of the 2024 Bonds other than as contained in this Official Statement. If given or made, any such information or representations must not be relied upon as having been authorized by the Authority or the Underwriter. The information and expressions of opinion in this Official Statement are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the 2024 Bonds shall under any circumstances create any implication that there has been no change in the affairs of any party described in this Official Statement, or in the status of any property described in this Official Statement, subsequent to the date as of which such information is presented.

This Official Statement and the information contained in this Official Statement are subject to amendment without notice. The 2024 Bonds may not be sold, and no offer to buy the 2024 Bonds may be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the 2024 Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

This Official Statement is not to be construed as a contract with the purchasers or owners of the 2024 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. This Official Statement, including any supplement or amendment hereto, is intended to be deposited with a nationally recognized municipal securities depository.

When used in this Official Statement, in any continuing disclosure by the Authority, in any press release, or in any oral statement made with the approval of an authorized officer of the Authority or any other entity described or referenced in this Official Statement, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," 'intend" and similar expressions identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward -looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized, and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material.

All summaries of the documents referred to in this Official Statement are qualified by the provisions of the respective documents summarized and do not purport to be complete statements of any or all of such provisions.

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 the completeness of such information." In connection with the offering of the 2024 Bonds, the Underwriter may overallot or effect transactions that stabilize or maintain the market prices of the 2024 Bonds at levels above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.

The Underwriter may offer and sell the 2024 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.

The 2024 Bonds have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon an exemption from the registration requirements contained in the Securities Act. The 2024 Bonds have not been registered or qualified under the securities laws of any state.

The City of Temecula maintains an Internet website, but the information on the website is not incorporated in this Official Statement.
-i-

TEMECULA PUBLIC FINANCING AUTHORITY
Board of Directors
James Stewart, Chair
Brenden Kalfus, Member
Zak Schwank, Member
Jessica Alexander, Member
Vacant
Authority/City of Temecula Officials
Aaron Adams, Executive Director and City Manager
Luke Watson, Deputy City Manager
Jennifer Hennessy, Authority Treasurer and City Director of Finance Patrick Thomas, Director of Public Works and City Engineer Randi Johl, Authority Secretary and City Clerk

PROFESSIONAL SERVICES
Authority General Counsel and City Attorney
Richards, Watson & Gershon,
A Professional Corporation
Los Angeles, California
Municipal Advisor
Fieldman, Rolapp & Associates, Inc.

Irvine, California
Bond Counsel and Disclosure Counsel
Quint & Thimmig LLP
Larkspur, California
Special Tax Consultant and Dissemination Agent
Webb Municipal Finance, LLC
Riverside, California
Appraiser
Integra Realty Resources
Sacramento, California
Fiscal Agent
U.S. Bank Trust Company, National Association
Los Angeles, California

TABLE OF CONTENTS
INTRODUCTION...................................................................1 General...................................................................................1 Authority for Issuance.........................................................1 The 2024 Bonds.....................................................................2 Application of 2024 Bond Proceeds...................................2 ParityBonds..........................................................................2 Security for the 2024 Bonds.................................................2 Delinquency Maintenance Fund........................................3 ReserveFund........................................................................4 TheAuthority.......................................................................4 TheDistrict............................................................................4 LandValuation.....................................................................5 Limited Obligation...............................................................6 Bondowners' Risks...............................................................6 Continuing Disclosure.........................................................6 Other Information................................................................7 PLAN OF FINANCING........................................................7 Overview............................................................................... 7 Estimated Sources and Uses of Funds...............................8 THE 2024 BONDS...................................................................8 Authority for Issuance.........................................................8 General Provisions...............................................................8 Redemption........................................................................... 9 Transfer or Exchange of 2024 Bonds...............................13 Discontinuance of DTC Services......................................13 Scheduled Debt Service.....................................................14 SECURITY FOR THE 2024 BONDS...................................14 General.................................................................................14 Limited Obligation.............................................................15 SpecialTaxes.......................................................................15 Special Tax Fund................................................................16 Summary of Rate and Method.........................................18 Delinquency Maintenance Fund......................................22 Reserve Fund......................................................................23 Covenant for Superior Court Foreclosure ......................24 NoTeeter Plan....................................................................25 Investment of Moneys.......................................................26 Issuance of Additional Bonds...........................................26 THE DISTRICT.....................................................................27 Location and General Description of the District .......... 27 History of the District........................................................29 The Improvements.............................................................30 Heirloom Farms..................................................................31 TheDeveloper.....................................................................34 PropertyValues..................................................................36 Land Use Distribution.......................................................37 Value -to -Lien Ratios..........................................................38 Special Tax Delinquencies ..............................................

Direct and Overlapping Governmental Obligations..

SampleTax Bill.................................................................

THE AUTHORITY.............................................................

SPECIAL RISK FACTORS ................................................

No General Obligation of the Authority or the
District...............................................................................

PropertyValue.................................................................

Concentration of Ownership ..........................................

Government Approvals ..................................................

Payment of the Special Tax is not a Personal
Obligation.........................................................................

FDIC/Federal Government Interests in Properties....

Exempt Properties...........................................................

Parity Taxes and Special Assessments ..........................

Insufficiency of Special Taxes ........................................

Tax Delinquencies............................................................

Bankruptcy Delays..........................................................

Proceeds of Foreclosure Sales ........................................

Natural Disasters.............................................................

Wildfires............................................................................

Hazardous Substances....................................................

Disclosure to Future Purchasers ....................................

Potential Early Redemption of 2024 Bonds from
Special Tax Prepayments ................................................

Cybersecurity...................................................................

Public Health Emergencies .............................................

No Acceleration Provision ..............................................

Taxability Risk..................................................................

Enforceability of Remedies .............................................

No Secondary Market .....................................................

Proposition218.................................................................

Ballot Initiatives...............................................................

IRS Audit of Tax -Exempt Bond Issues .........................

TAX MATTERS..................................................................

LEGAL MATTERS.............................................................

NORATING....................................................................... 40 41
43 43
44 44
44 45
45 45
45 47
47 47
48 48
49 50
50 50
50 51
51 51
52 52
52 53
53 54
54 54
57 57
NO LITIGATION.................................................................57 MUNICIPAL ADVISOR ..................................................... 57 UNDERWRITING...............................................................58 CONTINUING DISCLOSURE...........................................58 TheAuthority ..................................................................... 58 TheDeveloper.................................................................... 58 Remedies for Failures to Comply .................................... 59 MISCELLANEOUS.............................................................. 59 APPENDIX A GENERAL, ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING TO THE CITY

AND THE COUNTY

APPENDIX B

RATE AND METHOD

APPENDIX C

SUMMARY OF THE FISCAL AGENT AGREEMENT

APPENDIX D

FORM OF OPINION OF BOND COUNSEL

APPENDIX E

FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE AUTHORITY

APPENDIX F

FORM OF CONTINUING DISCLOSURE CERTIFICATE OF THE DEVELOPER

APPENDIX G

DTC AND THE BOOK -ENTRY ONLY SYSTEM

APPENDIX H

APPRAISAL REPORT

CITY OF TEMECULA
(Riverside County, California)
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OFFICIAL STATEMENT
$12,470,000*

TEMECULA PUBLIC FINANCING AUTHORITY
COMMUNITY FACILITIES DISTRICT NO.20-01
(HEIRLOOM FARMS)
2024 SPECIAL TAX BONDS

INTRODUCTION
This introduction is not a summary of this Official Statement and is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described in this Official Statement. A full review should be made of the entire Official Statement by those interested in purchasing the 2024 Bonds. The sale and delivery of 2024 Bonds to potential investors is made only by means of the entire Official Statement.

Certain capitalized terms used in this Official Statement and not defined herein have the meanings set forth in Appendix C — "Summary of the Fiscal Agent Agreement —Definitions" or in Appendix B — "Rate and Method."
General
The purpose of this Official Statement, which includes the cover page, the inside cover page, the table of contents and the attached appendices (the "Official Statement"), is to provide certain information concerning the issuance of the above -captioned 2024 Special Tax Bonds (the "2024 Bonds"). The 2024 Bonds are being issued by the Temecula Public Financing Authority (the "Authority"), for and on behalf of the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) (the "District"), pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (the "Act") and a Fiscal Agent Agreement, dated as of March 1, 2024 (the "Fiscal Agent Agreement"), by and between the Authority, for and on behalf of the District, and U.S. Bank Trust Company, National Association, as fiscal agent (the "Fiscal Agent"). The net proceeds of the 2024 Bonds will be used to finance certain public improvements authorized to be funded by the District. See "PLAN OF FINANCING." Authority for Issuance
General. The District was formed on April 13, 2021 under the authority of the Act, which 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. The Act authorizes local governmental entities to establish community facilities districts as legally constituted governmental entities within defined boundaries, with the legislative body of the local applicable governmental entity acting on behalf of the district. Subject to approval by at least a two-thirds vote of the votes cast by the qualified electors within a district and compliance with the provisions of the Act, the legislative body may authorize the issuance of bonds for the community facilities district established by it and may authorize the levy and collection of a special tax within the district to repay the bonds.

Bond Authority. The 2024 Bonds are authorized to be issued pursuant to the Act, a Resolution adopted on February 13, 2024 by the Board of Directors of the Authority (the 'Board of Directors") acting as the legislative body of the District, and the Fiscal Agent Agreement. For * Preliminary, subject to change.
-1-

more detailed information about the formation of the District and the authority for issuance of the 2024 Bonds, see "THE DISTRICT —History of the District." The 2024 Bonds
The 2024 Bonds will be issued only as fully registered bonds, in integral multiples of $5,000, and will bear interest at the rates per annum and will mature on the dates and in the principal amounts set forth on the inside cover page of this Official Statement. The 2024 Bonds will be dated the date of their issuance and interest on the 2024 Bonds will be payable on March 1 and September 1 of each year, commencing September 1, 2024 (each an "Interest Payment Date"). The 2024 Bonds will be issued in book -entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the 2024 Bonds. See "THE 2024 BONDS —General Provisions."
Redemption Prior to Maturity. The 2024 Bonds are subject to optional redemption, mandatory sinking payment redemption and mandatory redemption from Special Tax prepayments prior to their respective maturities. See "THE 2024 BONDS —Redemption" and "SPECIAL RISK FACTORS —Potential Early Redemption of 2024 Bonds From Special Tax Prepayments."
Application of 2024 Bond Proceeds
Proceeds of the 2024 Bonds will be used (a) to make deposits to four accounts within the Improvement Fund, (b) to make a deposit to the Reserve Fund in the amount of the Reserve Requirement as of the date of issuance of the 2024 Bonds, (c) to make a deposit to the Delinquency Maintenance Fund in the amount of the DMF Requirement, (d) make a deposit to the Capitalized Interest Account of the Bond Fund, and (e) to pay the costs of issuance of the 2024 Bonds. See "PLAN OF FINANCING —Estimated Sources and Uses of Funds." The proceeds of the 2024 Bonds deposited to the accounts within the Improvement Fund will be used to pay the costs of certain public improvements (the "Improvements") authorized to be funded by the District. See "THE DISTRICT —The Improvements." Parity Bonds
The Authority may in the future issue bonded indebtedness (future "Parity Bonds") that is secured by a lien on the Special Tax Revenues and on the funds pledged under the Fiscal Agent Agreement on a parity with the 2024 Bonds, but any such parity bonds must be Refunding Bonds, as defined in the Fiscal Agent Agreement. See "SECURITY FOR THE 2024 BONDS —Issuance of Additional Bonds." When used in this Official Statement, the term "Bonds" means, collectively, the 2024 Bonds and any future Parity Bonds that may be issued for the District.

Security for the 2024 Bonds
Pledge Under the Fiscal Agent Agreement. Pursuant to the Fiscal Agent Agreement, the Bonds are secured by a first pledge of all of the Special Tax Revenues (other than, in each Fiscal Year, up to the first $30,000 of Special Tax Revenues that may be deposited into the Administrative Expense Fund) and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed in accordance with the Fiscal Agent Agreement, in the Special Tax Fund and the Delinquency Maintenance Fund. See "SECURITY FOR THE 2024 BONDS —General." "Special Tax Revenues," as defined in the Fiscal Agent Agreement, means the proceeds of the Special Taxes (as described under the subheading "Special Taxes; Rate and Method" below) -2-

received by the Authority, including any scheduled payments and any prepayments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon, but does not include penalties, if any, collected in connection with delinquent Special Taxes. The Special Tax Revenues and all moneys deposited into the Bond Fund, the Reserve Fund and the Special Tax Fund are dedicated to the payment of the principal of, and interest and any premium on, the Bonds in accordance with the Fiscal Agent Agreement until all of the Bonds have been paid or defeased. See "SECURITY FOR THE 2024 BONDS —Special Taxes" and Appendix B - "Rate and Method."
Special Taxes; Rate and Method. The Special Taxes to be used to pay debt service on the Bonds will be levied on Taxable Property in the District in accordance with the Rate and Method of Apportionment of Special Tax, as described under the heading "SECURITY FOR THE 2024 BONDS —Summary of Rate and Method" (the "Rate and Method"). The term "Special Taxes", when used in this Official Statement, means the Special Tax A levied on the Taxable Property within the District pursuant to the Rate and Method and the Fiscal Agent Agreement to fund the "Special Tax A Requirement," which includes amounts needed to pay the debt service on the 2024 Bonds. The Rate and Method also allows for the levy of a Special Tax B to pay for certain municipal services authorized to be funded by the District until a Transition Event has occurred, and a Special Tax C to pay for the authorized municipal services following the occurrence of the Transition Event. The Special Tax B and the Special Tax C are not in any way pledged, and will not be used, to pay debt service on the Bonds. See "SECURITY FOR THE 2024 BONDS —Special Taxes," and "—Summary of Rate and Method." With respect to the annual Special Tax A levy on property in the District, the Special Tax A levy on any parcel may not exceed the Maximum Special Tax rate applicable to such parcel. See "SECURITY FOR THE 2024 BONDS —Summary of Rate and Method - Maximum Special Taxes." Also, under no circumstances may the Special Tax A on a parcel in residential use be increased in any Fiscal Year as a consequence of the delinquency or default in payment of the Special Tax A levied on another parcel or parcels by more than ten percent (10%) above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults. See "SECURITY FOR THE 2024 BONDS —Summary of Rate and Method - Method of Apportionment."
Limitations. Amounts in the Administrative Expense Fund, the accounts within the Improvement Fund and the Costs of Issuance Fund, each of which is established under the Fiscal Agent Agreement, are not pledged to the repayment of the Bonds. A portion of the Special Taxes collected annually and to be deposited on a priority basis to the Administrative Expense Fund (see clause (i) of the second paragraph under "SECURITY FOR THE 2024 BONDS —Special Tax Fund") is not pledged to the repayment of the Bonds. The Improvements are not pledged as collateral for the Bonds. The Special Tax B, the Special Tax C and the proceeds of condemnation or destruction of any of the Improvements are not pledged to pay the debt service on the Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to repay the Bonds are amounts held by the Fiscal Agent under the Fiscal Agent Agreement in the Bond Fund, the Reserve Fund, and, until disbursed as provided in the Fiscal Agent Agreement, in the Special Tax Fund, as well as certain proceeds, if any, from foreclosure sales of parcels with delinquent Special Taxes. See "SECURITY FOR THE 2024 BONDS -General."
Delinquency Maintenance Fund
The Special Tax A was first levied on property in the District in Fiscal Year 2023-24, with the first installment of the Special Tax delinquent if not paid by property owners by -3-

December 10, 2023. The Authority experienced an unexpected rate of delinquency in payment of that installment. See "THE DISTRICT —Special Tax Delinquencies." To address the current elevated level of delinquencies, the Fiscal Agent Agreement establishes a Delinquency Maintenance Fund to be held by the Fiscal Agent, to the credit of which a deposit of $ will be made from the proceeds of the 2024 Bonds on the Closing Date, which is equal to the initial DMF Requirement, and deposits shall be made as provided in the Fiscal Agent Agreement. The DMF Requirement is approximately equal to the percentage of the aggregate December 10, 2023 Special Tax levy that remained delinquent as of February 12, 2024.

Moneys in the Delinquency Maintenance Fund will be held therein by the Fiscal Agent for the benefit of the owners of the Bonds and are subject to a lien in favor of the owners of the Special Tax Bonds.

Whenever the amount in the Bond Fund is insufficient to pay the principal of, premium, if any, and interest on the 2024 Bonds on any Interest Payment Date due to a deficiency in the Bond Fund, the Fiscal Agent shall transfer the amount so needed from the Delinquency Maintenance Fund to the Bond Fund before any draw is made in respect of such deficiency from the Reserve Fund.

Amounts in the Delinquency Maintenance Fund will be transferred in whole to the Acquisition Account of the Improvement Fund upon the satisfaction of certain requirements set forth in the Fiscal Agent Agreement. See "SECURITY FOR THE 2024 BONDS —Delinquency Maintenance Fund" for more information regarding the Delinquency Maintenance Fund.

Reserve Fund
The Fiscal Agent Agreement establishes a Reserve Fund to be held by the Fiscal Agent as a reserve for the payment of principal of and interest on the Bonds. The Reserve Fund is required to be funded in an amount equal to the least of (i) Maximum Annual Debt Service of the Outstanding Bonds, (ii) 125% of average Annual Debt Service on the Outstanding Bonds, or (iii) 10% of the principal amount of the then Outstanding Bonds (the "Reserve Requirement").

The amounts in the Reserve Fund will be available to pay debt service on the Bonds in the event that there is a shortfall in the amount in the Bond Fund to pay such debt service, following any draw on the Delinquency Maintenance Fund for such purpose. The Reserve Requirement as of the date of issuance of the 2024 Bonds, to be funded with proceeds of the 2024 Bonds, will be $ . See "SECURITY FOR THE 2024 BONDS —Reserve Fund" and Appendix C — "Summary of Certain Provisions of the Fiscal Agent Agreement — Funds and Accounts — Reserve Fund."
The Authority
The Authority was formed on April 10, 2001, pursuant to a Joint Exercise of Powers Agreement (the "JPA Agreement") between the City and the former Redevelopment Agency of the City of Temecula (the "Agency"), in accordance with Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California. The JPA Agreement was amended in May of 2016 to provide for the withdrawal of the Successor Agency to the Agency as a member of the Authority, and to add the Temecula Community Services District and the Temecula Housing Authority as members of the Authority. See "THE AUTHORITY."
The District
General. The District was formed by the Board of Directors of the Authority pursuant to proceedings conducted under the Act on April 13, 2021 and an election held on that date -4-

wherein Meritage Homes of California, Inc., a California corporation (referred to in this Official Statement as the "Developer"), as the then sole owner of the property in the District, voted in favor of the formation of the District, the levy of the Special Tax A, the Special Tax B and the Special Tax C on the property in the District and the issuance of up to $17,000,000 principal amount of special tax bonds payable from the proceeds of the Special Tax A. See "THE DISTRICT —History of the District." The proceeds of the Special Tax B and the Special Tax C, which will not be available to pay the debt service on the 2024 Bonds, are being and will be, as applicable, used to pay costs of services eligible to be funded by the District, which include various municipal services ranging from public safety services, to maintenance of parks and landscaping in public areas, maintenance of public signage, sidewalks and roadways, storm drains, and street lighting and traffic signals, as well as graffiti removal from public improvements, all related to the area in the District.

The District is located in the northern portion of the City, and includes approximately 28 acres of residential land currently identified as "Heirloom Farms." Heirloom Farms, is expected to include at buildout 210 attached and 111 detached single family homes with three different product types, as well as a clubhouse, community pool and childrens play area. The three product types include Sultana with 150 three story attached townhomes, Crimson with 60 two story attached townhomes, and Valiant with 111 three story detached motor court homes. For an aerial view of the District, see "THE DISTRICT —Location and General Description of the District."
The property in the District is being developed and the homes in the District are being constructed by the Developer. For additional information regarding the Developer, see "THE DISTRICT —The Developer."
Summary of Status of Development. A summary of the status of development of the proposed 321 homes being constructed by the Developer in the District as of the December 4, 2023 date of value of the Appraisal Report (see "INTRODUCTION —Land Valuation" below and "THE DISTRICT —Property Values") is provided below, along with an update on the status of the development as of January 15, 2024.

Summary of Status of Development in the District
as of
December 4, 2023
as of
January 15, 2024
lots with homes sold and conveyed to homebuyers 118 146 lots with completed homes 0 0
lots with model homes 12 12
lots with homes under construction 122 100
lots with construction not yet started 69 63
Total Lots 321 321
For additional information on the status of development of the property in the District, see "THE DISTRICT —Heirloom Farms." See also "SPECIAL RISK FACTORS —Concentration of Ownership."
Land Valuation
Integra Realty Resources, Sacramento, California (the "Appraiser") has prepared an Appraisal Report dated January 22, 2024 (the "Appraisal Report"), estimating the market value of the 321 lots within the District that are subject to the Special Tax A securing the 2024 Bonds (the "Appraised Property"). The Appraiser concluded in the Appraisal Report that the market -5-

value of the Appraised Property as of December 4, 2023 was $106,722,000, including $70,060,000 allocable to the 118 homes in the District sold to homeowners, and $36,662,000 to the 203 properties owned by the Developer, subject to various assumptions described in the Appraisal Report. See "THE DISTRICT —Property Values." The appraised value of $106,722,000 is approximately 8.56* times the $12,470,000* initial principal amount of the 2024 Bonds.

The Appraisal Report, a complete copy of which is set forth in Appendix H to this Official Statement, is subject to various assumptions and limiting conditions, and the Appraisal Report should be read in its entirety by prospective purchasers of the 2024 Bonds.

The value of individual parcels of the Taxable Property varies significantly, 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 "THE DISTRICT —Value -to -District Lien Ratios," "SPECIAL RISK FACTORS —Property Value" and "SPECIAL RISK FACTORS — Insufficiency of Special Taxes."
Limited Obligation
Although the unpaid Special Taxes constitute liens on parcels within the District on which they are levied, they do not constitute a personal indebtedness of the property owners.

There is no assurance that the current or subsequent owners of Taxable Property in the District will be financially able to pay the Special Tax A levied on their property in the District, or that they will pay the Special Tax A even though financially able to do so.

NONE OF THE FAITH AND CREDIT OF THE DISTRICT, THE AUTHORITY OR THE

STATE OF CALIFORNIA OR OF ANY OF ITS POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE 2024 BONDS. EXCEPT FOR THE SPECIAL TAX A, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2024 BONDS. THE 2024 BONDS ARE

NEITHER GENERAL NOR SPECIAL OBLIGATIONS OF THE AUTHORITY, NOR GENERAL

OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE AUTHORITY

FOR THE DISTRICT PAYABLE SOLELY FROM PROCEEDS OF THE SPECIAL TAX A AND

CERTAIN AMOUNTS PLEDGED THEREFOR UNDER THE FISCAL AGENT AGREEMENT, AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.

Bondowners' Risks
Certain events could affect the ability of the Authority to pay the principal of and interest on the 2024 Bonds when due. Except for the Special Tax A, no other taxes are pledged to the payment of the 2024 Bonds. See "SPECIAL RISK FACTORS" for a discussion of certain factors that should be considered in evaluating an investment in the 2024 Bonds. The purchase of the 2024 Bonds involves significant risks, and the 2024 Bonds are not appropriate investments for all types of investors. See "SPECIAL RISK FACTORS." Continuing Disclosure
For purposes of complying with Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended, the Authority has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board (the "MSRB") certain annual financial and other information, and notice of certain enumerated events. The Developer has agreed to * Preliminary, subject to change.

provide semi-annual reports with certain limited information and notice of certain enumerated events. The Developer's annual, semi-annual and enumerated event reporting obligations will terminate if and when 257 of the homes in the District have been conveyed to individual homeowners. See "CONTINUING DISCLOSURE," and Appendices E and F for a description of the specific nature of the reports and notices of significant events, as well as the terms of the Continuing Disclosure Agreement of the Authority and the Continuing Disclosure Certificate of the Developer, respectively, pursuant to which such reports and notices are to be made.

Other Information
This Official Statement speaks only as of its date, and the information contained in this Official Statement is subject to change without notice. Except where otherwise indicated, all information contained in this Official Statement has been provided by the Authority on behalf of the District.

Copies of the Fiscal Agent Agreement and certain other documents referenced in this Official Statement are available for inspection at the office of, and (upon written request and payment to the Authority of a charge for copying, mailing and handling) are available for delivery from, the Director of Finance, City of Temecula, 41000 Main Street, Temecula, California 92590.

PLAN OF FINANCING
Overview
General. The primary purpose of the 2024 Bonds is to provide funds to pay costs of certain of the Improvements authorized to be funded by the District. Proceeds of the 2024 Bonds will also be used to make deposits to a Delinquency Maintenance Fund, a Reserve Fund and a Capitalized Interest Account, as well as to pay costs of issuance of the 2024 Bonds.

Funding for Improvements. The Authority, for and on behalf of the District, entered into an Acquisition Agreement with the Developer, dated as of February 23, 2021 (as amended on March 1, 2024, the "Acquisition Agreement"), pursuant to which the Authority has agreed to use proceeds of the 2024 Bonds to pay the costs of specified public infrastructure improvements.

At the time of formation of the District in 2021, the Authority also entered into separate joint community facilities agreements ("JCFAs") with the City, the Temecula Valley Unified School District (the "School District") and the Eastern Municipal Water District (the "Water District"), whereby proceeds of the 2024 Bonds are to be used to finance certain City, School District and Water District designated public improvements and those entities are to provide the Developer with credit against certain capital improvement fees payable with respect to the homes being constructed in the District (which credits have been taken into account in the Appraisal Report in determining the appraised value of the Taxable Property in the District, see Appendix H — "Appraisal Report").

The JCFAs designated public improvements, and the improvements to be constructed by the Developer pursuant to the Acquisition Agreement are collectively referred to in this Official Statement as the "Improvements." The Fiscal Agent Agreement establishes accounts within the Improvement Fund held by Fiscal Agent, one with respect to the City JCFA, one with respect to the School District JCFA, one with respect to the Water District JCFA and one with respect to the Acquisition Agreement, each of which will be funded with a portion of the proceeds of the 2024 Bonds. See "PLAN OF FINANCING —Estimated Sources and Uses of Funds" and "THE DISTRICT —The Improvements."
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Proceeds of the 2024 Bonds to be deposited to the Acquisition Account of the Improvement Fund are not expected to be sufficient to pay costs of all of the Improvements eligible to be funded under the provisions of the Acquisition Agreement. Under the Acquisition Agreement, costs of the portion of the Improvements specified therein in excess of the proceeds of the 2024 Bonds in the Acquisition Account of the Improvement Fund are the responsibility of the Developer. The amounts in the accounts within the Improvement Fund are not available to make payments on the 2024 Bonds.

Estimated Sources and Uses of Funds
The sources and uses of funds in connection with the 2024 Bonds are expected to be as follows:

Principal amount of 2024 Bonds $
Less: Net Original Issue Discount
Less: Underwriter's Discount
Total Sources
Deposit to Accounts within the Improvement Fund(') $
City Account
School District Account
Water District Account
Acquisition Account
Deposit to Reserve Fund(2)
Deposit to Delinquency Maintenance Fund(3)
Deposit to Capitalized Interest Payment Account(4)
Deposit to Costs of Issuance Fund(3) _
Total Uses $
(1) See "PLAN OF FINANCING —Overview — Funding for Improvements" and "THE DISTRICT —The Improvements."
(2) An amount equal to the Reserve Requirement as of the date of issuance of the 2024 Bonds. See "SECURITY FOR THE 2024 BONDS —Reserve Fund."
(3) An amount equal to the initial DMF Requirement. See "SECURITY FOR THE 2024 BONDS —Delinquency Maintenance Fund."
(4) To be used to pay a portion of the interest due on the 2024 Bonds on September 1, 2024. (5) Costs of issuance include, without limitation, Fiscal Agent fees and expenses, Municipal Advisor fees and expenses, the fees and expenses of Bond Counsel, Disclosure Counsel and Counsel to the Authority, printing costs and other costs related to the issuance of the 2024 Bonds.

THE 2024 BONDS
Authority for Issuance
The 2024 Bonds are authorized to be issued pursuant to the Act, a Resolution adopted on February 13, 2024, by the Board of Directors, acting as the legislative body of the District, and the Fiscal Agent Agreement. The Special Taxes to be used to pay debt service on the 2024 Bonds are being levied in accordance with the Rate and Method.

General Provisions
The 2024 Bonds will be issued only as fully registered bonds, in denominations of $5,000 and integral multiples thereof, and will bear interest at the rates per annum and will mature on BE

the dates set forth on the inside cover page of this Official Statement. Interest will be calculated on the basis of a 360-day year composed of twelve 30-day months. The 2024 Bonds will be dated the date of their issuance and interest will be payable on each Interest Payment Date, commencing September 1, 2024.

Each 2024 Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated on an Interest Payment Date, in which event it will bear interest from such date of authentication, or (b) 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 will bear interest from such Interest Payment Date, or (c) it is authenticated on or before August 15, 2024, in which event it will bear interest from the date of issuance of the 2024 Bonds; provided, however, that if, as of the date of authentication of any 2024 Bond interest thereon is in default, such 2024 Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. "Record Date" is defined in the Fiscal Agent Agreement as the fifteenth day of the month next preceding the month of the applicable Interest Payment Date, whether or not such fifteenth (15th) day is a Business Day.

The 2024 Bonds will be payable both as to principal and interest, and as to any premium upon the redemption thereof, in lawful money of the United States of America. The principal of the 2024 Bonds and any premium due upon the redemption thereof will be payable upon presentation and surrender at the principal corporate trust office of the Fiscal Agent. Interest on each 2024 Bond will be computed using a year of 360 days comprised of twelve 30-day months.

The Fiscal Agent Agreement provides that, in any case where the date of the payment of debt service on the 2024 Bonds or the date fixed for redemption of any 2024 Bonds is other than a Business Day, the payment of debt service or the redemption need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue on the 2024 Bonds for the period from and after such date.

The 2024 Bonds will be issued in book -entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of DTC, which will act as securities depository for the 2024 Bonds. Individual purchases of the 2024 Bonds will be made in Authorized Denominations in book -entry form only. Purchasers of the 2024 Bonds will not receive physical certificates representing their ownership interests in the 2024 Bonds purchased.

Principal and interest payments represented by the 2024 Bonds are payable directly to DTC by the Fiscal Agent. Upon receipt of payments of principal and interest, DTC will in turn distribute such payments to the beneficial owners of the 2024 Bonds. See Appendix G — "DTC and the Book -Entry Only System." So long as the 2024 Bonds are registered in the name of Cede & Co., as nominee of DTC, references in this Official Statement to the owners of the 2024 Bonds shall mean Cede & Co., and shall not mean the purchasers or Beneficial Owners of the 2024 Bonds.

Redemption
Optional Redemption. The 2024 Bonds maturing on or after September 1, are subject to optional redemption prior to their stated maturities on any Interest Payment Date occurring on or after September 1, as a whole or in part in an amount equal to $5,000 or any integral multiple thereof, among maturities so as to maintain substantially level debt service on the Bonds, and by lot within a maturity, upon payment from any source of funds available for that purpose, at a redemption price equal to the principal amount of the 2024 Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.
0 Mandatory Sinking Payment Redemption. The 2024 Bonds maturing on September 1, are subject to mandatory sinking payment redemption in part on September 1, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:

Redemption Date
(September 11 Sinking Payments
The Series 2024 Bonds maturing on September 1, are subject to mandatory sinking payment redemption in part on September 1, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:

Redemption Date
(September 11 Sinking Payments
The Series 2024 Bonds maturing on September 1, 2054 are subject to mandatory sinking payment redemption in part on September 1, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:
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Redemption Date
(September 11 Sinking Payments
The amounts in the foregoing tables will be reduced as a result of any prior partial redemption of the 2024 Bonds pursuant to the optional redemption or redemption from Special Tax A prepayments provisions of the Fiscal Agent Agreement, as specified in writing by the Authority's Treasurer to the Fiscal Agent.

Mandatory Redemption From Special Tax Prepayments. The 2024 Bonds are subject to mandatory redemption prior to their stated maturity on any Interest Payment Date, from the proceeds of Special Tax Prepayments and corresponding transfers of funds from the Reserve Fund (as described below under "SECURITY FOR THE 2024 BONDS —Reserve Fund"), as a whole or in part in an amount equal to $5,000 or any integral multiple thereof, at a redemption price (expressed as a percentage of the principal amount of the 2024 Bonds to be redeemed), as set forth below, together with accrued interest thereon to the date fixed for redemption:

Redemption Dates Redemption Prices
any Interest Payment Date from September 1, 2024 %
to and including March 1,
September 1, and March 1,
September 1, and March 1,
September 1, and any March 1 or September 1
thereafter
To date, no prepayments of Special Taxes have been made by the owners of the Taxable Parcels in the District, and the Developer has advised that it has no current plans to make any partial or full prepayments of Special Taxes. No assurance can be given, however, that prepayments in whole or in part of Special Taxes levied on the Taxable Property will not occur in the future, which would result in a redemption to 2024 Bonds prior to their maturity. See "SECURITY FOR THE 2024 BONDS —Summary of Rate and Method - Prepayment in Full," and "—Prepayment in Part" and "SPECIAL RISK FACTORS —Potential Early Redemption of 2024 Bonds from Special Tax Prepayments."
Purchase of 2024 Bonds In Lieu of Redemption. In lieu of redemption as described above, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2024 Bonds, upon the filing with the Fiscal Agent of an Officer's Certificate requesting such purchase prior to the selection of 2024 Bonds for redemption, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer's Certificate may provide, but in no event may 2024 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase and any premium which would otherwise be due if such 2024 Bonds were redeemed in accordance with the Fiscal Agent Agreement.

Selection of 2024 Bonds for Redemption. Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the 2024 Bonds (other than pursuant to the mandatory sinking payment redemption provisions of the Fiscal Agent Agreement), the Fiscal Agent will select the 2024 Bonds to be redeemed from among the maturities of the 2024 Bonds or such given portion thereof not previously redeemed as directed by the Treasurer (who -11-

shall specify 2024 Bonds to be redeemed so as to maintain substantially level debt service on the Bonds) and within a maturity by lot in any manner which the Fiscal Agent deems appropriate.

Notice of Redemption. The Fiscal Agent will cause notice of any redemption to be mailed by first class mail, postage prepaid, or by such other means as is acceptable to the recipient thereof, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services, and to the respective registered Owners of any 2024 Bonds designated for redemption, at their addresses appearing on the Bond registration books maintained by the Fiscal Agent; but such mailing is not a condition precedent to redemption and failure to mail or to receive any such notice, or any defect therein, will not affect the validity of the proceedings for the redemption of such 2024 Bonds.

The redemption notice will state the redemption date and the redemption price and, if less than all of the then Outstanding 2024 Bonds are to be called for redemption, will designate the CUSIP numbers and, if applicable, Bond numbers of the 2024 Bonds to be redeemed by giving the individual CUSIP number and, if applicable, Bond number of each Bond to be redeemed or if Bond numbers have been assigned by the Fiscal Agent to the 2024 Bonds will state that all 2024 Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the 2024 Bonds of one or more maturities have been called for redemption, will state as to any Bond called in part the principal amount thereof to be redeemed, and will require that such 2024 Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and will state that further interest on such 2024 Bonds will not accrue from and after the redemption date.

Notwithstanding the foregoing, in the case of any redemption of the 2024 Bonds pursuant to the redemption provisions described above under "— Optional Redemption" the notice of redemption may state that the redemption is conditioned upon receipt by the Fiscal Agent of sufficient moneys to redeem the 2024 Bonds on the anticipated redemption date, and that the redemption will not occur if by no later than the scheduled redemption date sufficient moneys to redeem the 2024 Bonds have not been deposited with the Fiscal Agent. In the event that the Fiscal Agent does not receive sufficient funds by the scheduled redemption date to so redeem the 2024 Bonds to be redeemed, the Fiscal Agent will send written notice to the owners of the 2024 Bonds, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated, and the 2024 Bonds for which notice of redemption was given will remain Outstanding for all purposes of the Fiscal Agent Agreement.

Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the 2024 Bonds so called for redemption have been deposited in the Bond Fund, such 2024 Bonds so called will cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and no interest will accrue thereon on or after the specified redemption date.

Tender of 2024 Bonds in Payment of Special Taxes. The Authority has covenanted in the Fiscal Agent Agreement not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the Authority having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds that will remain Outstanding following such tender. -12-

Transfer or Exchange of 2024 Bonds
So long as the 2024 Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of 2024 Bonds shall be made in accordance with DTC procedures. See Appendix G — "DTC and the Book -Entry Only System." If the book -entry only system for the 2024 Bonds is ever discontinued, 2024 Bonds may, in accordance with its terms, be transferred or exchanged in Authorized Denominations by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2024 Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form acceptable to the Fiscal Agent. Whenever any 2024 Bond or 2024 Bonds are surrendered for transfer or exchange, the Authority will execute and the Fiscal Agent will authenticate and deliver a new 2024 Bond or 2024 Bonds, for a like principal amount of 2024 Bonds of Authorized Denominations and of the same maturity. The Fiscal Agent will collect from the Owner 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 2024 Bonds will be required to be made (i) within the 15 days prior to the date designated by the Fiscal Agent as the date for selecting 2024 Bonds for redemption, (ii) with respect to any 2024 Bond after such 2024 Bond has been selected for redemption, or (iii) between a Record Date and the succeeding Interest Payment Date.

Discontinuance of DTC Services
DTC may determine to discontinue providing its services with respect to the 2024 Bonds by giving written notice to the Fiscal Agent during any time that the 2024 Bonds are Outstanding, and discharging its responsibilities with respect to the 2024 Bonds under applicable law. The Authority may terminate the services of DTC with respect to the 2024 Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the 2024 Bonds or that continuation of the system of book -entry transfers through DTC is not in the best interest of the Beneficial Owners. The Authority will mail any such notice of termination to the Fiscal Agent.

Upon the termination of the services of DTC as provided in the previous paragraph, and if no substitute Depository willing to undertake the functions can be found which is willing and able to undertake such functions upon reasonable or customary terms, or if the Authority determines that it is in the best interest of the Beneficial Owners of the 2024 Bonds that they obtain certificated Bonds, the 2024 Bonds will no longer be restricted to being registered in the Registration Books of the Fiscal Agent in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or names the Owners designate at that time, in accordance with the Fiscal Agent Agreement.

To the extent that the Beneficial Owners are designated as the transferees by the Owners, the 2024 Bonds will be delivered to such Beneficial Owners as soon as practicable in accordance with the Fiscal Agent Agreement.
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Scheduled Debt Service
The following table shows the annual scheduled debt service on the 2024 Bonds, assuming no optional redemption of the 2024 Bonds and no redemption of the 2024 Bonds from Special Tax Prepayments:

Bond Year ending
September 1 Principal
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
Totals
(1) Indicates a mandatory sinking fund payment.

General
Total Annual
Interest Debt Service
SECURITY FOR THE 2024 BONDS
Pursuant to the Fiscal Agent Agreement, the 2024 Bonds are secured by a first pledge of all of the Special Tax Revenues (other than, each Fiscal Year, a maximum of $30,000 of Special Tax Revenues that may be deposited to the Administrative Expense Fund on a priority basis), and all moneys deposited in the Bond Fund (including the Capitalized Interest Account and the Special Tax Prepayments Account therein), the Reserve Fund and, until disbursed in accordance with the Fiscal Agent Agreement, the Special Tax Fund and the Delinquency Maintenance Fund. Special Tax Revenues including only the Special Tax A collected and received by the Authority and do not include penalties, if any, collected in respect of delinquent Special Taxes. -14-

The Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided in the Fiscal Agent Agreement) are dedicated to the payment of the principal of, and interest and any premium on, the 2024 Bonds in accordance with the Fiscal Agent Agreement until all of the 2024 Bonds have been paid or defeased.

Amounts in the Administrative Expense Fund, the accounts within the Improvement Fund and the Costs of Issuance Fund, and up to $30,000 of the first Special Tax Revenues collected in any Fiscal Year that may be deposited to the Administrative Expense Fund on a priority basis, are not pledged to the repayment of the 2024 Bonds. The Improvements are not pledged as collateral for the 2024 Bonds. The proceeds of condemnation or destruction of any of the Improvements are not pledged to pay the Debt Service on the 2024 Bonds.

Limited Obligation
The 2024 Bonds are limited obligations of the Authority on behalf of the District and are payable solely from and secured solely by the revenues from the Special Tax A and the amounts in the Bond Fund (including the Capitalized Interest Account and the Special Tax Prepayments Account therein), the Reserve Fund, the Special Tax Fund and the Delinquency Maintenance Fund created pursuant to the Fiscal Agent Agreement. In the event that the Special Taxes are not paid when due, the only sources of funds available to repay the 2024 Bonds are amounts held by the Fiscal Agent under the Fiscal Agent Agreement in the Bond Fund, the Reserve Fund, the Special Tax Fund and the Delinquency Maintenance Fund, and the proceeds, if any, from foreclosure sales of parcels with delinquent Special Tax levies.

Special Taxes
In accordance with the provisions of the Act, the Rate and Method was approved in 2021 by the Developer, as the then owner of all of the property in the District. The Rate and Method is set forth in its entirety in Appendix B. The Rate and Method provides for the levy of a "Special Tax A" in order to fund the annual "Special Tax A Requirement," which includes amounts needed to pay the debt service on the Bonds, to pay costs of administering the Bonds and the District, to replenish any draws on the Reserve Fund and to pay directly for costs of the Improvements. The Rate and Method also provides for the levy of a "Special Tax B" in order to fund the annual "Special Tax B Requirement," which includes amounts needed to pay costs of services authorized to be funded by the District and to pay related administrative expenses, and the levy of a "Special Tax C" in order to fund the annual "Special Tax C Requirement," and which effectively replaces Special Tax B following the payment or defeasance of the Bonds, and which includes amounts needed to pay costs of services authorized to be funded by the District and to pay related administrative expenses. See "INTRODUCTION —The District" and "SECURITY FOR THE 2024 BONDS - Summary of Rate and Method." Proceeds of the Special Tax B and the Special Tax C levied on Taxable Property in the District to satisfy the annual Special Tax B Requirement and the Special Tax C Requirement, respectively, are not pledged, and will not be used, to pay debt service on the 2024 Bonds; and the term "Special Taxes" when used in this Official Statement includes only the Special Tax A levied to satisfy the annual Special Tax A Requirement.

Under the Fiscal Agent Agreement, the Authority is obligated to fix and levy the amount of Special Taxes within the District required for the timely payment of principal of and interest on the outstanding Bonds becoming due and payable, including any necessary replenishment of the Reserve Fund and an amount estimated to be sufficient to pay a portion of the Administrative Expenses, taking into account any prepayments of Special Taxes previously -15-

received by the Authority. The Special Taxes levied on any parcel of Taxable Property may not in any event exceed the maximum amount as provided in the Rate and Method and the Act.

The Special Taxes are payable and are to be collected in the same manner, at the same time and in the same installment as County ad valorem taxes on property levied on the secured tax roll are payable, and pursuant to the Act 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 taxes levied on the County secured tax roll.

Notwithstanding the foregoing, the Special Taxes may be collected by means of direct billing of the property owners within the District, in which event the Special Taxes will become delinquent if not paid pursuant to such billing.

Although the Special Tax A, when levied, will constitute a lien on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of the property within the District. Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Tax on a parcel of Taxable Property, the Authority may order the institution of a superior court action to foreclose the lien on the parcel of Taxable Property within specified time limits. In such an action, the real property subject to the unpaid amount of the Special Tax lien may be sold at judicial foreclosure sale. The Act provides that the Special Taxes are secured by a continuing lien that is subject to the same lien priority in the case of delinquency as ad valorem property taxes. See "SECURITY FOR THE 2024 BONDS —Summary of Rate and Method," and "—Covenant for Superior Court Foreclosure" and "SPECIAL RISK FACTORS —Parity Taxes and Special Assessments."
The property located within the District is subject to other liens for taxes and assessments, and other such liens could come into existence in the future. See "THE DISTRICT —Direct and Overlapping Government Obligations" and "SPECIAL RISK FACTORS —Parity Taxes and Special Assessments." There is no assurance that any owner of a parcel subject to the Special Tax levy will be financially able to pay the annual Special Taxes or that it will pay such taxes even if financially able to do so. See "SPECIAL RISK FACTORS — Payment of Special Taxes is not a Personal Obligation." Special Tax Fund
Deposit of Special Tax Revenues. The Fiscal Agent Agreement establishes a Special Tax Fund to be held by the Fiscal Agent. Under the Fiscal Agent Agreement, the Authority is obligated to transfer or cause to be transferred to the Fiscal Agent, for deposit by the Fiscal Agent in the Special Tax Fund, as soon as practicable following receipt, all Special Tax Revenues (which include only proceeds of Special Tax A collected and received by the Authority), which amounts are to be deposited by the Fiscal Agent to the Special Tax Fund.

to increase the amount then on deposit in the Delinquency Maintenance Fund up to the then DMF Requirement; third, by transfer to the Administrative Expense Fund to the extent that amounts in such fund were used to pay costs related to the collection of such delinquencies; fourth, by transfer to the Reserve Fund to the extent needed to increase the amount then on deposit in the Reserve Fund to the then Reserve Requirement; and fifth, to be held in the Special Tax Fund and used for its purposes; (iii) any proceeds of Special Tax Prepayments will be remitted by the Treasurer to the Fiscal Agent for deposit by the Fiscal Agent in the Special Tax Prepayments Account and used to redeem Bonds; and
(iv) any Special Tax Revenues constituting the portion, if any, of the Special Tax A Requirement that is to pay directly for the acquisition or construction of any portion of the Improvements shall be separately identified by the Authority and shall be deposited by the Fiscal Agent in the Acquisition Account of the Improvement Fund established under the Fiscal Agent Agreement so long as the Acquisition Account of the Improvement Fund has not theretofore been closed, and if the Acquisition Account of the Improvement Fund has been closed, then such amount shall be retained by the Authority to be used to pay Improvement costs.

In addition to the foregoing, in the event that the Authority receives proceeds of Special Tax levies that constitute amounts that are not Special Tax Revenues (because they constitute penalties and / or interest excluded from the definition of Special Tax Revenues in the Fiscal Agent Agreement, if the amount then on deposit in the Delinquency Maintenance Fund is not an amount equal to the Maximum DMF Requirement, the Authority shall remit such amounts to the Fiscal Agent, for deposit by the Fiscal Agent in the Delinquency Maintenance Fund, until the amount in the Delinquency Maintenance Fund is at least equal to the then Maximum DMF Requirement.

Moneys in the Special Tax Fund will be held by the Fiscal Agent for the benefit of the Authority and the Owners of the Bonds, will be disbursed as provided below and, pending any disbursement, will be subject to a lien in favor of the Owners of the Bonds and the Authority.

Disbursements. On each Interest Payment Date, the Fiscal Agent will withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority:
(i) to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers under the Fiscal Agent Agreement from the accounts within the Improvement Fund, the Reserve Fund, the Capitalized Interest Account and the Special Tax Prepayments Account to the Bond Fund, such that the amount in the Bond Fund equals the principal (including any sinking payment), premium, if any, and interest due on the Bonds on such Interest Payment Date; and (ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement.

amount then on deposit in the Administrative Expense Fund; (ii) to such other fund or account established to pay debt service on or administrative expenses with respect to any bonds or other debt secured by a pledge of Special Tax Revenues subordinate to the pledge thereof under the Fiscal Agent Agreement; or (iii) to such other fund or account established by the Authority to be used for any lawful purpose under the Act and otherwise in accordance with the provisions of the Rate and Method.

Summary of Rate and Method
Special Tax Formula - Calculation of Annual Special Taxes. The Rate and Method is used to determine and allocate the amount of the Special Tax A, the Special Tax B and the Special Tax C that is needed to be collected each fiscal year among the Taxable Properties within the District, based upon the development status of the Taxable Property and its size, subject to a maximum tax rate that may be levied against each class of Taxable Property, and depending upon the "Zone" in which the property is located. The Rate and Method is set forth in full in Appendix B, and the following is a summary of the Rate and Method. Capitalized terms used, but not otherwise defined, in this section have the meanings given to them in the Rate and Method.

The Rate and Method provides that the Annual Special Tax A may be levied only so long as any Bonds are outstanding, provided that levies may continue if there are any delinquent Special Taxes in order to collect those delinquent amounts but not in any event later than Fiscal Year 2061-62. The annual Special Tax A was first levied on property in the District in Fiscal Year 2023-24. The Annual Special Tax B may only be levied on Developed Property, as described below, and may be levied so long as Authorized Services are being provided and shall not be levied during or after the Transition Year. The Special Tax C, for the Transition Year and each Fiscal Year thereafter, shall be levied in perpetuity so long as the Authorized Services are being provided.

Special Tax Requirements. Annually, at the time of levying the Special Tax, the Authority, with the assistance of a special tax administrator (currently Webb Municipal Finance, LLC), determines the amount of money to be collected from Taxable Property in the District (the "Special Tax A Requirement"), which will be the amount required in any Fiscal Year to pay the following: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses (apportioned between Special Tax A and Special Tax B), (iii) any amount required to establish or replenish any reserve funds established in association with the Bonds, and (iv) the collection or accumulation of funds for the acquisition or construction of Improvements or payment of fees authorized by the District by the levy on Developed Property of the Assigned Annual Special Tax A provided that the inclusion of such amount does not cause an increase in the levy of Special Tax A on Approved Property or Undeveloped Property as set forth in Step Two and Three described under the subheading "Method of Apportionment" below, less (v) any amount available to pay debt service or other periodic costs on the Bonds pursuant to the Fiscal Agent Agreement. The Authority, with the assistance of the special tax administrator, will also determine the amount of money to be collected from Taxable Property in the District (the "Special Tax B Requirement" and the "Special Tax C Requirement"), which will be the amount required in any Fiscal Year before and after the Transition Event, respectively, to pay for the municipal services the District is authorized to fund, as well as a share of the costs of administration of the District.

Classification of Property. The Rate and Method provides that for each Fiscal Year, all Assessor's Parcels of Taxable Property within the District be classified as either Taxable Property or Exempt Property. Taxable Property is further classified as Developed Property, -18-

Approved Property, Undeveloped Property, or Provisional Exempt Property. In addition, each Assessor's Parcel of Developed Property, Approved Property, Undeveloped Property and Provisional Exempt Property is classified as being within Zone 1, Zone 2 or Zone 3 of the District. If an Assessor's Parcel of Developed Property, Approved Property, Undeveloped Property or Provisional Exempt Property is located within more than one Zone, it is deemed to be entirely within the Zone in which the largest portion of its Acreage is located. In addition, each Assessor's Parcel of Developed Property is further classified as Residential Property, Multifamily Residential Property or Non -Residential Property. Assessor's Parcels of Residential Property are further categorized based on the Building Square Footage of each such Assessor's Parcel.

Under the Rate and Method, "Developed Property' includes all Assessor's Parcels of Taxable Property for which a Final Map was recorded as of the January 1 preceding the Fiscal Year for which the Special Tax levy is being made and a building permit for new construction was issued as of the April 1 preceding the Fiscal Year for which the Special Tax A, Special Tax B or Special Tax C are being levied and for which a building permit was issued on or before April 1st preceding the Fiscal Year in which any or all of the Special Taxes are levied. "Undeveloped Property" includes all Taxable Property not classified as Developed Property, Approved Property or Provisional Exempt Property. "Approved Property" includes all Assessor's Parcels of Taxable Property other than Provisional Exempt Property: (i) that are included in a Final Map that was recorded prior to the January 1st immediately preceding the Fiscal Year for which the Special Tax A is being levied, and (ii) that have not been issued a building permit on or before the April 1st immediately preceding the Fiscal Year for which the Special Tax A is being levied. "Provisional Exempt Property" includes all Assessor's Parcels of Taxable Property subject to Special Tax A that would otherwise be classified as Exempt Property pursuant to the provisions of the Rate and Method, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property within the applicable Zone below the required minimum Acreage for that Zone set forth in the Exempt Property section (Section P) of the Rate and Method.

All Taxable Property in the District is currently classified as Developed Property (as to 264 of the parcels of Taxable Property in the District), or Approved Property (as to 57 of the parcels of Taxable Property in the District). See Table 3 under the heading "THE DISTRICT — Value -to -District Lien Ratios — Value -to -District Lien Ratio Distribution." The Rate and Method also provides for a Backup Annual Special Tax A that is not currently relevant to the Taxable Property in the District.

Maximum Special Taxes. The Maximum Special Tax A for each Assessor's Parcel that is Residential Property, Multifamily Residential Property or Non -Residential Property in any Fiscal Year is the greater of (i) the Assigned Annual Special Tax A, or (ii) the Backup Annual Special Tax A. The Maximum Special Tax A for each Assessor's Parcel of Approved Property, Undeveloped Property or Provisional Exempt Property is the Assigned Annual Special Tax A.

The Assigned Annual Special Tax A rates for the three Zones of the District and for the various categories of Taxable Property are set forth in Section D of the Rate and Method in Appendix B.

For Fiscal Year 2024-25 the Assigned Special Tax A rates range from approximately $2,173.94 annually per dwelling unit to approximately $3,219.69 annually per dwelling unit depending upon the size of the home and the Zone in which the parcel is located, and from $50,920 annually per parcel for Approved Property to approximately $62,528 annually per acre for Approved Property depending upon the Zone in which such property is located. The Maximum Special Tax B for Fiscal Year 2024-25 for each Assessor's Parcel of Residential Property is $540.51 per Unit, and the Maximum Special Tax C for Fiscal Year 2024-25 for each Assessor's Parcel of Residential Property is $1,148.14 per Unit; however, the Special Tax C will not be levied until the Fiscal Year following the final maturity of the 2024 Bonds. -19-

The Special Tax A is subject to annual increases each July 1 commencing July 1, 2022, by an amount equal to one percent (1%) of the amount in effect for the previous Fiscal Year. The Maximum Special Tax B and the Maximum Special Tax C are subject to annual increases each July 1, commencing July 1, 2022, by an amount equal to five and six -tenth percent (5.6%) of the amount in effect for the previous Fiscal Year; provided that, following the Transition Year, the Maximum Special Tax C shall increase each subsequent July 1 by an amount equal to the greater of three percent or the positive change in CPI over the amount in effect for the previous Fiscal Year all as determined by the CFD Administrator.

Method of Apportionment. The Rate and Method provides that for each Fiscal Year, the Board of Directors of the Authority will levy the Annual Special Tax A on all Taxable Property to fund the Special Tax A Requirement as follows:

First: The Annual Special Tax A shall be levied Proportionately on each Assessor's Parcel of Developed Property, up to 100% of the applicable Assigned Annual Special Tax A rates in Tables 1, 2 and 3 of Section D of the Rate and Method (which Section sets forth the Assigned Annual Special Tax rates for the three Zones within the District) to satisfy the Special Tax A Requirement;
Second: If additional moneys are needed to satisfy the Special Tax A Requirement after the first step, the Annual Special Tax A shall be levied Proportionately on each Assessor's Parcel of Approved Property at up to 100% of the applicable Assigned Annual Special Tax A to satisfy the Special Tax A Requirement; Third: If additional moneys are needed to satisfy the Special Tax A Requirement after the first two steps have been completed, the Annual Special Tax A shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property up to 100% of the Assigned Annual Special Tax A for Undeveloped Property applicable to each such Assessor's Parcel as needed to satisfy the Special Tax A Requirement; Fourth: If additional moneys are needed to satisfy the Special Tax A Requirement after the first three steps have been completed, the Annual Special Tax A on each Assessor's Parcel of Developed Property for which the Maximum Special Tax A is the Backup Annual Special Tax A (the Backup Annual Special Tax A is computed pursuant to Section E of the Rate and Method) shall be increased Proportionately from the Assigned Annual Special Tax A up to 100% of the Backup Annual Special Tax A as needed to satisfy the Special Tax A Requirement; and
Fifth: If additional moneys are needed to satisfy the Special Tax A Requirement after the first four steps have been completed, the Annual Special Tax A shall be levied Proportionately on each Assessor's Parcel of Provisional Exempt Property up to 100% of the Assigned Annual Special Tax A applicable to each such Assessor's Parcel as needed to satisfy the Special Tax A Requirement.

As previously stated, as of December 4, 2043 all Taxable Property in the District was classified as Developed Property (as to 264 of the parcels of Taxable Property in the District), or Approved Property (as to 57 of the parcels of Taxable Property in the District). See Table 3 under the heading "THE DISTRICT —Value -to -District Lien Ratios — Value -to -District Lien Ratio Distribution." The Rate and Method also provides for a Backup Annual Special Tax A that is not currently relevant to the Taxable Property in the District. -20-

The Rate and Method provides that for each Fiscal Year, commencing with Fiscal Year 2021-22, the Authority shall levy the Special Tax B at up to 100% of the applicable Maximum Special Tax B Proportionately on each Assessor's Parcel of Developed Property until the amount of Special Tax B equals the Special Tax B Requirement. For the Transition Year and each Fiscal Year thereafter, the Authority shall levy the Special Tax C at up to 100% of the applicable Maximum Special Tax C, Proportionately on each Assessor's Parcel of Developed Property until the amount of Special Tax C equals the Special Tax C Requirement.

Notwithstanding the above, the Act effectively provides that under no circumstances will the Special Tax A, the Special Tax B or the Special Tax C levied against any Assessor's Parcel used as a private residence be increased as a consequence of delinquency or default by the owner of any other Assessor's Parcel or Assessor's Parcels within the District by more than ten percent (10%) per Fiscal Year.

Prepayment in Full. The Special A Tax obligation applicable to an Assessor's Parcel of Developed Property, or Approved Property for which a Building Permit has been issued, or Approved Property for which a Building Permit has not been issued, may be fully prepaid and the obligation of the Assessor's Parcel to pay the Special Tax A permanently satisfied as described in Section G of the Rate and Method, provided that a prepayment may be made only if there are no delinquent Special Tax A with respect to the Assessor's Parcel. The Prepayment Amount for Special Tax A for an applicable Assessor's Parcel is calculated based on Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount and other costs, all as specified in Section G of the Rate and Method. Any such prepayment will result in a redemption of Bonds prior to maturity. See "THE 2024 BONDS —Redemption - Mandatory Redemption From Special Tax Prepayments." In addition, the Act authorizes a public agency which acquires property subject to the Special Tax A to prepay the Special Tax A so long as the Authority determines the prepayment arrangement will fully protect the interests of the owners of the Bonds. The Special Tax B and the Special Tax C are not subject to prepayment.

Prepayment in Part. The Special A Tax on an Assessor's Parcel of Developed Property, Approved Property or Undeveloped Property may be partially prepaid. The amount of any such partial prepayment will be calculated pursuant to Section H of the Rate and Method. Any such prepayment will result in a redemption of Bonds prior to maturity. See "THE 2024 BONDS —Redemption - Mandatory Redemption From Special Tax Prepayments." The Maximum Special Tax B and the Special Tax C are not subject to partial prepayment.

Projected Fiscal Year 2024-25 Assigned Special Tax A Levy. Table 1 below sets forth the projected Assigned Special Tax A levy for Fiscal Year 2024-25 for the various classes of Taxable Property within the several Tax Zones of the District. Table 1 also shows the projected Fiscal Year 2024-25 Assigned Special Tax A levy as a percentage of the total projected Special Tax levy for each Tax Zone.
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Table 1
Temecula Public Financing Authority
Community Facilities District No. 20-01 (Heirloom Farms) Fiscal Year 2024-25 Assigned Special Tax A
Projected Fiscal Projected Total Percent of Total
Year 2024-25 Fiscal Year Projected Fiscal
No. of Appraised Special Tax 2024-25 Special Year 2024-25 Land Use Residential Floor Area Parcels(') Value(') per Unit(2).(4) Tax Levy(3).(4) Special Taxes(3),(4) Tax Zone 1
Residential Property
Less than 1,801 sq. ft.
29 $14,219,351
$3,003
$87,096

11.39%
Residential Property
1,801 sq. ft. to 2,000 sq. ft.
31 14,607,468
3,112
96,457

12.61 Residential Property
Greater than 2,000 sq. ft.
30 14,981,429
3,220
96,591

12.63 Approved Property
N/A
21 3,303,757
50,920
42,831

5.60 Tax Zone 2
Residential Property
Less than 1,551 sq. ft.
38 10,796,574
$2,174
$82,610

10.80%
Residential Property
1,551 sq. ft. to 1,750 sq. ft.
38 12,698,431
2,380
90,440

11.83 Residential Property
Greater than 1,750 sq. ft.
38 12,146,574
2,483
94,355

12.34 Approved Property
N/A
36 4,335,012
74,120
29,833

3.90 Tax Zone 3
Residential Property
Less than 1,601 sq. ft.
30 9,576,702
$2,344
$70,318

9.207o
Residential Property
1,601 sq. ft. or Greater
30 10,056,702
2,473
74,182

9.70 Totals
321 $106,722,000
$764,713 100.00%
(1) Appraised valuation as of December 4, 2023, as reported in the Appraisal Report. (2) Reflects per acre rate for parcels of Approved Property. (3) Based upon principal amount of the 2024 Bonds and includes priority administration in the amount of $30,000. (4) Preliminary, subject to change.

Source: Webb Municipal Finance, LLC
Delinquency Maintenance Fund
The Special Tax A was first levied on property in the District in Fiscal Year 2023-24, with the first installment of Special Tax A delinquent if not paid by December 10, 2023. As of December 10, 2023 of the total $192,436.24 of Special Tax A delinquent if not paid by December 10, 2023, 38 parcels were delinquent in payment of an aggregate of $46,592.95 of Special Tax A, or a 24.21% delinquency rate. The Developer indicates that the majority of these delinquencies appear to relate to homes that were conveyed to individual homeowners between April and September 2023. Further, the Developer indicates that the property tax bills for 31 of these properties were received by the Developer's corporate headquarters in Arizona and not forwarded to the new homeowners. The Developer has since sent communication to the homeowners reminding them of the need to pay their property taxes.

To address the current relatively elevated level of delinquencies, the Fiscal Agent Agreement establishes a Delinquency Maintenance Fund as a separate fund to be held by the Fiscal Agent, to the credit of which a deposit of $ shall be made on the Closing Date, which is equal to the initial DMF Requirement, and deposits shall be made as provided in the Fiscal Agent Agreement. The DMF Requirement is approximately equal to percentage of the aggregate semiannual Special Tax levy for fiscal year 2023-24 that was delinquent if not paid by December 10, 2024 and remained delinquent as of February 12, 2024. Moneys in the Delinquency Maintenance Fund will be held therein by the Fiscal Agent for the benefit of the owners of the Bonds, and are subject to a lien in favor of the owners of the Bonds.

Under the Fiscal Agent Agreement, amounts will be deposited from time to time to the Delinquency Maintenance Fund, as needed to increase the amount on deposit therein to the -22-

amount of the DMF Requirement, from proceeds of collections of delinquent Special Taxes, including (i) the portion of such delinquent Special Taxes included in the definition of Special Tax Revenues in the Fiscal Agent Agreement (being the amount equal to a portion of the scheduled principal on the Special Tax Bonds included in the delinquent Special Tax installment together with interest at the rate of interest payable on the Special Tax Bonds) after use of such portion, if any, needed to pay any past due amounts then owing on the Special Tax Bonds; and (ii) that portion that does not constitute Special Tax Revenues because it constitutes penalties and / or interest in excess of the amount described in the preceding clause (i). See "SECURITY FOR THE 2024 BONDS —Special Tax Fund." In addition, investment earnings on amounts in the Delinquency Maintenance Fund will be retained therein until the amount then on deposit therein is equal to the DMF Requirement.

Whenever the amount in the Bond Fund is insufficient to pay the principal of, premium, if any, and interest on the Special Tax Bonds on any Interest Payment Date due to a deficiency in the Bond Fund, the Fiscal Agent shall transfer the amount so needed from the Delinquency Maintenance Fund to the Bond Fund, prior to any draw on the Reserve Fund for such purpose.

In addition to the foregoing, on any date, upon the receipt by the Fiscal Agent of an Officer's Certificate requesting the same, the Fiscal Agent shall transfer to the Acquisition Account of the Improvement Fund any amount specified in such Officer's Certificate from the Delinquency Maintenance Fund so long as the amount to remain in the Delinquency Maintenance Fund following such withdrawal is at least equal to the DMF Requirement.

At such time as an Authorized Officer files a certificate with the Fiscal Agent to the effect that (i) all of the 321 homes in the District have been sold to individual homebuyers, and (ii) the Special Tax delinquency rate as of the most recent June 30 is not greater than five percent (5%), the Fiscal Agent shall transfer all amounts then in the Delinquency Maintenance Fund to the Acquisition Account of the Improvement Fund, and the Delinquency Maintenance Fund shall be closed.

Reserve Fund
The Fiscal Agent Agreement establishes a debt service reserve fund (the "Reserve Fund") as a separate fund to be held by the Fiscal Agent for the benefit of the Owners of the Bonds, as a reserve for the payment of principal of, and interest and any premium on, the Bonds. Moneys in the Reserve Fund are subject to a lien in favor of the Owners of the Bonds.

The Reserve Fund is required by the Fiscal Agent Agreement to be maintained in an amount equal to the Reserve Requirement, which is defined in the Fiscal Agent Agreement, as of any date of calculation, as an amount equal to the least of (i) the then Maximum Annual Debt Service, (ii) 125% of the then average Annual Debt Service, or (iii) 10% of the principal amount of the then Outstanding Bonds under the Fiscal Agent Agreement. The Reserve Requirement as of the date of issuance of the 2024 Bonds will be $ , and will be funded with a portion of the proceeds of the 2024 Bonds. See "PLAN OF FINANCING —Estimated Sources and Uses of Funds."
Except as otherwise provided in the Fiscal Agent Agreement (with respect to the use of moneys in the Reserve Fund in connection with prepayments of Special Taxes, for the payment of any rebate liability due to the federal government, and the use of moneys in excess of the Reserve Requirement to pay debt service on the Bonds), all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds, but only if a deficiency still exists following any transfer from the Delinquency -23-

Maintenance Fund for that purpose. See Appendix C - "Summary of Fiscal Agent Agreement - Reserve Fund."
Whenever the balance in the Reserve Fund equals or exceeds the amount required to redeem or pay all of the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent will transfer the amount in the Reserve Fund to the Bond Fund to be used for the payment and redemption of all of the Outstanding Bonds. In the event that the amount transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund will be retained by the Authority, free of any encumbrance by the Fiscal Agent Agreement, to be used for any lawful purpose under the Act. Notwithstanding the foregoing, no amounts will be transferred from the Reserve Fund until after (i) amounts in the Reserve Fund are withdrawn for purposes of making a rebate payment to the federal government in accordance with the Fiscal Agent Agreement, and (ii) payment of any fees and expenses due to the Fiscal Agent. See Appendix C - "Summary of Fiscal Agent Agreement - Reserve Fund."
Covenant for Superior Court Foreclosure
Foreclosure Under the Act. Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Tax on the taxed parcel, the Authority may order the institution of a superior court action to foreclose the lien on the taxed parcel within specified time limits. In such an action, the real property subject to the unpaid amount of the Special Tax lien may be sold at judicial foreclosure sale.

Authority Foreclosure Covenant. The Authority has covenanted for the benefit of the Bondowners that on or about June 15 of each Fiscal Year, the Treasurer shall compare the amount of Special Tax A theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the Authority, and following such determination: (a) if, as of any June 15, the Treasurer determines that any single parcel subject to the Special Tax in the District is delinquent in the payment of Special Taxes in the aggregate amount of $7,500 or more, the Treasurer will send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner, and if the delinquency remains uncured foreclosure proceedings will be commenced by the Authority against the delinquent parcel within 90 days of the sending of such notice; and (b) if the Treasurer determines that, as of any June 15, the total amount of delinquent Special Tax for the then current Fiscal Year for the entire District (including the total of delinquencies under subsection (a) above), exceeds 5yo of the total Special Tax A due and payable for the then current Fiscal Year, the Treasurer shall promptly notify or cause to be notified property owners who are then delinquent in the payment of Special Tax A (and demand immediate payment of the delinquency), and the Authority shall commence foreclosure proceedings within 90 days after the notices of delinquency have been sent.

Notwithstanding the foregoing, the Treasurer may defer any mailing of notices of delinquency or foreclosure action if (i) the amount in the Reserve Fund is at least equal to the Reserve Requirement, and (ii) the amounts then on deposit in the Special Tax Fund and the Bond Fund are sufficient to pay the scheduled debt service due on the Bonds on the succeeding September 1 and March 1 without the need for any draw on the Reserve Fund. See Appendix C - "Summary of the Fiscal Agent Agreement."
No assurance can be given as to the time necessary to complete any foreclosure sale or that any foreclosure sale will be successful. The Authority is not required to be a bidder at any foreclosure sale and does not intend to be such a bidder. -24-

Sufficiency of Foreclosure Sale Proceeds; Foreclosure Limitations and Delays. No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment. Subject to the maximum rates, the Rate and Method is designed to generate from all non-exempt property within the District the current year's debt service, administrative expenses, and replenishment of the Reserve Fund to the Reserve Requirement, including an amount reflecting the prior year's delinquencies. However, if foreclosure proceedings are necessary, and the Reserve Fund has been depleted, there could be a delay in payments to owners of the 2024 Bonds pending prosecution of the foreclosure proceedings and receipt by the Authority of the proceeds of the foreclosure sale. See "SPECIAL RISK FACTORS — Bankruptcy Delays" and "—Proceeds of Foreclosure Sales." No assurance can be given that a foreclosure action in respect of delinquent Special Taxes will result in the collection of the Special Taxes.

The ability of the Authority to foreclose the lien of delinquent unpaid Special Taxes may be limited in certain instances and may require prior consent of the obligee in the event the property is owned by or in receivership of a Federal agency. See "SPECIAL RISK FACTORS— FDIC/Federal Government Interests in Properties."
No assurances can be given that a judicial foreclosure action, once commenced, will be completed or that it will be completed in a timely manner. If a judgment of foreclosure and order of sale is obtained, the judgment creditor (the Authority for the District) must cause a Notice of Levy to be issued. Under current law, a judgment debtor (property owner) has 120 days from the date of service of the Notice of Levy in which to redeem the property to be sold, which period may be shortened to 20 days for parcels other than those on which a dwelling unit for not more than four persons is located. If a judgment debtor fails to 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, as a result of such an action, a foreclosure sale is 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 (Section 701.680 of the California Code of Civil Procedure). The constitutionality of the aforementioned legislation, which repeals the former one-year redemption period, has not been tested; and there can be no assurance that, if tested, such legislation will be upheld.

Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus post - judgment interest and authorized costs, unless the consent of the owners of 75% of the outstanding Bonds is obtained. However, under Section 53356.6 of the Act, the Authority, as judgment creditor, is entitled to purchase any property sold at foreclosure using a "credit bid," where the Authority could submit a bid crediting all or part of the amount required to satisfy the judgment for the delinquent amount of the Special Tax. If the Authority becomes the purchaser under a credit bid, the Authority must pay the amount of its credit bid into the redemption fund established for the 2024 Bonds, but this payment may be made up to 24 months after the date of the foreclosure sale. Neither the Act nor the Fiscal Agent Agreement requires the Authority to purchase or otherwise acquire any lot or parcel of property foreclosed upon if there is no other purchaser at such sale, and the Authority has no intent to be such a purchaser.

No Teeter Plan
Collection of the Special Taxes is not subject to the "Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds," as provided for in Section 4701 et seq. -25-

of the California Revenue and Taxation Code (known as the "Teeter Plan"). Accordingly, collections of Special Taxes will reflect actual delinquencies, if any.

Investment of Moneys
Except as otherwise provided in the Fiscal Agent Agreement, all moneys in any of the funds or accounts established pursuant to the Fiscal Agent Agreement will be invested by the Fiscal Agent solely in Permitted Investments, as directed by the Authority. See Appendix C — "Summary of the Fiscal Agent Agreement" for a definition of "Permitted Investments" and for additional provisions regarding the investment of funds held under the Fiscal Agent Agreement.

Issuance of Additional Bonds
General. The Fiscal Agent Agreement authorizes the Authority to issue one or more series of "Parity Bonds" secured and payable on a parity under the Fiscal Agent Agreement with the 2024 Bonds. Subject to meeting the conditions summarized below (including that the Parity Bonds be Refunding Bonds), the Parity Bonds will be secured by a lien on the Special Tax Revenues and funds pledged for the payment of the Bonds under the Fiscal Agent Agreement on a parity with all other Bonds Outstanding under the Fiscal Agent Agreement (the Fiscal Agent Agreement defines "Bonds" as the 2024 Bonds and any future Parity Bonds).

The Authority may issue the Parity Bonds subject to the following specific conditions precedent, as set forth in the Fiscal Agent Agreement:
(A) Current Compliance. The Authority must be in compliance in all material respects on the date of issuance of the Parity Bonds with all covenants set forth in the Fiscal Agent Agreement and all Supplemental Agreements, and the principal amount of the Parity Bonds must not cause the Authority to exceed the maximum authorized indebtedness of the District under the provisions of the Act. (B) Payment Dates. The interest on the Parity Bonds must be payable on March 1 and September 1, and principal of the Parity Bonds must be payable on September 1 in any year in which principal is payable (provided that there is no requirement that any Parity Bonds pay interest on a current basis). (C) Funds and Accounts; Reserve Fund Deposit. The Supplemental Agreement providing for the issuance of such Parity Bonds may provide for the establishment of separate funds and accounts, and shall provide for a deposit to the Reserve Fund (or to a separate account created for such purpose) in an amount necessary so that the amount on deposit in the Reserve Fund (together with the amount in any such separate account), following the issuance of such Parity Bonds, is at least equal to the Reserve Requirement. (D) Refunding Bonds. The Parity Bonds must be Refunding Bonds. (E) Officer's Certificate. The Authority shall deliver to the Fiscal Agent an Officer's Certificate certifying that the conditions precedent to the issuance of such Parity Bonds set forth in paragraphs (A), (B), (C) and (D) above have been satisfied. In delivering such Officer's Certificate, the Authorized Officer that executes the same may conclusively rely upon such certificates of the Fiscal Agent, the Tax Consultant and others selected with due care, without the need for independent inquiry or certification. -26-

The term "Refunding Bonds" is defined in the Fiscal Agent Agreement as bonds issued by the Authority for the District the net proceeds of which are used to refund all or a portion of the then Outstanding Bonds; provided that the debt service on the Refunding Bonds in any Bond Year is not in excess of the debt service on the Bonds being refunded and the final maturity of the Refunding Bonds is not later than the final maturity of the Bonds being refunded.

Subordinate Bonds. Nothing in the provisions described above will prohibit the Authority from issuing bonds or otherwise incurring debt secured by a pledge of Special Tax Revenues subordinate to the pledge of the Special Tax Revenues under the Fiscal Agent Agreement.

THE DISTRICT
Location and General Description of the District
The District includes approximately 28 acres of residential land in the City currently identified as "Heirloom Farms." The District is located in the northern portion of the City. The District is bounded by Murietta Hot Springs Road, State Highway 79, Anza Road and Interstate Highway 15. Heirloom Farms is expected to include at buildout 210 attached and 111 detached single family homes with three different product types, as well as a clubhouse, community pool and childrens play area. See "THE DISTRICT —Heirloom Farms." The property in the District is being developed and the homes in the District are being constructed by the Developer (see "THE DISTRICT —The Developer"). For the current status of the development of the property in the District, see "THE DISTRICT —Heirloom Farms." The following page contains an aerial photo of the District. -27-

TEMECULA PUBLIC FINANCING AUTHORITY
COMMUNITY FACILITIES DISTRICT NO.20-01
(HEIRLOOM FARMS)
-28-

History of the District
In order to raise funds to finance the Improvements that will result in an offset of capital improvement fees levied on the homes being constructed in the District, or otherwise needed for the development of the property in the District, the Developer petitioned the Authority in February of 2021 to form the District. On February 23, 2021, the Board of Directors of the Authority adopted Resolution Nos. TPFA 2021-01 and TPFA 2021-02 of intention to form the District and to incur up to $17,000,000 of bonded indebtedness of the Authority for the District.

On March 16, 2021, the Authority entered into a Joint Community Facilities Agreement with the City related to certain of the Improvements and the Services authorized to be funded by the District but to be owned and provided, respectively, by the City for the District. On March 16, 2021 the Authority, the Developer and the School District entered into a Joint Community Facilities Agreement relating to certain public school facilities constituting a portion of the Improvements to be financed by the District but to be owned by the School District. On March 17, 2021 the Authority, the Developer and the Water District entered into a Joint Community Facilities Agreement with respect to certain of the Improvements to be financed by the District but to be owned upon completion by the Water District. The three Joint Community Facilities Agreements (collectively, the "JCFAs") effectively provide that the Developer will receive credit against capital improvement impact fees imposed by the City, the School District and the Water District, respectively, on homes being constructed by the Developer in the amount of any Bond proceeds allocated to the respective public agency for capital improvements to be designated and constructed by the respective public agency.

Following the adoption by the Board of Directors of the Authority of resolutions of intention for the District, and the execution of the three JCFAs, on April 13, 2021, the Authority held a public hearing regarding the formation of, and the issuance of bonds for, the District.

Following the public hearing, also on April 13, 2021, the Board of Directors of the Authority adopted Resolution No. TPFA 21-03 forming the District, Resolution No. TPFA 21-04 determining the necessity to issue up to $17,000,000 of special tax bonds for the District, and Resolution No. TPFA 21-05 calling a special election regarding the formation of the District and the issuance of the special tax bonds for the District.

The election was held on April 13, 2021 at which the Developer, as the then sole owner of the property in the District, voted in favor of the formation of the District, the levy of Special Tax A, Special Tax B and Special Tax C on property in the District, and the issuance by the Authority of special tax bonds for the District. On April 22, 2021, a Notice of Special Tax Lien was recorded in the Riverside County Recorder's Office against the property in the District, and on April 27, 2021 the Board of Directors of the Authority adopted Ordinance No. TPFA 2021-01 levying Special Tax A, Special Tax B and Special Tax C on the property in the District.

On February 13, 2024, the City Council held a public hearing regarding the issuance by the Authority of the 2024 Bonds. Following the public hearing, the City Council adopted a Resolution pursuant to which it found that significant public benefits will arise from the use of the proceeds of the 2024 Bonds to finance costs of the Improvements and it approved the issuance of the 2024 Bonds by the Authority. Also on February 13, 2024, the Board of Directors of the Authority adopted a Resolution authorizing the issuance of the 2024 Bonds, and approved the execution and delivery of the Fiscal Agent Agreement. The Fiscal Agent Agreement provides the terms of the 2024 Bonds.
-29-

The Improvements
As previously mentioned under the heading "PLAN OF FINANCING — Overview — Funding for Improvements," the Authority entered into the Acquisition Agreement with the Developer pursuant to which the Authority agreed to use a portion of the proceeds of the 2024 Bonds to finance costs of Improvements some of which are to be constructed by the Developer, and the Authority entered into the JCFAs to provide for the financing from 2024 Bond proceeds for Improvements that are to be constructed and owned by the City, the School District and the Water District.

The District is authorized to finance all or a portion of the costs of the following facilities:

The acquisition and construction of: streets (including paving, aggregate base, striping and traffic marking, sidewalks, curbs, gutters and driveways), including Temecula Center Drive and Ynez Road within and in the vicinity of the District; stormwater drainage systems (including storm drain lines, inlets, outlets, channels, structures, junctions, manholes, catch basins and related dewatering); street light improvements (including light fixtures, substructures, conduits and service points of connection); and street signage (including traffic, stop and street name signs).

The foregoing are to include the acquisition of any related right-of-way and other land needed for the installation of any such improvements, demolition of existing structures and site leveling needed for the installation of any such improvements, erosion control, and other appurtenances.
• The acquisition and installation of traffic signal improvements, including traffic signal interconnection and video surveillance systems, at the intersection of Ynez Road and Temecula Center Drive.
• Landscaping improvements in the public right of way along or in the vicinity of Temecula Center Drive, Date Street and Ynez Road, including related appurtenances.
• Capital improvements included in the City of Temecula's adopted Capital Improvement Program for Fiscal Years 2021-2025.
• School improvements to be designated by the School District, which may include construction of buildings, equipping of school facilities, and acquisition of support and other appurtenances with a useful life of five years or more. • Sewer system improvements to be designated by the Water District.

The Improvements include, as applicable, the acquisition of right-of-way, the costs of design, engineering and planning, the costs of any environmental or traffic studies, surveys or other reports, the cost of any required environmental mitigation and any required noise mitigation measures, landscaping and irrigation, soils testing, permits, plan check and inspection fees, insurance, legal and related overhead costs, coordination and supervision and any other costs or appurtenances related to any of the foregoing.

It is expected that, shortly after the issuance of the 2024 Bonds, amounts in the City Account, the School District Account and the Water District Account of the Improvement Fund will be transferred to the City, the School District and the Water District, respectively, to finance capital improvements to be identified by each of them, and credits against development impact -30-

fees imposed by each of them will be provided to the Developer in respect of the homes being constructed by it in the District, or rebates to the Developer will be made in respect of any such fees previously paid by the Developer.

Otherwise, the Developer estimates that the total projected costs of the Improvements eligible to be funded by the District under the Acquisition Agreement are approximately $1,470,000, and only $ of the proceeds of the 2024 Bonds to be deposited to the Acquisition Account of the Improvement Fund, and possibly amounts transferred from the Delinquency Maintenance Fund to the Acquisition Account of the Improvement Fund (see "SECURITY FOR THE 2024 BONDS —Delinquency Maintenance Fund"), will be available to pay costs of the Improvements. See "PLAN OF FINANCING —Estimated Sources and Uses of Funds." Under the Acquisition Agreement, costs of Improvements specified therein in excess of available amounts in the Acquisition Account of the Improvement Fund from the proceeds of the 2024 Bonds to be deposited therein (see "PLAN OF FINANCING —Overview — Funding for Improvements" are the responsibility of the Developer.

No assurance can be given that construction of the Improvements required to be constructed under the Acquisition Agreement or otherwise needed for the buildout of the District will be completed as currently expected, or that the costs of the Improvements will be as currently estimated.

Heirloom Farms
The property in the District includes a development known as Heirloom Farms.

Heirloom Farms, with approximately 28 gross acres, which is expected to include at buildout 321 homes, a clubhouse, community pool and childrens play area. The three product types in Heirloom Farms include Sultana with 150 three story attached townhomes, Crimson with 60 two story attached townhomes, and Valiant with 111 three story detached motor court homes.

The Developer acquired the property in the development for $18,000,000 on January 1, 2021, and recorded a final map creating the 321 parcels in the development in October of 2021.

The next page contains the site plan for the development, including the locations of the three product types in the development.
-31-

Site Plan
Crimson
T,...,
Model Porkwg
Sultana
R—d— a»
R.od—. T—
R..d.M. Th—
■ Mod.l Popp

SITE PLAN FOR THE DEVELOPMENT

TEMECWA CENTER WYE
Valiant
• Res We * One
• R.W—. Two
• R..d..<. TFi..

Mod.l Hoar
Model Pohang
NO�fM
-32-

Site development activities were commenced by the Developer in August, 2021, and home construction began on August 8, 2022. As of December 4, 2023, the date of value in the Appraisal Report, the Developer has advised that all lots are in finished or near finished condition, and that it had obtained building permits for 264 of the 321 homes to be constructed in the development.

The development has a homeowners association. According to the Developer, the base dues imposed by the homeowner's association to be paid by the homeowners are $145 per unit per month. Both Sultana and Crimson homeowners have additional homeowner's association fees (associated with a cost center specific to each project) of $135 and $131 per unit per month, respectively, which equates to a total homeowner's association fee of $280 per unit per month in Sultana and $276 per unit per month in Crimson. The total homeowner's association fee for Valiant is $145 per unit per month.

Summary of Status of Development. A summary of the status of development of the proposed 321 homes being constructed by the Developer in the District as of the December 4, 2023 date of value of the Appraisal Report (see "INTRODUCTION —Land Valuation" below and "THE DISTRICT —Property Values") is provided below, along with an update on the status of the development as of January 15, 2024.

Summary of Status of Development in the District
as of as of
December 4, 2023 January 15, 2024
lots with homes sold and conveyed to homebuyers 118 146 lots with completed homes 0 0
lots with model homes 12 12
lots with homes under construction 122 100
lots with construction not yet started 69 63
Total Lots 321 321
Status of Home Construction and Sales. The homes currently being constructed by the Developer in the District range from approximately 1,387 square feet for a Sultana townhome to approximately 2,155 square feet for a Valiant motor court home. The first conveyance of a home in Sultana occurred in April 2023, in Crimson in March 2023 and in Valiant in February 2023.

As of December 4, 2023, base sales prices for Sultana range from $489,000 to $569,000, for Crimson range from $554,000 to $579,000 and for Valiant range from $619,000 to $680,000.

The status of the three product types currently being developed by the Developer as of December 4, 2023 is as follows:

Sultana-
42 Completed homes sold and conveyed to individual home buyers 6 Models owned by the Developer
0 Completed Homes owned by the Developer
54 Homes under construction (14 in escrow)
48 Lots without any vertical home construction (12 with building permits) 150 Total planned Sultana units
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Crimson:
20 Completed homes sold and conveyed to individual home buyers 4 Models owned by the Developer
0 Completed Homes owned by the Developer
36 Homes under construction (20 in escrow)
0 Lots without any vertical home construction
60 Total planned Crimson units
Valiant:
56 Completed homes sold and conveyed to individual home buyers 2 Models owned by the Developer
0 Completed Homes owned by the Developer
32 Homes under construction (12 in escrow)
21 Lots without any vertical home construction
111 Total planned Valiant units
Between December 4, 2023 and January J 2024, the Developer completed and conveyed _ additional homes in the Sultana product line, _ additional homes in the Crimson product line and additional homes in the Valiant product line, for a total of homes conveyed to individual homeowners. As of January 2024, a total of _ building permits had been issued for homes in the District. The Developer currently expects to close out sales of the Sultana homes in April of 2025, to close out of sales of the Crimson homes in June of 2024 and to close out of sales of the Valiant homes in October of 2024.

As of December 4, 2023, the Developer had expended approximately $68,514,305 on land acquisition costs, site improvement costs, direct and indirect home construction costs, permit and impact fees, and sales and marketing costs related to its development within the District. As of December 4, 2023, the Developer anticipated expending approximately $44,211,136 in additional site improvement costs, direct and indirect home construction costs, permit and impact fees, and sales and marketing costs to complete its development within the District, with $34,002,037 of such additional cost allocated to home construction costs.

No assurance can be given that home construction and sales will be completed as currently anticipated, or that the home construction and sale plans or base prices will not change from those in effect as of December 4, 2023. The Developer may change their development plans at any time without notice. Additionally, homes sold may not result in closed escrows as sales contracts are subject to cancellation.

The Developer
The information provided in this section has been included because it may be considered relevant to an informed evaluation and analysis of the 2024 Bonds and the District. No assurance can be given, however, that the Developer will or will not retain ownership of the property within the District not yet sold to homebuyers. There may be material adverse changes in this information after the date of the Official Statement. Neither the 2024 Bonds nor any of the Special Tax are personal obligations of any property owner within the District and, in the event that any property owner defaults in the payment of its Special Tax, the Authority may proceed with judicial foreclosure but has no direct recourse to the assets of any property owner or any affiliate thereof. The 2024 Bonds are secured solely by the Special Tax Revenues and amounts on deposit in certain of the funds and accounts maintained by the Fiscal Agent under the Fiscal Agent Agreement. See "SPECIAL RISK FACTORS" for a discussion of certain of the risk factors that should be considered in evaluating the investment quality of the 2024 Bonds. The following information has been provided by the Developer. No representation is -34-

made by the Authority or the Underwriter as to the accuracy or adequacy of such information so provided.

The Developer. Meritage Homes of California, Inc., a California corporation (previously defined as the "Developer') is a subsidiary of Meritage Homes Corporation ("Meritage Homes Corporation"), a Maryland corporation. Meritage Homes Corporation is a homebuilder focused primarily on high -growth regions of the western and southern United States. Meritage Homes Corporation operates as a holding company, has no independent assets or operations, and is traded on the New York Stock Exchange ("NYSE") under the ticker symbol "MTH." Homebuilding, construction, development and sales activities are conducted through subsidiaries. As of July 1, 2023, Meritage Homes Corporation was actively selling homes in three geographic regions: West (Arizona, California and Colorado), Central (Texas) and East (Florida, Georgia, North Carolina, South Carolina and Tennessee).

Meritage Homes Corporation is subject to the informational reporting requirements of the Exchange Act, and in accordance therewith is obligated to file reports, proxy statements and other information with the SEC. Such filings set forth, among other things, certain data relative to the consolidated results of operations and financial position of Meritage Homes Corporation and its subsidiaries (e.g., see Meritage Homes Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 15, 2023, Quarterly Report on Form 10-Q for the quarterly period ending September 30, 2023 as filed with the SEC on November 1, 2023) and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023, as filed with the SEC on July 28, 2023) as of the dates described therein. The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including Meritage Homes Corporation. The address of such Internet website is www.sec.gov . All documents subsequently filed by Meritage Homes Corporation pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of Meritage Homes Corporation's annual report, quarterly reports and current reports, including any amendments, will be available from Meritage Homes Corporation's website at www.meritagehomes.com .

The foregoing Internet addresses and references to filings with the SEC are included for reference only, and the information on these Internet sites are not a part of this Official Statement and are not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on these Internet sites. Neither of the Developer nor Meritage Home Corporation is obligated to advance funds to pay for development or construction costs or to pay ad valorem property taxes or the Special Taxes, and investors should not rely on the information and financial statements contained on such internet sites in evaluating whether to buy, hold or sell the 2024 Bonds.

Financing Plan. To date, the Developer has financed its land acquisition, site development and home construction costs related to its property in the District through internally generated funds, including cash generated from its homebuilding operations. The Developer expects to use internally generated funds, including cash generated from its homebuilding operations, along with proceeds of the 2024 Bonds, to complete development of its property in the District.

Although the Developer expects to have sufficient funds available to complete the proposed development in the District, there can be no assurance that amounts necessary to fund the remaining planned development of the property within the District will be available to the Developer when needed.

Neither the Developer, nor any of its related entities, is under any legal obligation of any kind to expend funds for the development of the property in the District, or the payment of ad valorem property taxes or -35-

the Special Taxes. Any contributions by the Developer or any other entity or person to fund the costs of such development are entirely voluntary.

Impact of Economic Conditions on the Development in the District. Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which the Developer is able to complete and sell homes and demand by and the ability of individuals to purchase homes within the District. Such events and factors could include a renewed increase in inflation and interest rates, possible supply chain issues, further impacts of the COVID-19 pandemic and global market instability caused by the wars in Ukraine and in Israel. Any adverse impact of the foregoing and other economic factors on the projects in the District and the real estate market in general cannot be predicted.

Mortgage Interest Rates. Most of the purchasers of the Developer's homes finance their acquisitions with mortgage financing. As such, rising interest rates, decreased availability of mortgage financing or of certain mortgage programs, higher down payment requirements or increased monthly mortgage costs could have a negative impact on the estimated absorption rates of the Developer's planned for -sale homes in the District. Further, a combination of higher mortgage rates, delays in construction stemming from delays in the supply chain, homebuyers' inability to sell their existing homes and adverse changes in local, regional or national economic conditions, among other factors, could contribute to an increase in the Developer's rate of home order cancellations. An increase in the level of such cancellations could similarly have a negative impact on the estimated absorption rates of the Developer's planned for -sale homes in the District.

Property Values
The value of the property in the District is an important factor in determining the investment quality of the 2024 Bonds. If a property owner defaults in the payment of the Special Tax A, the Authority's primary remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax A. The Special Tax A is not a personal obligation of the owners of the property. A variety of economic, political, and natural occurrences incapable of being accurately predicted can affect property values. See "SPECIAL RISK FACTORS — Property Value."
Integra Realty Resources, Sacramento, California (the "Appraiser") has prepared the Appraisal Report dated January 22, 2024 estimating the market value of the 321 lots within the District that are subject to the Special Tax A securing the 2024 Bonds (the "Appraised Property"). The Appraiser concluded in the Appraisal Report that the market value of the Appraised Property as of December 4, 2023 was $106,722,000, including $70,060,000 allocable to the 118 homes in the District sold to homeowners, and $36,662,000 to the 203 properties owned by the Developer, subject to various assumptions described in the Appraisal Report. See "THE DISTRICT —Property Values." The appraised value of $106,722,000 is approximately 8.56* times the $12,470,000* initial principal amount of the 2024 Bonds.

The Appraisal Report does not take into account possible future liens or indebtedness which may be imposed by the City or by other public entities. The Authority has not covenanted, and in many instances does not have the legal ability, to restrict other entities from * Preliminary, subject to change.
-36-

imposing indebtedness, which may be secured by a lien on the Taxable Property in the District which is on a parity with the Special Tax. See "THE DISTRICT — Direct and Overlapping Governmental Obligations" and "SPECIAL RISK FACTORS — Parity Taxes and Special Assessments." A number of economic, political, and natural occurrences may adversely affect the value of the property as expressed in the Appraisal Report. See "SPECIAL RISK FACTORS."
The value of individual parcels of the Taxable Property varies significantly, 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 "THE DISTRICT —Value -to -District Lien Ratios," "SPECIAL RISK FACTORS —Property Value" and "SPECIAL RISK FACTORS — Insufficiency of Special Taxes."
Land Use Distribution
The following Table 2 shows the Tax Zones and the distribution of land use classes of the Taxable Property within the District based on the Rate and Method, the appraised value of the 321 County Assessor's parcels in the District as of December 4, 2023, the estimated Special Tax levy for fiscal year 2024-25 for each land use class of each Tax Zone, the percentage of the overall Special Tax levy by land use class and the aggregate value -to -lien ratio for the respective land use classes.
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Table 2
Temecula Public Financing Authority
Community Facilities District No. 20-01
(Heirloom Farms)
Projected Fiscal Year 2024-25
Special Tax Levy for Taxable Property by Tax Zone and Land Use Percent of
Projected
Total
Total Fiscal
Projected
Year 2024-25
FY 2024-25
Aggregate
No. of
Appraised
Special Tax
Special
2024
Value -to -
Land Use
Residential Floor Area
Parcels
Value0)
Levy(2),(3)
Taxes(3)
Bonds(3)
Lien(3)
Tax Zone 1
Residential Property
Less than 1,801 sq. ft.
29 $14,219,351
$87,096

11.39%
$1,420,264

10.01:1
Residential Property
1,801 sq. ft. to 2,000 sq. ft.
31 14,607,468
96,457

12.61 1,572,900

9.29:1
Residential Property
Greater than 2,000 sq. ft.
30 14,981,429
96,591

12.63 1,575,084

9.51:1
Approved Property
N/A
21 3,303,757
42,831

5.60 698,439

4.73:1
Tax Zone 2
Residential Property
Less than 1,551 sq. ft.
38 10,796,574
$82,610

10.807o
$1,347,096

8.01:1
Residential Property
1,551 sq. ft. to 1,750 sq. ft.
38 12,698,431
90,440

11.83 1,474,782

8.61:1
Residential Property
Greater than 1,750 sq. ft.
38 12,146,574
94,355

12.34 1,538,626

7.89:1
Approved Property
N/A
36 4,335,012
29,833

3.90 486,485

8.91:1
Tax Zone 3
Residential Property
Less than 1,601 sq. ft.
30 9,576,702
$70,318

9.20%
$1,146,661

8.35:1
Residential Property
1,601 sq. ft. or Greater
30 10,056,702
74,182

9.70 1,209,664

8.31:1
Totals
321
$106,722,000
$764,713
100.0070
$12,470,000

8.56:1
(1) Assessed/Appraised valuation as of December 4, 2023, as reported in the Appraisal
Report.
(2) Based upon
debt service due on the 2024 Bonds and includes priority administration in the amount of $30,000. (3) Preliminary,
subject to change.

Source: Webb Municipal Finance, LLC
Value -to -Lien Ratios
General Information Regarding Value -to -Lien Ratios. The value -to -lien ratio on bonds secured by special taxes will generally vary over the life of those bonds as a result of changes in the value of the property that is security for the special taxes and the principal amount of the bonds.

In comparing the appraised value of the real property within the District and the principal amount of the 2024 Bonds, it should be noted that an individual parcel may only be foreclosed upon to pay delinquent installments of the Special Taxes attributable to that parcel.

The principal amount of the 2024 Bonds is not allocated among the parcels within the District based on their appraised or assessed values; rather, the total Special Tax A will be allocated among the parcels within the District according to the Rate and Method.

Economic and other factors beyond the property owners' control, such as economic recession, deflation of land values, financial difficulty or bankruptcy by one or more property owners, or the complete or partial destruction of Taxable Property caused by, among other possibilities, earthquake, flood, fire or other natural disaster, could cause a reduction in the assessed value within the District. See "SPECIAL RISK FACTORS —Property Value" and "Bankruptcy Delays."
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Assessed Valuation. The valuation of real property in the Authority for ad valorem tax purposes is established by the County Assessor. Assessed valuations are reported at 100% of the full value of the property, as defined in Article XIIIA of the California Constitution. Article XIIIA of the California Constitution defines "full cash value" as the appraised value as of March 1, 1975, plus adjustments not to exceed 2% per year to reflect inflation, and requires assessment of "full cash value" upon change of ownership or new construction. Because the construction of homes in the District is ongoing, any assessed valuations presented in this Official Statement may not necessarily be representative of the actual market value of the property in the District as of any particular date.

Value -to -Lien Ratio Distribution. Table 3 below shows the projected fiscal year 2023-24 Special Tax levy, an allocation of the aggregate appraised value of the property by property owner, the allocation of the principal amount of the 2024 Bonds, and the estimated debt to allocated appraised value ratios for the parcels in the District, all based on the status of the parcels in the District as of December 4, 2023. See "THE DISTRICT —Heirloom Farms," and "— The Developer" for more information regarding the status of ownership and development of parcels in the District as of December 4, 2023.

Table 3
Temecula Public Financing Authority
Community Facilities District No. 20-01
(Heirloom Farms)
Estimated Value to Lien Ratios by Development Status and Property Owner Percent of
Projected
Projected
Fiscal Year
Fiscal Year
Percent of
2024-25
2024-25
Appraised
Maximum
Maximum
Special Tax
Special Tax
Appraised
2024
Value -to -
Property Owner(')
Parcels
Special Tax
Special Tax
Levy(2).(4)
Levy(4)
Value
BondSQ,(4)
Lien(4)
Developed Individual
118
$344,367

40.51%
$321,031

41.98%
$70,060,000
$5,234,990

13.38:1
Developed Meritage Homes
146
385,077

45.30 371,017

48.52 29,023,231
6,050,086

4.80:1
Subtotal Developed
264
$729,444

85.81%
$692,048

90.50%
$99,083,231
$11,285,076

8.78:1
Approved Meritage Homes
57 $120,596

14.19%
$72,664

9.50%
$7,638,769
$1,184,924

6.45:1
Subtotal Approved
57 $120,596

14.19%
$72,664

9.50%
$7,638,769
$1,184,924

6.45:1
Totals
321
$850,040
100.00%
$764,713
100.00%
$106,722,000
$12,470,000

8.56:1
(1) Based upon ownership information and development status as of December 4, 2023. (2) Based upon the debt service requirement of the 2024 Bonds and includes priority administration in the amount of $30,000.
(3) Allocated based on the projected Fiscal Year 2024-25 Special Tax Levy. (4) Preliminary, subject to change.

Source: Webb Municipal Finance, LLC
Of the 57 parcels of Approved Property, as of December 4, 2023, 36 are to be developed with the Sultana product and 21 with the Valiant product. See "THE DISTRICT —Heirloom Farms — Summary of Development" and "—Status of Home Construction and Sales" for more information regarding the developments in the District.

The following Table 4 sets forth the distribution of appraised value -to -District lien ratios among the 321 parcels of Taxable Property based on the parcels that existed, and their appraised values, as of December 4, 2023, the projected fiscal year 2024-25 Special Tax levy and the principal amount of the 2024 Bonds.
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Table 4
Temecula Public Financing Authority
CFD No. 20-01 (Heirloom Farms)
Assessed Value to Lien Ratios
Percent of
Projected Total Projected
Appraised No. of Appraised FY 2024-25 FY 2024-25 2024 Aggregate Value to Lien Parcels Value(') Levv(5) Levv(5) Bonds(2),(5) Value-to-Lien(s) Less than 4.00:1(3) 63 $10,638,158 $175,110 22.9070 $2,855,480 3.73:1 Between 4.00:1 and 7.99:1 98 15,681,332 214,632 28.07 3,499,961 4.48:1 Between 8.00:1 and 11.99:1 30 3,612,510 24,117 3.15 393,266 9.19:1 Greater than 11.99:10) 130 76,790,000 350,854 45.88 5,721,292 13.42:1 Total 321 $106,722,000 $764,713 100.0070 $12,470,000 8.56:1 (1) Appraised valuation as of December 4, 2023, as reported in the Appraisal. (2) Allocation is based upon the projected FY 2024-25 Special Tax Levy and includes $30,000 in priority administration expenses.
(3) Lowest estimated Value -to -Lien is 2.97:1.
(4) Highest estimated Value -to -Lien is 14.38:1.
(5) Preliminary, subject to change.

Source: Webb Municipal Finance, LLC
All of the parcels with less than a 4.00:1 Appraised Value to Lien ratio are categorized as Developed Property under the Rate and Method (see "SECURITY FOR THE 2024 BONDS — Summary of Rate and Method — Classification of Property"), but may have had very little vertical construction underway as of December 4, 2023.

Special Tax Delinquencies
The Special Tax A was first levied on property in the District in Fiscal Year 2023-24, with the first installment of Special Tax A delinquent if not paid by December 11, 2023. As of December 11, 2023, of the total $192,436.24 of Special Tax A delinquent if not paid by December 11, 2023, 37 parcels were delinquent in payment of an aggregate of $45,432.59 of Special Tax A, or a 23.61% delinquency rate. As of February 12, 2024, of the 37 previously delinquent parcels the owners of parcels had cured the delinquencies, leaving an aggregate of $ in delinquent Special Tax A payments or a % delinquency rate.

According to the Developer, the current delinquencies appear to all relate to homes conveyed by the Developer to individual homeowners between April 6, 2023 and September 29, 2023. During that same time period, the Developer closed a total of 90 homes.

Typically, the homeowner is credited in escrow for the Developer's share of an estimated or actual annual real property tax bill based upon the portion of the year the particular assessor's parcel was owned by the Developer. However, depending upon when a home is conveyed and how long it takes the County to reflect the change of ownership on the tax roll, the County may send the property tax bill to the prior owner and not the new homeowner. The specific cause of each of the current delinquencies cannot be determined. However, in the case of the 37 delinquent parcels in the District as of December 11, 2023, the Developer has determined 31 of the Fiscal Year 2023 24 property tax bills were sent by the County to the Developer's corporate office in Arizona prior to November 1, 2023 and they were not then forwarded to the applicable homeowners. It has not been the Developer's common practice to forward property tax bills to the new homeowners in any of its new neighborhoods in Riverside County and the Developer has indicated it has not seen as many delinquencies in the other districts as have been experienced with respect to the December 11, 2023 payments in this District. The Developer has now mailed notices to each homeowner whose assessor's parcel appears to be delinquent with a copy of the parcel's real property tax bill obtained from the County website. The notice reminds -40-

the homeowner of the need to pay the bill when due and reminds them to contact their mortgagor to make the required payment if the property taxes have been impounded by the mortgagor. The Developer has also indicated it will adopt a post closing procedure for future home closings in this District to forward property tax bills they receive from the County relating to closed homes to the homeowner with a reminder to pay the bill on or prior to the delinquency date of each installment.

Direct and Overlapping Governmental Obligations
Taxes, Charges and Assessments. The base ad valorem secured property tax rate on property in the District is 1.00% (including ad valorem tax overrides). Property in the District is also subject, or will be subject, to certain annual charges and assessments (which are billed to property owners on a semi-annual basis). See "THE DISTRICT —Sample Tax Bill" below for a list of public agencies that currently levy annual charges and assessments on property in the District.

Overlapping Public Debt. The District is located within the boundaries of certain local agencies, other than the Authority, that provide public services and assess property taxes, assessments, special taxes and other charges on the property in the District. Some of these local agencies have outstanding debt.

The current and estimated direct and overlapping obligations affecting the property in the District are shown in the following Table 5. The table was prepared by the Special Tax Consultant and is included for general information purposes only. Neither the Authority nor the Underwriter has reviewed this report for completeness or accuracy and they make no representation in connection therewith.
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Table 5
Temecula Public Financing Authority
Community Facilities District No. 20-01
(Heirloom Farms)
Direct and Overlapping Bonded Debt
I. APPRAISED VALUE
Appraised Valuation(1)
II. LAND SECURED BOND INDEBTEDNESS
Total
Parcels
Outstanding Direct and Overlapping Bonded Debt Type Levied TPFA CFD No. 20-01 (Heirloom Farms) CFD 321

TOTAL OUTSTANDING LAND SECURED BONDED DEBT
Authorized and Unissued Direct and Overlapping Bonded Debt Type The District CFD

TOTAL UNISSUED LAND SECURED INDEBTEDNESS

TOTAL OUTSTANDING AND UNISSUED LAND SECURED
INDEBTEDNESS(4)
III. GENERAL OBLIGATION BOND INDEBTEDNESS
Outstanding Direct and Overlapping Bonded Debt
Type
Temecula Valley Unified School B & I (0.02389%)
GO
MT San Jacinto Comm College (0.01320%)
GO
Metropolitan Water East (0.00350%)
GO
EMWD Improvement District U-8 (0.00150%)
GO
RCWD Rancho Division (0.30000%)(6)
REV

TOTAL OUTSTANDING GENERAL OBLIGATION BONDED
DEBT
Authorized and Unissued Direct and Overlapping Indebtedness Type
Temecula Valley Unified School B & I (0.02389%)
GO
MT San Jacinto Comm College (0.01320%)
GO
Metropolitan Water East (0.00350%)
GO
EMWD Improvement District U-8 (0.00150%)
GO
RCWD Rancho Division (0.30000%)(6)
REV

TOTAL UNISSUED GENERAL OBLIGATION INDEBTEDNESS

TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION
INDEBTEDNESS(4)

TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING

BONDED DEBT

TOTAL OF ALL OUTSTANDING AND UNISSUED DIRECT AND

OVERLAPPING INDEBTEDNESS
IV. Ratios to Appraised Valuation
Outstanding Land Secured Bonded Debt
Outstanding Direct and Overlapping Bonded Debt
Issued Outstanding Applicable
$12,470,000 $12,470,000(2),(7) 100.000%
$106,722,000
Amount
Applicable
$12,470,000(7)
$12,470,000
Total
Parcels % Amount
Levied Authorized Unissued Applicable Applicable
321 $17,000,000 $0(3) 100.000% $0
$0
$12,470,000(7)
Total
Parcels
%
Amount
Levied
Issued
Outstanding
Applicable
Applicable
321
$1727747,035
$159,434,716

0.056480%
$90,049
321
295,000,000
242,210,000

0.013549
32,817
321
850,000,000
19,215,000

0.000456
88 321
16,000,000
2,934,000

0.077787
2,282
321
320,035,000
239,189,998

0.073017
174,649
$299,885
Total
Parcels
%
Amount
Levied
Authorized
Unissued
Applicable
Applicable
321
$230,000,000
$57,252,965

0.056480%
$32,336
321
295,000,000
0 0.013549
0 321
850,000,000
0 0.000456
0 321
16,000,000
0 0.077787
0 321
320,035,000
0 0.073017
0 $32,336
$332,221

8.56:1(7)

8.36:1(7)
$12,769,885(7)
$12,802,221(7)
(1) Appraised valuation as of December 4, 2023, as reported in the Appraisal Report. (2) Amount Outstanding is equal to the initial par amount of the 2024 Bonds. (3) Additional bonds may be issued for refunding purposes only. (4) Additional bonded debt or available bond authorization may exist but is not shown because a tax was not levied for Fiscal Year 2023-24.
(5) Percentage applicable determined by Fiscal Year 2023-24 Equalized Roll Assessed Value information. (6) RCWD Rancho Division is assessed at 0.30000% of land assessed value only. (7) Preliminary, subject to change.

Source: Webb Municipal Finance, LLC
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Sample Tax Bill
Table 6 below provides, for an average parcel of Taxable Property under the Rate and Method, the expected property tax bill that would be received by an owner of the property for fiscal year 2024-25, based on the projected Special Tax levy for that fiscal year.

Table 6
Temecula Public Financing Authority
CFD No. 20-01 (Heirloom Farms)
Average Fiscal Year 2024-25 Tax Obligation(')
For Individually -Owned Parcels of Developed Property
Average Home Value(2) $593,729
Ad Valorem Property Taxes:

Basic Levy (1.0000%) $5,937.29
Temecula Valley Unified School B & I (0.02389%) 141.84
MT San Jacinto Comm College (0.01320%) 78.37
Metropolitan Water East (0.00350%) 20.78
EMWD Improvement District U-8 (0.00150%) 8.91
RCWD Rancho Division (0.30000%)(3) 445.30
Total General Property Taxes $6,632.49
Assessment, Special Taxes & Parcel Charges:

EMWD Infrastructure Availability Charge
$11.60
Flood Control Stormwater/Cleanwater

3.60 Temecula Parks/Lighting Services

74.44 Temecula Residential Street Lights

25.68 Temecula Trash/Recycling
356.24
TPFA CFD 01-02 Harveston Services
115.18
MWD Standby East

6.94 Temecula Perimeter Landscaping Zone 24
100.00
TPFA CFD No. 20-01 Services(4)
540.50
TPFA CFD No. 20-01 Facilities(4)
2,720.61
Total Assessment Charges
$3,954.79
Average Total Property Tax
$10,587.27
Average Effective Tax Rate

1.78%
(1) Average fiscal year 2024-25 tax rates based upon fiscal year 2024-25 Overlapping Taxes and Assessment Rates. (2) Average Projected Home Value is based upon average Appraised Values for parcels of Developed Property. (3) Rancho Water Rancho Division is assessed at 0.30000% of land assessed value only. (4) Reflects average projected fiscal year 2024-25 District Special Tax A and Special Tax B for parcels of Developed Property.

Source: Webb Municipal Finance, LLC

THE AUTHORITY
The Temecula Public Financing Authority was established pursuant to a Joint Exercise of Powers Agreement, dated April 10, 2001 (the "JPA Agreement"), by and between the City and the Agency. The JPA was entered into pursuant to the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California. The Authority was formed for the primary purpose of assisting in the financing and refinancing of public capital improvements in the City. As of May 1, 2016, the JPA Agreement was amended to provide for the withdrawal of the Successor Agency to the Agency -43-

as a member of the Authority, and to add the Temecula Community Services District and the Temecula Housing Authority as members of the Authority.

The Authority is administered by a five -member Board of Directors, which currently consists of the members of the City Council of the City. The Authority has no independent staff.

The Executive Director of the Authority is the City Manager of the City, and the Treasurer of the Authority is the City's Chief Financial Officer. The Executive Director administers the day-to- day affairs of the Authority, and the Treasurer has custody of all money of the Authority from whatever source.

SPECIAL RISK FACTORS
The following is a description of certain risk factors affecting the District, the property owners in the District, the parcels subject to the levy of Special Taxes and the payment of and security for the 2024 Bonds. The following discussion of risks is not meant to be a complete list of the risks associated with the purchase of the 2024 Bonds and does not necessarily reflect the relative importance of the various risks.

Potential investors are advised to consider the following factors along with all other information in this Official Statement in evaluating the investment quality of the 2024 Bonds. There can be no assurance that other risk factors will not become material in the future.

No General Obligation of the Authority or the District
The Authority's obligations under the 2024 Bonds and under the Fiscal Agent Agreement are limited obligations of the Authority on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and amounts in the Special Tax Fund, the Bond Fund and the Reserve Fund. The 2024 Bonds are neither general or special obligations of the Authority nor general obligations of the District, but are limited obligations of the Authority for the District payable solely from the revenues and funds pledged therefor and under the Fiscal Agent Agreement. None of the faith and credit of the District, the Authority or the State of California or of any of their respective political subdivisions is pledged to the payment of the 2024 Bonds.

Property Value
The value of land within the District is a critical factor in determining the investment quality of the 2024 Bonds. If a landowner defaults in the payment of the Special Tax, the only legal remedy is the institution of a superior court action to foreclose on the delinquent Taxable Property in an attempt to obtain funds with which to pay the Special Tax.

The value of the taxable parcels in the District could be adversely affected by economic factors beyond the Authority's control, 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 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, wildfire, earthquakes and floods), which may result in uninsured losses. See "SPECIAL TAX FACTORS —Natural Disasters." No assurances can be given that the real property subject to a judicial foreclosure sale 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 Authority to cause such an action to be -44-

commenced and diligently pursued to completion, the Act does not specify any obligation of the Authority 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. The Authority is not obligated and does not expect to be a bidder at any such foreclosure sale. See "SPECIAL TAX FACTORS —Proceeds of Foreclosure Sale."
Concentration of Ownership
As of December 4, 2023, the Developer owned 203 of the 321 parcels in the District not yet with completed sales to homebuyers. See "THE DISTRICT —The Developer." The lack of diversity in the obligation to pay the Special Tax represents a significant risk to the owners of the 2024 Bonds. Failure of the Developer to pay the annual Special Tax A when due could result in a default in payments of the principal of, and interest on, the 2024 Bonds. See "SPECIAL RISK FACTORS —Insufficiency of Special Tax Revenues" below.

Government Approvals
Development within the District is contingent upon the completion, and acceptance by various public agencies, of infrastructure improvements, as well as the issuance by the City of building and other ministerial permits for homes to be constructed in the District. The failure to commence and complete the required infrastructure improvements and to obtain any such permits in a timely manner could adversely affect land development within the District.

Payment of the Special Tax is not a Personal Obligation The owners of the parcels in the District are not personally obligated to pay the Special Tax A. Rather, the Special Tax is an obligation that is secured only by a lien against the parcels on which it is levied. If the value of the taxable parcels is not sufficient to secure fully the payment of the Special Tax A, the Authority has no recourse against the property owners.

FDIC/Federal Government Interests in Properties
General. The ability of the District to foreclose the lien of delinquent unpaid Special Tax A 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 Tax A within the District but does not pay taxes and assessments levied on the parcel (including Special Tax A), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. -45-

Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special 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.

FDIC. In the event that any financial institution making any loan which is secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property by the FDIC, then the ability of the District to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Tax A 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 assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Act and a rate and method of apportionment 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 has issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from special taxes levied pursuant to the Act.

The Authority 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 ownership interest, although prohibiting the lien of the Special Taxes to be foreclosed out 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 Delinquency Maintenance Fund and, if fully depleted, a draw on the Reserve Fund and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the 2024 Bonds.
-46-

Exempt Properties
Certain properties are exempt from the Special Tax A in accordance with the Rate and Method. In addition, the Act provides that properties or entities of the state, federal or local government are exempt from the Special Tax A; provided, however, that property within the District acquired by a public entity through a negotiated transaction, or by gift or devise, that is not otherwise exempt from the Special Tax A, will continue to be subject to the Special Tax A. It is possible that property acquired by a public entity following a tax sale or foreclosure based upon failure to pay taxes could become exempt from the Special Tax A. In addition, the Act provides that if property subject to the Special Tax A is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax A with respect to that property, for outstanding Bonds only, 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.

In particular, insofar as the Act requires payment of the Special Tax A by a federal entity acquiring property within the District, it may be unconstitutional (see "SPECIAL RISK FACTORS —FDIC / Federal Government Interests in Properties"). If for any reason property within the District becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal government or another public agency, subject to the limitation of the Maximum Special Tax A, the Special Tax A will be reallocated to the remaining taxable properties within the District. This would result in the owners of such property paying a greater amount of the Special Tax A and could have an adverse impact upon the timely payment of the Special Tax A. Moreover, if a substantial portion of land within the District becomes exempt from the Special Tax A because of public ownership, or otherwise, the maximum rate that could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the 2024 Bonds when due and a default would occur with respect to the payment of such principal and interest.

Parity Taxes and Special Assessments
The Special Taxes and any penalties thereon will constitute liens against the taxable parcels in the District until they are paid. Such lien is on a parity with all special taxes and special assessments levied by other agencies and is coequal to and independent of the lien for general property taxes regardless of when they are imposed upon the taxable parcel. The Special Tax B, not pledged to the payment of the 2024 Bonds, is collected with, and secured by the same lien that secures the payment of, the Special Tax A. The Special Taxes have priority over all existing and future private liens imposed on the property. The Authority, however, has no control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the taxable parcels within the District subject to the levy of Special Tax A. In addition, the landowners within the District may, without the consent or knowledge of the District, petition other public agencies to issue public indebtedness secured by special taxes or assessments, and any such special taxes or assessments may have a lien on such property on a parity with the Special Tax A. The imposition of additional indebtedness could reduce the willingness and the ability of the property owners within the District to pay the Special Tax A when due. See "THE DISTRICT —Direct and Overlapping Governmental Obligations."
Insufficiency of Special Taxes
In order to pay debt service on the 2024 Bonds, it is necessary that the Special Tax A levied against taxable parcels within the District be paid in a timely manner. The Authority has established the Reserve Fund in an amount equal to the Reserve Requirement to pay debt -47-

service on the Bonds to the extent Special Taxes are not paid on time and other funds are not available. See "SECURITY FOR THE 2024 BONDS —Reserve Fund" and Appendix C — "Summary of the Fiscal Agent Agreement —Reserve Fund." Under the Fiscal Agent Agreement, the Authority has covenanted to maintain in the Reserve Fund an amount equal to the Reserve Requirement; subject, however, to the limitations that (i) the Authority may not levy the Special Tax A in any fiscal year at a rate in excess of the Maximum Special Tax A rates permitted under the Rate and Method and (ii) per the Act, under no circumstances will the Special Tax A levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within the District. See "SECURITY FOR THE 2024 BONDS —Summary of Rate and Method — Special Tax Formula — Calculation of Annual Special Taxes." Consequently, if a delinquency occurs, the Authority may be unable to replenish the Delinquency Maintenance Fund to the DMF Requirement and the Reserve Fund to the Reserve Requirement due to the limitation of the Maximum Special Tax A rates. If such defaults were to continue in successive years, the Delinquency Maintenance Fund and the Reserve Fund could be depleted and a default on the Bonds would occur if proceeds of a foreclosure sale did not yield a sufficient amount to pay the delinquent Special Taxes.

The Authority has made certain covenants regarding the institution of foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the Bonds. See "SECURITY FOR THE 2024 BONDS —Covenant for Superior Court Foreclosure." If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of delinquent Special Taxes to protect its security interest.

Tax Delinquencies
Under provisions of the Act, the Special Tax A, from which funds necessary for the payment of principal of, and interest on, the 2024 Bonds are derived, are being billed to the taxable parcels within the District on the regular property tax bills sent to owners of the parcels.

Such Special Tax A installments are due and payable, and bear the same penalties and interest for non-payment, as do regular property tax installments. Special Tax A installment payments cannot be made separately from Special Tax B and property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax payments and Special Tax A installment payments in the future. See "SECURITY FOR THE 2024 BONDS —Reserve Fund" and "—Covenant for Superior Court Foreclosure" for a discussion of the provisions which apply, and procedures which the District is obligated to follow under the Fiscal Agent Agreement, in the event of delinquency in the payment of Special Tax A installments. See also "THE DISTRICT —Special Tax Delinquencies" for historical Special Tax delinquency history.

Also, as noted under "SECURITY FOR THE 2024 BONDS —Summary of Rate and Method," the Act provides that under no circumstances will the Special Tax A levied against any Parcel used as a private residence be increased as a consequence of delinquency or default by the owner of any other Parcel or Parcels within the District by more than ten percent (10%) per Fiscal Year.

Bankruptcy Delays
The payment of the Special Tax and the ability of the Authority to commence a superior court action to foreclose the lien of a delinquent unpaid Special Tax A, as discussed in "SECURITY FOR THE 2024 BONDS —Covenant for Superior Court Foreclosure," may be -48-

limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State of California relating to judicial foreclosure. Legal opinions to be delivered concurrently with the delivery of the 2024 Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Although bankruptcy proceedings would not cause the Special Tax A to become extinguished, bankruptcy of a property owner or any other person claiming an interest in the property could result in a delay in superior court foreclosure proceedings and could result in the possibility of Special Tax A installments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the 2024 Bonds.

Proceeds of Foreclosure Sales
Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of Special Tax A, the Board of Directors, as the legislative body of the District, may order that the Special Tax A be collected by a superior court action to foreclose the lien within specified time limits. The Authority has covenanted in the Fiscal Agent Agreement that it will, under certain circumstances, commence such a foreclosure action. See "SECURITY FOR THE 2024 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 Tax A 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 Authority to cause such an action to be commenced and diligently pursued to completion, the Act does not specify any obligation of the Authority 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 Authority 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 A 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 2024 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 Authority, 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 Developer or any other owner of a significant number of the taxable parcels in the District could -49-

cause a delay, reduction or elimination in the flow of Special Tax Revenues to the Fiscal Agent.

See "SPECIAL RISK FACTORS —Bankruptcy Delays."
Natural Disasters
The value of the Taxable Property 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 Taxable Property and the continued habitability and enjoyment of such private improvements. Such occurrences include, without limitation, wildfire, earthquakes and floods. One or more of such 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, the value of the Taxable Property may well depreciate or disappear.

Wildfires
In early September 2022, an almost 24,000 acre fire, the Fairview fire, came within 10 miles of the boundary of the District. Heavy rain and thunderstorms that occurred four days after the start of the fire benefitted firefighters in extinguishing the fire. While some areas were evacuated for a short period, there were no evacuations of City residents.

Otherwise, there were two other wildfires in the last four years, the Chaparral fire in 2021 and the Tenaja fire in 2019, in the general area neither of which affected property in the City. Both fires were over ten miles from the City boundary, and the District is located on the other side of the City. There have also been recent wildfires in the County of San Diego, but none have crossed into Riverside County or had any impact on property in the City.

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

The Authority has not independently verified, but is not aware of, the presence of any hazardous substances within the District.

Disclosure to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax A, even if the value of the property is sufficient to justify payment, may be affected by whether or not the owner was given due notice of the Special Tax A authorization at the time the owner purchased the parcel, was informed of the amount of the Special Tax A on the parcel should the Special -50-

Tax A be levied at the maximum tax rate and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The Authority has caused a notice of the Special Taxes to be recorded in the Office of the Riverside County Recorder against the parcels in the District. Although title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation when purchasing a property within the District or lending money thereon, as applicable.

California Civil Code Section 1102.6b requires that, in the case of transfers, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax A, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax A when due.

Potential Early Redemption of 2024 Bonds from Special Tax Prepayments Property owners within the District are permitted to prepay their Special Tax A in full or in part at any time. Any such prepayments will result in a mandatory redemption of 2024 Bonds on any date for which timely notice may be given under the Fiscal Agent Agreement following the receipt of the Special Tax A prepayment. Any resulting redemption of 2024 Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such 2024 Bonds. The Authority cannot predict whether and if so when Special Tax A prepayments will occur in the future. See "THE 2024 BONDS - Redemption - Mandatory Redemption from Special Tax Prepayments."
Cybersecurity
The City, the employees of which conduct the operations of the Authority including those related to the District, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As a recipient and provider of personal, private, or sensitive information, the City is subject to multiple cyber threats including, but not limited to, hacking, viruses, malware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City's digital systems for the purposes of misappropriating assets or information or causing operational disruption and damage. No assurance can be given that the efforts of the City to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City or the Authority, or the administration of the District and the Bonds. The Authority is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes and the Fiscal Agent. No assurance can be given that the City, the Authority and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.

Public Health Emergencies
The COVID-19 Pandemic commenced in approximately March 2020 and resulted in a global public health crisis that was fluid and unpredictable with unknown financial and economic impacts. The health emergency and related declarations have ceased, although investors continue to be cautioned that the Authority cannot predict the full impacts that the COVID-19 Pandemic may have had either directly or indirectly on the development and sales of homes in the District. Further, there could be future outbreaks of other COVID-19 variants or -51-

other public health emergencies that could have material adverse effects on the development and sales of homes in the District.

No prediction can be made with respect to possible future COVID-19 outbreaks and related public health and governmental authorities' orders and actions. Such effects, if and as they arise, could have a material adverse effect on the ability to sell lots and develop the homes in the District as planned, and no assurance can be provided that will be able to (a) complete in whole or in any part, or within any particular time, the construction of homes within the District; (b) avoid additional material increases in development costs or delays resulting from work stoppages, reduced attendance of workers, shortages or delays in the delivery of building materials, and / or delays in obtaining necessary inspections and approvals; or (c) sell homes, and close home sales, due to in each case to public health or governmental restrictions, further spread of COVID-19, an economic downturn driven by the pandemic, or otherwise.

No Acceleration Provision
The 2024 Bonds and the Fiscal Agent Agreement do not contain a provision allowing for the acceleration of the 2024 Bonds in the event of a payment default or other default under the terms of the 2024 Bonds or the Fiscal Agent Agreement or in the event interest on the 2024 Bonds becomes included in gross income for federal income tax purposes.

Taxability Risk
As discussed herein under the caption "TAX MATTERS," interest on the 2024 Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the 2024 Bonds were issued, as a result of future acts or omissions of the Authority in violation of its covenants in the Fiscal Agent Agreement. There is no provision in the 2024 Bonds or the Fiscal Agent Agreement for special redemption or acceleration or for the payment of additional interest should such an event of taxability occur, and the 2024 Bonds will remain outstanding until maturity or until redeemed under one of the other redemption provisions contained in the Fiscal Agent Agreement.

In addition, as discussed under the caption "TAX MATTERS," Congress has considered in the past, is currently considering and may consider in the future, legislative proposals, including some that carry retroactive effective dates, that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the 2024 Bonds. Prospective purchasers of the 2024 Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. The Authority can provide no assurance that federal tax law will not change while the 2024 Bonds are outstanding or that any such changes will not adversely affect the exclusion of interest on the 2024 Bonds from gross income for federal income tax purposes. If the exclusion of interest on the 2024 Bonds from gross income for federal income tax purposes were amended or eliminated, it is likely that the market price for the 2024 Bonds would be adversely impacted.

Enforceability of Remedies
The remedies available to the Fiscal Agent and the registered owners of the 2024 Bonds upon a default under the Fiscal Agent 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 2024 Bonds will be qualified to the extent that the enforceability of the legal documents with respect to the 2024 Bonds is -52-

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.

No Secondary Market
No representation is made concerning any secondary market for the 2024 Bonds. There can be no assurance that any secondary market will develop for the 2024 Bonds. Investors should understand the long-term and economic aspects of an investment in the 2024 Bonds and should assume that they will have to bear the economic risks of their investment to maturity.

An investment in the 2024 Bonds may be unsuitable for any investor not able to hold the 2024 Bonds to maturity.

Proposition 218
An initiative measure entitled 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." Provisions of the Initiative have been and will continue to be interpreted by the courts. The Initiative could potentially impact the Special Taxes otherwise available to the District to pay the principal of and interest on the 2024 Bonds as described below.

Among other things, Section 3 of Article XIIIC states, "...the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure, which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax.

However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, the Governor of the State signed a bill into law 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 Article XIIIC 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 2024 Bonds. -53-

It may be possible, however, for voters or the District or the Board of Directors of the Authority acting as the legislative body of the District to reduce the Special Tax A in a manner that does not interfere with the timely repayment of the 2024 Bonds, but which does reduce the maximum amount of Special Tax A 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 Tax A in amounts greater than the amount necessary for the timely retirement of the 2024 Bonds.

Therefore, no assurance can be given with respect to the levy of Special Tax A for Administrative Expenses (as defined in the Fiscal Agent Agreement). Nevertheless, the Authority has covenanted that it will not consent to, or conduct proceedings with respect to, a reduction in the maximum Special Tax A that may be levied in the District on Developed Property below an amount, for any Bond Year, equal to 110% of the aggregate of the debt service due on the 2024 Bonds in such Bond Year, plus a reasonable estimate of Administrative Expenses for each such Bond Year. However, no assurance can be given as to the enforceability of the foregoing covenant.

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 "—Enforceability of Remedies." Ballot Initiatives
Articles XIIIC and XIIID of the California Constitution 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 that 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 Authority, or local districts to increase revenues or to increase appropriations.

IRS Audit of Tax -Exempt Bond Issues
The Internal Revenue Service has initiated an expanded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the 2024 Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the 2024 Bonds might be affected as a result of such an audit of the 2024 Bonds (or by an audit of similar bonds). See "TAX MATTERS."

TAX MATTERS
Federal tax law contains a number of requirements and restrictions which apply to the 2024 Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and the facilities financed therewith, and certain other matters. The Authority has covenanted in the Fiscal Agent Agreement to comply with all requirements that must be satisfied in order for the interest on the 2024 Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the 2024 Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the 2024 Bonds.
-54-

Subject to the Authority's compliance with the above -referenced covenants, under present law, in the opinion of Quint & Thimmig LLP, Bond Counsel, interest on the 2024 Bonds is excludable from the gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals under the Internal Revenue Code of 1986, as amended (the "Code"). However, interest on the Bonds may affect the corporate alternative minimum tax for certain corporations.

In rendering its opinion, Bond Counsel will rely upon certifications of the Authority with respect to certain material facts within the Authority's knowledge. Bond Counsel's opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result.

Ownership of the 2024 Bonds may result in collateral federal income tax consequences to certain taxpayers. Prospective purchasers of the 2024 Bonds should consult their tax advisors as to applicability of any such collateral consequences.

The issue price (the "Issue Price") for each maturity of the 2024 Bonds is the price at which a substantial amount of such maturity of the 2024 Bonds is first sold to the public. The Issue Price of a maturity of the 2024 Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the inside cover page of this Official Statement.

If the Issue Price of a maturity of the 2024 Bonds is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity, if any, of the 2024 Bonds (the "OID 2024 Bonds") and the principal amount payable at maturity is original issue discount.

For an investor who purchases an OID 2024 Bond in the initial public offering at the Issue Price for such maturity and who holds such OID 2024 Bond to its stated maturity, subject to the condition that the Authority comply with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID 2024 Bond constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OID 2024 Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Owners of OID 2024 Bonds should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such OID 2024 Bonds.

Owners of 2024 Bonds who dispose of 2024 Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase 2024 Bonds in the initial public offering, but at a price different from the Issue Price or purchase 2024 Bonds subsequent to the initial public offering should consult their own tax advisors.

If a 2024 Bond is purchased at any time for a price that is less than the 2024 Bond's stated redemption price at maturity or, in the case of an OID 2024 Bond, its Issue Price plus accreted original issue discount reduced by payments of interest included in the computation of original issue discount and previously paid (the "Revised Issue Price"), the purchaser will be treated as having purchased a 2024 Bond with market discount subject to the market discount rules of the -55-

Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a 2024 Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser's election, as it accrues. Such treatment would apply to any purchaser who purchases an OID 2024 Bond for a price that is less than its Revised Issue Price even if the purchase price exceeds par. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such 2024 Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the 2024 Bonds.

An investor may purchase a 2024 Bond at a price in excess of its stated principal amount.

Such excess is characterized for federal income tax purposes as "bond premium" and must be amortized by an investor on a constant yield basis over the remaining term of the 2024 Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor's basis in the 2024 Bond. Investors who purchase a 2024 Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the 2024 Bond's basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the 2024 Bond.

There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the 2024 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the 2024 Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation.

The Internal Revenue Service (the "Service") has an ongoing program of auditing tax- exempt obligations to determine whether, in the view of the Service, interest on such tax- exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the 2024 Bonds. If an audit is commenced, under current procedures the Service may treat the Authority as a taxpayer and the 2024 Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the 2024 Bonds until the audit is concluded, regardless of the ultimate outcome.

Payments of interest on, and proceeds of the sale, redemption or maturity of, tax exempt obligations, including the 2024 Bonds, are in certain cases required to be reported to the Service.

Additionally, backup withholding may apply to any such payments to any 2024 Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any 2024 Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes.

In the further opinion of Bond Counsel, interest on the 2024 Bonds is exempt from California personal income taxes.

Ownership of the 2024 Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral -56-

consequences arising with respect to the 2024 Bonds. Prospective purchasers of the 2024 Bonds should consult their tax advisors regarding the applicability of any such state and local taxes.

The complete text of the final opinion that Bond Counsel expects to deliver upon issuance of the 2024 Bonds is set forth in Appendix D.

LEGAL MATTERS
Concurrent with the issuance of the 2024 Bonds, Quint & Thimmig LLP, Larkspur, California, Bond Counsel, will render its opinion substantially in the form set forth in Appendix D to this Official Statement. Certain legal matters with respect to the 2024 Bonds will be passed upon for the Authority and the District by Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, in their capacity as attorneys for the Authority, and for the Authority by Quint & Thimmig LLP, Larkspur, California, acting as Disclosure Counsel.

Certain legal matters will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California. Payment of the fees and expenses of Underwriter's Counsel is contingent on the issuance of the 2024 Bonds. At times Quint & Thimmig LLP represents Stifel, Nicolaus & Company, Inc., the Underwriter for the 2024 Bonds, in matters unrelated to the 2024 Bonds.

NO RATING
The Authority has not made, and does not intend to make, any application to any rating agency for the assignment of a rating to the 2024 Bonds.

NO LITIGATION
The Authority is not aware of any pending or threatened litigation challenging the validity of the 2024 Bonds, the Special Taxes securing the 2024 Bonds, or any action taken by the Authority in connection with the formation of the District, the levying of the Special Taxes or the issuance of the 2024 Bonds.

The Bond Purchase Agreement between the Authority and the Underwriter requires that the Developer deliver a certificate on the date of issuance of the 2024 Bonds to the effect that no action, suit, proceeding, inquiry or investigation, at law or in equity, before any court, regulatory agency, public board or body, is pending, or to its actual knowledge is overtly threatened, in any way seeking to restrain such entity's development of the property it owns in the District or in any way seeking to invalidate or set aside any approval or permit relating to the development of such property.

MUNICIPAL ADVISOR
Fieldman, Rolapp & Associates, Inc. has acted as Municipal Advisor (the "Municipal Advisor") to the Authority in connection with the issuance of the 2024 Bonds. The Municipal Advisor has assisted in matters related to the planning, structuring, execution and delivery of the 2024 Bonds. The Municipal Advisor will receive compensation contingent upon the sale and delivery of the 2024 Bonds. The Municipal Advisor has not audited, authenticated or otherwise independently verified the information set forth in this Official Statement or any other related information available, with respect to accuracy or completeness of disclosure of -57-

such information. Because of this limited participation, the Municipal Advisor makes no guarantee, warranty or other representation with respect to the accuracy or completeness of this Official Statement, or any other matter related to this Official Statement.

UNDERWRITING
The 2024 Bonds are being purchased through negotiation by Stifel, Nicolaus & Company, Incorporated (the "Underwriter"). The Underwriter agreed to purchase the 2024 Bonds at a price of $ (which is equal to the par amount of the 2024 Bonds, less an original issue discount of $ , and less an underwriter's discount of $ ).

The initial public offering prices set forth on the inside cover page may be changed by the Underwriter. The Underwriter may offer and sell the 2024 Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside cover page hereof.

CONTINUING DISCLOSURE
The Authority
The Authority will covenant in a Continuing Disclosure Agreement for the benefit of the Owners of the 2024 Bonds to provide Annual Reports that include certain annual financial information and operating data, and to provide notices of the occurrence of certain enumerated events. The Authority has retained Albert A. Webb Associates to act as the Dissemination Agent under the Continuing Disclosure Agreement. The Authority or the Dissemination Agent, on behalf of the Authority, will file the Annual Reports and notices as required by the Continuing Disclosure Agreement with the Municipal Securities Rulemaking Board. See Appendix E — "Form of Continuing Disclosure Agreement of the Authority" for the complete text of the Authority's Continuing Disclosure Agreement. The covenants of the Authority in the Continuing Disclosure Agreement have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) (the "Rule") promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

During the last five Fiscal Years, the Authority has complied in all material respects with its obligations under several continuing disclosure agreements entered into in connection with various community facilities district special tax bonds that it has issued.

The Developer
Although the Developer is not an obligated person under Rule 15c2-12, the Developer has agreed, for the benefit of the owners of the 2024 Bonds to enter into a Continuing Disclosure Certificate covenanting to provide certain information regarding the development of its property and notice of certain material events as they occur.

The Developer has advised that it has not failed in any material respect to comply with any previous undertaking by it to provide periodic continuing disclosure reports or notices of listed events with respect to community facilities districts or assessment districts in northern California within the past five years. However, in connection with a continuing disclosure obligation entered into with respect to the $14,735,000 Improvement Area No. 1 of the City of Dixon Community Facilities District No. 2019-1 (Homestead) Special Tax Bonds, Series 2020, the Developer was late in filing its first periodic report due June 15, 2021. The oversight was discovered in August 2021, and the Developer promptly filed a curative report on August 23, 2021 or approximately two months after the due date. Additionally, in connection with the -58-

phased acquisition of lots from the master developer of property within the City of Roseville Creekview Community Facilities District No. 1 (Public Facilities) Improvement Area No. 1 ("Roseville CFD No. 1, IA No. 1"), the Developer executed a Continuing Disclosure Certificate (Assumption by Builder), dated August 13, 2021 (the "CDC Assumption"), with respect to the acquisition of Villages C-11 (34 projected units), C-12 (95 projected units), C-14 (20 projected units), and C-15 (20 projected units). The CDC Assumption relates to the issuance of $10,905,000 City of Roseville Creekview Community Facilities District No. 1 (Public Facilities) Improvement Area No. 1 Special Tax Bonds Series 2020, and requires the filing of periodic reports by May 1 and November 1 of each year with respect to the property referenced, commencing November 1, 2021. The Developer was late in filing its first periodic report due November 1, 2021. The oversight was discovered in late April 2022, and the Developer promptly filed a curative report on April 28, 2022 or approximately six months after the due date. Identification of the above -described events does not constitute a representation by the Developer that such events were material.

The Developer has represented that, other than described above, it has not failed to comply in any material respect with any previous undertaking by it to provide periodic continuing disclosure reports or notices of listed events with respect to community facilities districts or assessment districts.

The obligations of the Developer under its Continuing Disclosure Certificate will terminate upon the earliest to occur of: (i) the legal defeasance, prior redemption or payment in full of all of the 2024 Bonds; and (ii) the date on which the Developer has conveyed 257 homes within the District to individual homeowners. See Appendix F — "Form of Continuing Disclosure Certificate of the Developer" for a complete copy of the Continuing Disclosure Certificate.

Remedies for Failures to Comply
A failure by the Authority or the Developer to comply with the provisions of its respective Continuing Disclosure Agreement or Continuing Disclosure Certificate is not an event of default under the Fiscal Agent Agreement (although the holders and beneficial owners of the 2024 Bonds do have remedies at law and in equity). However, a failure by the Authority to comply with the provisions of its Continuing Disclosure Agreement must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the 2024 Bonds. Therefore, a failure by the Authority to comply with the provisions of its Continuing Disclosure Agreement may adversely affect the marketability of the 2024 Bonds on the secondary market.

MISCELLANEOUS
Included herein are brief summaries of certain documents, which summaries do not purport to be complete or definitive, and reference is made to such documents for full and complete statements of the contents thereof. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority or the District and the purchasers or Owners of any of the 2024 Bonds. -59-

The execution and delivery of this Official Statement has been duly authorized by the Board of Directors of the Authority, acting as the legislative body of the District.

TEMECULA PUBLIC FINANCING AUTHORITY,
for and on behalf of the TEMECULA PUBLIC

FINANCING AUTHORITY COMMUNITY
FACILITIES DISTRICT NO.20-01 (HEIRLOOM
FARMS)
0 20009.25:J19441
Executive Director

APPENDIX A

GENERAL, ECONOMIC AND DEMOGRAPHIC INFORMATION

RELATING TO THE CITY AND THE COUNTY
The information in this Appendix A is presented as general background data. The 2024 Bonds are payable solely from the proceeds of the Special Tax A received by the Authority and amounts held in certain funds under the Fiscal Agent Agreement, as described in the Official Statement.

Although reasonable efforts have been made to include up-to-date information in this Appendix A, some of the information is not current due to delays in reporting of information by various sources. It should not be assumed that the trends indicated by the following data would continue beyond the specific periods reflected herein.

Introduction
The City. The City of Temecula (the "City") is located in southwestern Riverside County, California. The City was incorporated on December 1, 1989. Temecula is bordered by the City of Murrieta to the north and the Pechanga Indian Reservation and San Diego County to the south. The City of Temecula forms the southwestern anchor of the Inland Empire region.

Temecula is an affluent community. The City is supported by high median and mean income levels as well as the city's favorable tourism and resort industries. The city is a prominent tourist destination, with the Temecula Valley Wine Country, Old Town Temecula, the Temecula Valley Polo Club, the Temecula Valley Balloon & Wine Festival, championship golf courses, and resort accommodations attracting a significant amount of tourists.

The City is a general law city, which operates under a council-manager form of government.

The City Council consists of five members elected at -large to staggered four-year terms. Each year, the City Council elects a Mayor and a Mayor Pro Tern amongst themselves to serve for one calendar year. The Mayor, who has equal legislative power with fellow members of the City Council, serves as the ceremonial leader of the city and as the presiding officer of the bi-weekly City Council meetings.

The County. Riverside County, California (the "County") is the 4th-most populous county in California and the 11th-most populous in the United States. The County name was taken from the City of Riverside, which is the county seat.

Roughly rectangle -shaped, Riverside County covers 7,208 square miles (18,670 km2) in Southern California, spanning from the Greater Los Angeles area to the Arizona border.

Geographically, the county is mostly desert in the central and eastern portions of the county and is a Mediterranean climate in the western portion of the county. Most of Joshua Tree National Park is located in the county.

The resort cities of Palm Springs, Palm Desert, Indian Wells, La Quinta, Rancho Mirage, and Desert Hot Springs are all located in the Coachella Valley region of Riverside County. Large numbers of Los Angeles area workers have moved to the county to take advantage of its relatively affordable housing. Alongside neighboring San Bernardino County, it was one of the fastest growing regions in the state prior to the recent changes in the regional economy. In addition, smaller, but significant, numbers of people have been moving into Southwest Riverside County from the San Diego -Tijuana metropolitan area.

A-1

Population
The table below summarizes population of the City, the County, and the State for the last five years.

CITY OF TEMECULA, RIVERSIDE COUNTY, and CALIFORNIA
Population
City of
Riverside
State of
Year
Temecula
County
California
2019
112,561
2,419,057
39,605,361
2020
112,512
2,440,719
39,648,938
2021
109,881
2,418,727
39,286,510
2022
109,468
2,430,976
39,078,674
2023
108,899
2,439,234
38,940,231
Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2010-23, with 2020 Census Benchmark.

Employment
The following table summarizes historical employment and unemployment for the County, the State, and the United States:

RIVERSIDE COUNTY, CALIFORNIA, and UNITED STATES
Civilian Labor Force, Employment, and Unemployment
(Annual Averages)
Unemployment
Year Area Labor Force Employment Unemployment Rate(')
2018 Riverside County 1,092,400 1,044,600 47,800 4.4%
California 19,398,200 18,582,800 815,400 4.2
United States 162,075,000 155,761,000 6,314,000 3.9
2019
Riverside County
1,104,000
1,057,900
California
19,411,600
18,627,400
United States
163,539,000
157,538,000
2020
Riverside County
1,107,700
997,700
California
18,821,200
16,913,100
United States
160,742,000
147,795,000
2021
Riverside County
1,129,600
1,046,700
California
18,923,200
17,541,900
United States
161,204,000
152,581,000
2022(2)
Riverside County
1,152,100
1,104,100
California
19,252,000
18,440,900
United States
164,287,000
158,291,000
46,100 4.2
784,200 4.0
6,001,000 3.7
110,000 9.9
1,908,100 10.1
12,947,000 8.1
82,800 7.3
1,381,200 7.3
8,623,000 5.3
48,000 4.2
811,100 4.2
5,996,000 3.6
Source: California Employment Development Department, Monthly Labor Force Data for Counties, Annual Average 2010-22, and US Department of Labor.
(1) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures available in this table.
(2) Latest available full -year data.

A-2

Major Employers in the City and Industries in the County The following table lists the top 10 employers within the City for 2022.

CITY OF TEMECULA
Top 10 Employers
For the 2022 Fiscal Year(')
% of
Employer
Employees
Total
Temecula Valley Unified School District
3,000

4.95%
Abbott Laboratories
1,500

2.48 Temecula Valley Hospital
1,009

1.67 Milgrad Manufacturing Inc.
515
.85
Walmart
500
.83
Costco Wholesale
500
.83
Southwest Traders, Inc.
484
.80
FFF Enterprises
366
.60
Macy's
295
.49
Temecula Valley Winery Management
274
.45
Total Top 10
8,443

13.95%
Source: City of Temecula 2021-22 Annual Comprehensive Financial Report. (1) Latest available full -year data.

The following table lists the top 10 employers within the County for 2022.

RIVERSIDE COUNTY
Top 10 Employers
For the 2022 Fiscal Year(')
% of
Employer
Employees
Total
Riverside County
23,772

2.13%
Amazon
14,500

1.30 March Air Reserve Base
9,600
.86
University of California Riverside
8,593
.77
Moreno Valley Unified School District
6,020
.54
Kaiser Permanente Riverside Medical Center
5,817
.52
Corona -Norco Unified School District
5,478
.49
Riverside Unified School District
5,431
.49
Stater Bros
4,699
.42
Mt. San Jacinto Community College District
4,638
.42
Total Top 10
88,548

7.94%
Source: Riverside County 2021-22 Annual Comprehensive Financial Report. (1) Latest available full -year data.

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Construction Activity
The following tables reflect the five-year history of building permit valuation for the City and the County:

CITY OF TEMECULA
Building Permits and Valuation
(Dollars in Thousands)
Permit Valuation:

New Single-family
New Multi -family
Res. Alterations/Additions
Total Residential
Total Nonresidential
Total All Building
New Dwelling Units:

Single Family
Multiple Family
Total
2018 2019 2020 2021 2022(')
$17,052 $10,707 $ 47,734 $ 84,334 $ 70,231
-
14,538
2,512
2,163
24,802
6,381
4,295
7,462
6,263
7,044
23,433
29,542
57,708
92,760
102,079
33,469
28,911
23,605
26,804
18,700
56,903
58,453
81,314
119,565
120,780
90 54
261
441
426
-
169
39 36
277
90 223
300
477
703

RIVERSIDE COUNTY
Building Permits and Valuation
(Dollars in Thousands)
2018
2019
2020
2021
2022(1)
Permit Valuation:

New Single-family
$ 2,200,020
$1,834,821
$ 2,315,365
$ 2,013,158
$ 2,429,329
New Multi -family
232,706
282,465
93,149
149,081
339,474
Res. Alterations/Additions
125,353
158,117
110,788
100,401
152,309
Total Residential
21558,080
2,275,404
2,519,303
2,262,641
2,921,112
Total Nonresidential
1,959,680
1,285,855
1,153,777
1,543,997
1,701,617
Total All Building
4,517,761
3,561,260
3,673,080
3,806,639
4,622,730
New Dwelling Units:

Single Family
7,540
6,563
8,443
7,360
8,863
Multiple Family
1,628
1,798
723
1,126
2,861
Total
9,168
8,361
9,166
8,486
11,724
Source: Construction Industry Research Board: "Building Permit Summary.

Note: Columns may not sum to totals due to independent rounding. (1) Latest available full year data.

Median Household Effective Buying Income
"Effective Buying Income" is defined as personal income less personal tax and nontax payments, a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of wages and salaries, other labor -related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner -occupants of non -farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, State and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income." A-4

The following table summarizes the median household effective buying income for the City, the County, the State and the nation for the past five years.

CITY OF TEMECULA, RIVERSIDE COUNTY,

STATE OF CALIFORNIA AND UNITED STATES
Median Household Effective Buying Income
2018 2019 2020 2021
2022(')
City of Temecula $ 77,298 $ 82,329 $ 82,910 $ 93,861
$ 92,488
Riverside County 55,565 59,928 60,865 70,961
71,623
California 62,637 65,870 67,956 77,058
77,175
United States 52,841 55,303 56,790 64,448
65,326
Source: Nielsen, Inc.

Latest available full year data.

A-5

APPENDIX B

TEMECULA PUBLIC FINANCING AUTHORITY
COMMUNITY FACILITIES DISTRICT NO.20-01
(HEIRLOOM FARMS)

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
The following sets forth the Rate and Method of Apportionment of Special Tax for the levy and collection of an Annual Special Tax A, an Annual Special Tax B, and an Annual Special Tax C in the Temecula Public Financing Authority ("PFA") Community Facilities District No. 20-01 ("CFD No. 20-01"). An Annual Special Tax A, an Annual Special Tax B, and an Annual Special Tax C shall be levied on and collected in CFD No. 20-01 each Fiscal Year, in an amount determined through the application of the Rate and Method of Apportionment of Special Tax described below. All of the real property within CFD No. 20-01, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided.

SECTION A

DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on the Assessor's Parcel Map, the land area as shown on the applicable Final Map, or if the land area is not shown on the applicable Final Map, the land area as calculated by or on behalf of the CFD Administrator. "Act" means the Mello -Roos Community Facilities Act of 1982 as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 20-01, including but not limited to the following: (i) the costs of computing Special Tax A, Special Tax B, and / or Special Tax C (the "Special Taxes") and of preparing the annual Special Tax A, Special Tax B, and Special Tax C collection schedules (whether by the CFD Administrator or designee thereof, or both); (ii) the costs of collecting the Special Taxes (whether by the Authority, County, City, or otherwise); (iii) the costs of remitting the Special Taxes to the fiscal agent or trustee for any Bonds; (iv) the costs of commencing and pursuing to completion any foreclosure action arising from delinquent Special Taxes; (v) the costs of the fiscal agent or trustee (including its legal counsel) in the discharge of the duties required of it under any Indenture; (vi) the costs of the Authority, City, or designee of either in complying with arbitrage rebate, mandated reporting and disclosure requirements of applicable federal and State of California laws, and responding to property owner or Bond owner inquiries regarding the Special Taxes or Bonds; (vii) the costs associated with the release of funds from any escrow account established under an Indenture; (viii) the costs of the Authority, City, or designee of either thereof related to any appeal of a Special Tax; (ix) an allocable share of the salaries of the City staff and City overhead expense directly relating to the foregoing and (x) any other expense eligible under the Act. Administrative Expenses shall also include amounts advanced by the City or the Authority for any administrative purposes of CFD No. 20-01. "Annual Special Tax A" means for each Assessor's Parcel, the Special Tax A actually levied in a given Fiscal Year on such Assessor's Parcel.

"Annual Special Tax B" means for each Assessor's Parcel, the Special Tax B actually levied in a given Fiscal Year on such Assessor's Parcel. "Annual Special Tax C" means for each Assessor's Parcel, the Special Tax C actually levied in a given Fiscal Year on such Assessor's Parcel. "Approved Property" means all Assessor's Parcels of Taxable Property other than Provisional Exempt Property: (i) that are included in a Final Map that was recorded prior to the January 1st immediately preceding the Fiscal Year in which the Special Tax A is being levied, and (ii) that have not been issued a Building Permit on or before the April 1st immediately preceding the Fiscal Year in which the Special Tax A is being levied. "Assessor" means the Assessor of the County.
"Assessor's Parcel" or "Parcel" means a lot or parcel of land designated on an Assessor's Parcel Map with an assigned Assessor's Parcel Number within the boundaries of CFD No. 20-01.
"Assessor's Parcel Map" means an official map of the Assessor designating parcels by Assessor's Parcel Number.
"Assessor's Parcel Number" means that number assigned to a lot or parcel of land by the Assessor for purposes of identification.
"Assigned Annual Special Tax A" means the Special Tax A as described in Section D below.
"Authorized Facilities" means the public facilities authorized to be financed, in whole or in part, by the CFD, as identified in the list of authorized facilities approved by the Resolution of Formation of the CFD adopted by the Board of Directors when the CFD was formed.
"Authorized Services" means the services authorized to be funded, in whole or in part, by the CFD, as identified in the list of authorized services approved by the Resolution of Formation of the CFD adopted by the Board of Directors when the CFD was formed. "Backup Annual Special Tax A" means the Special Tax A as described in Section E below.
"Board of Directors" means the Board of Directors of the Temecula Public Financing Authority, acting as the legislative body of CFD No. 20-01, or its designee. "Bonds" means any bonds or other indebtedness (as defined in the Act), whether in one or more series, the repayment of which is secured by proceeds of the levy of Special Tax A on Assessor's Parcels within CFD No. 20-01.
"Boundary Map" means a recorded map of the CFD No. 20-01 which indicates the boundaries of CFD No. 20-01.
"Building Permit" means the first legal document issued by the City giving official permission for new construction of improvements on an Assessor's Parcel in CFD No. 20-01.

For purposes of this definition, "Building Permit" may or may not include any subsequent IM

building permits issued or changed after the first issuance, as determined by the CFD Administrator.
"Building Square Footage" or "BSF" means the square footage of assessable internal living space, exclusive of garages or other structures not used as living space, as determined by the CFD Administrator by reference to the building permit application for such Assessor's Parcel.
"Calendar Year" means the period commencing January 1 of any year and ending the following December 31.
"CFD No. 20-01" or "CFD" means the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) established by the Authority under the Act.
"CFD Administrator" or "Administrator" means the Finance Director of the City, or designee thereof, responsible for, among other things, determining the Special Tax A Requirement for Special Tax A, the Special Tax B Requirement for Special Tax B, and the Special Tax C Requirement for Special Tax C and providing for the levy and collection of said Special Tax A, Special Tax B, and Special Tax C.
"City" means the City of Temecula, California.
"Consumer Price Index" or "CPI" means, for each Fiscal Year, the Consumer Price Index published by the U.S. Bureau of Labor Statistics for "All Items for All Urban Consumers:
in the Riverside -San Bernardino -Ontario area", measured as of the month of December in the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Consumer Price Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Consumer Price Index for the Riverside -San Bernardino -Ontario area.
"County" means the County of Riverside, California.
"Developed Property" means all Assessor's Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to January 1st preceding the Fiscal Year in which Special Tax A, Special Tax B or Special Tax C are being levied, and (ii) for which a building permit was issued on or before April 1st preceding the Fiscal Year in which any or all of the Special Taxes are being levied.
"Exempt Property" means all Assessor's Parcels designated as being exempt from the Special Taxes as provided for in Section P.
"Exempt Welfare Exemption Property" means, for each Fiscal Year, an Assessor's Parcel that is (a) receiving a welfare exemption under subdivision (g) of Section 214 of the California Revenue and Taxation Code (or any successor statute), as indicated in the County's assessor's roll finalized as of January 1 of the previous Fiscal Year, and (b) exempt from the Special Tax pursuant to Section 53340(c) of the Act. Pursuant to Section 53340(c) of the Act, after the issuance of the first series of Bonds, any Assessor's Parcels that receive welfare exemption under subdivision (g) of Section 214 of the California Revenue and Taxation Code (or any successor statute) shall not be classified as Exempt Welfare Exemption Property and will be subject to the Special Tax.

"Final Map" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 4285 that creates individual lots that do not need, and are not expected, to be further subdivided prior to the issuance of a Building Permit.
"Fiscal Year" means the period commencing July 1 of any year and ending the following June 30.
"Indenture" means the bond indenture, fiscal agent agreement, trust agreement, resolution, or other instrument pursuant to which Bonds are issued, as modified, amended and / or supplemented from time to time, and any instrument replacing or supplementing the same.
"Land Use Type" means Residential Property, Multifamily Residential Property, or Non -Residential Property.
"Maximum Special Tax A" means for each Assessor's Parcel of Taxable Property, the maximum Special Tax A, determined in accordance with Section C that can be levied on each such Assessor's Parcel.
"Maximum Special Tax B" means for each Assessor's Parcel of Taxable Property, the maximum Special Tax B, determined in accordance with Section I that can be levied on each such Assessor's Parcel.
"Maximum Special Tax C" means for each Assessor's Parcel of Taxable Property, the maximum Special Tax C, determined in accordance with Section L that can be levied on each such Assessor's Parcel.
"Multifamily Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for the purpose of constructing a building or buildings comprised of attached Units available for rental by the general public, not for sale to an end user, and which attached units are under common ownership, as determined by the CID Administrator.
"Non -Residential Property" means all Assessor's Parcels of Developed Property for which a building permit was issued for any type of use other than Residential Property and Multifamily Residential Property.
"Partial Prepayment Amount" means the amount required to prepay a portion of the Special Tax A obligation for an Assessor's Parcel, as described in Section H. "Prepayment Amount" means the amount required to prepay the Special Tax A obligation in full for an Assessor's Parcel, as described in Section G. "Proportionately" means for Special Tax A that the ratio of the Annual Special Tax A to the applicable Assigned Annual Special Tax A is equal for all applicable Assessor's Parcels. In the case of Special Tax B and Special Tax C, "Proportionately" means that the ratio of the Annual Special Tax B to the applicable Maximum Special Tax B and the Annual Special Tax C to the applicable Maximum Special Tax C is equal for all applicable Assessor's Parcels. In the case of Developed Property subject to the apportionment of the Annual Special Tax A under Step Four of Section F, "Proportionately" means that the quotient of (a) Annual Special Tax A less

the Assigned Annual Special Tax A divided by (b) the Backup Annual Special Tax A less the Assigned Annual Special Tax A, is equal for all applicable Assessor's Parcels. "Provisional Exempt Property" means all Assessor's Parcels of Taxable Property subject to Special Tax A that would otherwise be classified as Exempt Property pursuant to the provisions of Section P, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property within the applicable Zone below the required minimum Acreage set forth in Section P.
"Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units, and which are not otherwise Multifamily Residential Property. "RMA" means this Rate and Method of Apportionment of Special Tax. "Special Tax(es)" means any of the Special Taxes authorized to be levied on Taxable Property within and for CFD No. 20-01 pursuant to the Act to fund the Special Tax A Requirement, Special Tax B Requirement, and / or the Special Tax C Requirement. "Special Tax A" means any of the Special Taxes authorized to be levied on Taxable Property within and by CFD No. 20-01 pursuant to the Act to fund the Special Tax A Requirement.
"Special Tax B" means any of the Special Taxes authorized to be levied on Taxable Property within and by CFD No. 20-01 pursuant to the Act to fund the Special Tax B Requirement.
"Special Tax C" means any of the Special Taxes authorized to be levied on Taxable Property within and by CFD No. 20-01 pursuant to the Act to fund the Special Tax C Requirement.
"Special Tax A Requirement" means, subject to the Maximum Special Tax A, the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses for such Fiscal Year (apportioned between Special Tax A and Special Tax B), (iii) any amount required to establish or replenish any reserve funds established in association with the Bonds, and (iv) the collection or accumulation of funds for the acquisition or construction of facilities authorized to be funded by CFD No. 20-01, and paid for by the levy on Developed Property of the Assigned Annual Special Tax A provided that the inclusion of such amount does not cause an increase in the levy of Special Tax A on Approved Property or Undeveloped Property as set forth in Step Two and Three of Section F, less (v) any amount available to pay debt service or other periodic costs on the Bonds pursuant to any applicable fiscal agent agreement, or trust agreement.
"Special Tax B Requirement" means, subject to the Maximum Special Tax B, that amount to be collected in any Fiscal Year to pay for certain Authorized Services as required to meet the needs of CFD No. 20-01. The costs of services to be covered shall be the direct costs for (i) Authorized Services, and (ii) Administrative Expenses (apportioned between Special tax A and Special Tax B); less (iii) a credit for funds available to reduce the Annual Special Tax B levy, if any, as determined by the CFD Administrator. Under no circumstances shall the Special Tax B Requirement include amounts needed to repay Bonds.

"Special Tax C Requirement" means, subject to the Maximum Special Tax C, that amount to be collected in any Fiscal Year to pay for certain Authorized Services as required to meet the needs of CFD No. 20-01. The costs of services to be covered shall be the direct costs for (i) Authorized Services, and (ii) Administrative Expenses; less (iii) a credit for funds available to reduce the Annual Special Tax C levy, if any, as determined by the CFD Administrator. Under no circumstances shall the Special Tax C Requirement include amounts needed to repay Bonds. "Special Tax Category" means any of the individual categories of BSF set forth in Tables 1 through 3 in Section D below.
"Taxable Property" means (i) with respect to Special Tax A, all Assessor's Parcels within CFD No. 20-01, which are not Exempt Property or for which the Special Tax A obligation has not been prepaid in full, and (ii) with respect to Special Tax B and Special Tax C, all Assessor's Parcels within CFD No. 20-01, which are not Exempt Property. "Temecula Public Financing Authority" or "PFA" or "Authority" means the Temecula Public Financing Authority, or its designee.
"Transition Event" shall be deemed to have occurred when the Administrator determines that the following events have occurred: (i) all Bonds secured by the levy and collection of Special Tax A in the CFD have been fully repaid, or there are sufficient revenues available to fully repay the Bonds in funds and accounts that, pursuant to the Indenture, will require such revenues to be applied to repay the Bonds; (ii) all Administrative Expenses from prior Fiscal Years have been paid or reimbursed; and (iii) there are no other Authorized Facilities that the Authority or the CFD intends to fund with Bonds and Special Tax A. "Transition Year" means the earlier of: (i) the first Fiscal Year in which the Administrator determines that the Transition Event occurred in the prior Fiscal Year, or (ii) Fiscal Year 2062-63.
"Undeveloped Property" means all Assessor's Parcels of Taxable Property which are not Developed Property, Approved Property, or Provisional Exempt Property. "Unit" means any residential dwelling unit excluding dwelling units within Multifamily Residential Property.
"Zone(s)" means Zone 1, Zone 2, or Zone 3 as geographically identified on Attachment A of the RMA.
"Zone 1" means the specific area identified on Attachment A as Zone 1 of CFD 20-01. "Zone 2" means the specific area identified on Attachment A as Zone 2 of CFD 20-01. "Zone 3" means the specific area identified on Attachment A as Zone 3 of CFD 20-01.

SECTION B

CLASSIFICATION OF ASSESSOR'S PARCELS
Each Fiscal Year, beginning with Fiscal Year 2021-22, each Assessor's Parcel within CFD No. 20-01 shall be classified as Taxable Property or Exempt Property. In addition, each Assessor's Parcel of Taxable Property shall be further classified as Developed Property, Approved Property, Undeveloped Property, or Provisional Exempt Property. In addition, each Assessor's Parcel of Developed Property, Approved Property, Undeveloped Property and

Provisional Exempt Property shall be classified as being within Zone 1, Zone 2, or Zone 3. If an Assessor's Parcel of Developed Property, Approved Property, Undeveloped Property or Provisional Exempt Property is located within more than one Zone, it shall be deemed to be entirely within the Zone in which the largest portion of its Acreage is located. In addition, each Assessor's Parcel of Developed Property shall further be classified as Residential Property, Multifamily Residential Property or Non -Residential Property. Assessor's Parcels of Residential Property shall be further categorized based on the Building Square Footage of each such Assessor's Parcel.

SECTION C

MAXIMUM SPECIAL TAX A

1. Developed Property
The Maximum Special Tax A for each Assessor's Parcel of Residential Property, Multifamily Residential Property or Non -Residential Property in any Fiscal Year shall be the greater of (i) the Assigned Annual Special Tax A or (ii) the Backup Annual Special Tax A.

2. Avvroved Provertv. Undeveloped Provertv, and Provisional Exempt Provert The Maximum Special Tax A for each Assessor's Parcel classified as Approved Property, Undeveloped Property, or Provisional Exempt Property in any Fiscal Year shall be the Assigned Annual Special Tax A.

3. Increase in the Maximum Special Tax A
On each July 1, commencing July 1, 2022, the Maximum Special Tax A shall be increased by an amount equal to one percent (1.0%) of the amount in effect for the previous Fiscal Year.

4. Maximum Special Tax A at Transition Year
For the Transition Year and each Fiscal Year thereafter, the Maximum Special Tax A for any Assessor's Parcel of Taxable Property shall be $0.00.

SECTION D

ASSIGNED ANNUAL SPECIAL TAX A

1. Developed Property
Each Fiscal Year prior to the Transition Year, each Assessor's Parcel of Residential Property, Multifamily Residential Property or Non -Residential Property shall be subject to an Assigned Annual Special Tax A.

The Assigned Annual Special Tax A applicable to an Assessor's Parcel of Developed Property shall be determined using the tables below.

TABLE 1

ASSIGNED ANNUAL SPECIAL TAX A RATES
FOR DEVELOPED PROPERTY WITHIN ZONE 1
FISCAL YEAR 2021-22
Land Use Type
Building Square
Footage
Assigned Special
Tax A
Residential Property
Less than 1,801
$2,915 per Unit
Residential Property
1,801- 2,000
$3,020 per Unit
Residential Property
Greater than 2,000
$3,125 per Unit
Multifamily Residential Property
N/A
$49,422 per Acre
Non -Residential Property
N/A
$49,422 Fer Acre
TABLE 2

ASSIGNED ANNUAL SPECIAL TAX A RATES
FOR DEVELOPED PROPERTY WITHIN ZONE 2
FISCAL YEAR 2021-22
Land Use Type
Building Square
Footage
Assigned Special
Tax A
Residential Property
Less than 1,551
$2,110 per Unit
Residential Property
1,551-1,750
$2,310 per Unit
Residential Property
Greater than 1,750
$2,410 per Unit
Multifamily Residential Prop er
N/A
$71,940 per Acre
Non -Residential Property
N/A
$71,940 Fer Acre
TABLE 3

ASSIGNED ANNUAL SPECIAL TAX A RATES
FOR DEVELOPED PROPERTY WITHIN ZONE 3
FISCAL YEAR 2021-22
Land Use Type
Building Square
Footage
Assigned Special
I Tax A
Residential Property
Less than 1,601
$2,275 per Unit
Residential Property
1,601 or Greater
$2,400 per Unit
Multifamily Residential Property
N/A
$60,689 per Acre
Non -Residential Proper y
N/A
$60,689 per Acre

2. Approved Property, Undeveloped Property and Provisional Exempt Property Each Fiscal Year, prior to the Transition Year, each Assessor's Parcel of Approved Property, Undeveloped Property, and Provisional Exempt Property shall be subject to an Assigned Annual Special Tax A. In the Transition Year and each Fiscal Year thereafter, no Special Tax A shall be levied on Approved Property, Undeveloped Property, or Provisional Exempt Property. Notwithstanding the forgoing, if there are delinquent Special Tax A taxes on a Parcel, such delinquent Special Tax A taxes will continue to constitute a lien against the Parcel until they are collected. The Assigned Annual Special Tax A rate for an Assessor's Parcel classified as Approved Property, Undeveloped Property, or Provisional Exempt Property shall be determined pursuant to Table 4 below:
::

TABLE 4

ASSIGNED ANNUAL SPECIAL TAX RATES

FOR APPROVED PROPERTY, UNDEVELOPED PROPERTY,

AND PROVISIONAL EXEMPT PROPERTY
FISCAL YEAR 2021-22
Zone
Assigned Special Tax A
Zone 1
$49,422 per Acre
Zone 2
$71,940 per Acre
Zone 3
$60,689 per Acre

3. Increase in the Assigned Annual Special Tax A
On each July 1, commencing July 1, 2022, the Assigned Annual Special Tax A for any Assessor's Parcel of Taxable Property shall be increased by an amount equal to one percent (1.0%) of the amount in effect for the previous Fiscal Year.

4. Assigned Annual Special Tax A at Transition Year
For the Transition Year and each Fiscal Year thereafter, the Assigned Annual Special Tax A for all Taxable Property shall be $0.00.

SECTION E

BACKUP ANNUAL SPECIAL TAX A
At the time a Final Map is recorded, the CFD Administrator shall determine the Backup Annual Special Tax A for all Assessor's Parcels with a Zone classified or reasonably expected to be classified as Residential Property within such Final Map by multiplying the Maximum Special Tax A rate for Undeveloped Property for the applicable Zone by the total Acreage of Taxable Property within the applicable Zone, excluding the Provisional Exempt Property Acreage, Non -Residential Property Acreage, Multifamily Residential Property Acreage and any Acreage reasonably expected to be classified as Exempt Property, and dividing such amount by the total number of such Assessor's Parcels within the applicable Zone which are classified or reasonable expected to be classified as Residential Property.

The Backup Annual Special Tax A rate for Multifamily Residential Property or Non - Residential Property shall be its Assigned Annual Special Tax A rate.

On each July 1, commencing July 1, 2022, the Backup Annual Special Tax A shall be increased by an amount equal to one percent (1.0%) of the amount in effect for the previous Fiscal Year.

Notwithstanding the foregoing, if Assessor's Parcels which are classified or to be classified as Residential Property, Non -Residential Property or Multifamily Property are subsequently changed by recordation of a lot line adjustment, Final Map amendment, new Final Map or similar instrument, then the Backup Annual Special Tax A shall be recalculated within the area that has been changed to equal the amount of Backup Annual Special Tax A that would have been generated if such change did not take place.

SECTION F

METHOD OF APPORTIONMENT OF THE ANNUAL SPECIAL TAX A
Commencing Fiscal Year 2021-22 and for each subsequent Fiscal Year, the Board of Directors shall levy the Annual Special Tax A in accordance with the following steps:

Step One: The Annual Special Tax A shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Annual Special Tax A rates in Tables 1, 2, and 3 to satisfy the Special Tax A Requirement.

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

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

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

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

Notwithstanding the foregoing, pursuant to Section 53321 (d) of the Act, the Special Tax A levied against an Assessor's Parcel used for private residential purposes shall under no circumstances increase more than ten (10%) as a consequence of delinquency of default by the owner of any other Assessor's Parcel or Assessor's Parcels and shall, in no event, exceed the Maximum Special Tax A in effect for the Fiscal Year in which the Special Tax A is being levied.

SECTION G

PREPAYMENT OF SPECIAL TAX A
The following definitions apply to this Section G:
"Business Day" means days Temecula City Hall is open for business. "CFD Public Facilities Amount" means $12,200,000 expressed in 2021 dollars, which shall increase by the Construction Inflation Index on July 1, 2022, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide the Authorized Facilities under the authorized bonding program, or (ii) shall be B-10

determined by the Board of Directors concurrently with a covenant that the CFD will not issue any more Bonds.
"Construction Inflation Index" means the annual percentage change in the Engineering News -Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News -Record Building Cost Index for the City of Los Angeles.
"Future Facilities Costs" means the CFD Public Facilities Amount minus (i) Bond proceeds deposited in an Improvement Fund and (ii) other amounts (proceeds of the levy of Special Tax A, interest earnings, etc.) held in an Improvement Fund that were available to fund such CFD Public Facilities Amount prior to the date of prepayment. "Improvement Fund" means any fund or account established under an Indenture to hold funds which were or continue to be available for expenditure to pay costs of Authorized Facilities and any fund or account established prior to the issuance of Bonds for such purpose. "Outstanding Bonds" means the principal amount of all previously issued Bonds which will remain outstanding after the payment from the amount of any Special Tax A that has therefore been levied, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Tax A.

Prepayment in Full
The Special Tax A obligation may be prepaid and permanently satisfied for (i) Assessor's Parcels of Developed Property, (ii) Assessor's Parcels of Approved Property or Undeveloped Property for which a Building Permit has been issued, (iii) Approved or Undeveloped Property for which a Building Permit has not been issued, and (iv) Assessor's Parcels of Provisional Exempt Property that are not Exempt Property pursuant to Section P. The Special Tax A obligation applicable to an Assessor's Parcel may be fully prepaid and the obligation to pay the Special Tax A for such Assessor's Parcel permanently satisfied as described herein; provided that a prepayment may be made only if there is no delinquent Special Tax A previously levied on the Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax A obligation for such Assessor's Parcel shall provide the CFD Administrator with written notice of intent to prepay, and within 5 Business Days of receipt of such notice, the CFD Administrator shall notify such owner of the amount of the non- refundable deposit determined by the CFD Administrator to cover the cost to be incurred for the CFD in calculating the Prepayment Amount (as defined below) for the Assessor's Parcel.

Within 15 Business Days of receipt of such non-refundable deposit, the CFD Administrator shall notify such owner of the Prepayment Amount for the Assessor's Parcel. Prepayment must be made not less than 60 days prior to the redemption date for any Outstanding Bonds to be redeemed with the proceeds of such prepaid Special Taxes.

The Prepayment Amount (defined below) shall be calculated as follows (capitalized terms are defined below):

B-11

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

1. Confirm that no Special Tax A delinquencies apply to such Assessor's Parcel.

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

3. Divide the Maximum Special Tax A derived pursuant to paragraph 2 by the total amount of Special Tax A that could be levied on all Taxable Property based on the applicable Maximum Special Tax A, including for Approved Property or Undeveloped Property for which a Building Permit has been issued, the Maximum Special Tax A for the Assessor's Parcel as though it was already designated as Developed Property. The calculation of the total amount of Special Tax A shall exclude Assessor's Parcels for which the Special Tax A obligation has been previously prepaid in full or the portion thereof that has been previously prepaid in part.

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

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

6. Determine the Future Facilities Costs.

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

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

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

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

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

12. Verify the administrative fees and expenses of the CFD, including the cost of computation of the Prepayment Amount not funded from the deposit, the cost to invest the Prepayment Amount, the cost of redeeming the Outstanding Bonds, and the cost of recording notices to evidence the prepayment of the Special Tax A obligation for the Assessor's Parcel and the redemption of Outstanding Bonds (the "Administrative Fees and Expenses").

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

14. The Prepayment Amount is equal to the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Amount and the Administrative Fees and Expenses, less the Reserve Fund Credit.

15. From the Prepayment Amount, the Bond Redemption Amount, the Redemption Premium, and Defeasance Amount shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make debt service payments. The Future Facilities Amount shall be deposited into the Improvement Fund. The Administrative Fees and Expenses shall be retained by the CFD to be used for payment thereof.

The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such event, the increment above $5,000 or an integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next redemption from other Special Tax A prepayments of Outstanding Bonds or to make debt service payments.

As a result of the payment of the current Fiscal Year's Special Tax A levy as determined pursuant to paragraph 9 above, if applicable, the CFD Administrator shall remove the current Fiscal Year's Special Tax A levy for the Assessor's Parcel from the County tax roll. With respect to any Assessor's Parcel for which the Special Tax A obligation is prepaid, the Board shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Tax A obligation and the release of the lien securing the payment of Special Tax A for B-13

the Assessor's Parcel, and the obligation to pay the Special Tax A for such Assessor's Parcel shall cease.

Notwithstanding the foregoing, no Special Tax A prepayment shall be allowed unless the amount of Maximum Special Tax A that may be levied on all Assessor's Parcels of Taxable Property, excluding all Provisional Exempt Property and all Assessor's Parcels with delinquent Special Taxes, after the proposed prepayment will be at least 1.1 times maximum annual debt service on the Bonds that will remain outstanding after the prepayment plus the estimated annual Administrative Expenses, all as determined by the CFD Administrator.

Tenders of Bonds in prepayment of the Maximum Special Tax A obligation may be accepted upon the terms and conditions established by the Board pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case -by -case basis as specifically approved by the Board.

SECTION H

PARTIAL PREPAYMENT OF SPECIAL TAX A
The Special Tax A obligation for an Assessor's Parcel of Developed Property, Approved Property or Undeveloped Property may be partially prepaid. For purposes of determining the partial prepayment amount, the provisions of Section G shall be modified as provided by the following formula:

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

PP = Partial Prepayment
PE = the Prepayment Amount calculated according to Section G F = the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Special Tax A obligation
A = the Administrative Fees and Expenses determined pursuant to Section G The owner of an Assessor's Parcel who desires to partially prepay the Special Tax A obligation for the Assessor's Parcel shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax A obligation, and (ii) the percentage of the Maximum Special Tax A obligation such owner wishes to prepay. Within 5 Business Days of receipt of such notice, the CFD Administrator shall notify such property owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by the CFD in calculating the amount of a partial prepayment. Within 15 Business Days of receipt of such non- refundable deposit, the CFD Administrator shall notify such owner of the amount of the Partial Prepayment for the Assessor's Parcel. A Partial Prepayment must be made not less than 60 days prior to the redemption date for any Outstanding Bonds to be redeemed with the proceeds of the Partial Prepayment.

With respect to any Assessor's Parcel for which the Maximum Special Tax A obligation is partially prepaid, the CFD Administrator shall (i) distribute the Partial Prepayment as provided in Paragraph 15 of Section G and (ii) indicate in the records of the CFD that there has been a Partial Prepayment for the Assessor's Parcel and that a portion of the Special Tax A obligation equal to the remaining percentage (1.00 - F) of Special Tax A obligation will continue to be levied on the Assessor's Parcel pursuant to Section F.

B-14

SECTION I

MAXIMUM SPECIAL TAX B

1. Developed Property
Maximum Special Tax B
Each Fiscal Year, each Assessor's Parcel of Residential Property, Multifamily Residential Property, or Non -Residential Property shall be subject to a Maximum Annual Special Tax B.

The Maximum Annual Special Tax B applicable to an Assessor's Parcel of Developed Property shall be determined using the Table below.

TABLE 5

MAXIMUM SPECIAL TAX B RATES

FOR DEVELOPED PROPERTY
FISCAL YEAR 2021-22
Land Use Type
Maximum Special
Tax B
Residential Property
$459 per Unit
Multifamily Residential Property
$10,644 per Acre
Non -Residential Property
$10,644 per Acre

2. Approved Property, Undeveloped Property and Provisional Exempt Property No Special Tax B shall be levied on Approved Property, Undeveloped Property, and Provisional Exempt Property.

3. Increase in the Maximum Special Tax B
On each July 1, commencing July 1, 2022, the Maximum Special Tax B shall be increased by an amount equal to five and six -tenths percent (5.6%) of the amount in effect for the previous Fiscal Year.

4. Maximum Special Tax B at Transition Year
For the Transition Year and each Fiscal Year thereafter, the Maximum Special Tax B for any Assessor's Parcel of Developed Property shall be $0.00.

SECTION J

METHOD OF APPORTIONMENT OF THE SPECIAL TAX B
Commencing with Fiscal Year 2021-22 and for each following Fiscal Year, the Authority shall levy the Special Tax B at up to 100% of the applicable Maximum Special Tax B, Proportionately on each Assessor's Parcel of Developed Property until the amount of Special Tax B equals the Special Tax B Requirement.

Notwithstanding the foregoing, pursuant to Section 53321 (d) of the Act, the Special Tax B levied against an Assessor's Parcel used for private residential purposes shall under no circumstances increase more than ten (10%) as a consequence of delinquency of default by the B-15

owner of any other Assessor's Parcel or Assessor's Parcels and shall, in no event, exceed the Maximum Special Tax B in effect for the Fiscal Year in which the Special Tax B is being levied.

SECTION K

PREPAYMENT OF SPECIAL TAX B
No prepayments of Special Tax B are permitted.

SECTION L

MAXIMUM SPECIAL TAX C

1. Developed Property
Maximum Special Tax C
For the Transition Year and each Fiscal Year thereafter, each Assessor's Parcel of Residential Property, Multifamily Residential Property, or Non -Residential Property shall be subject to a Maximum Special Tax C.

The Maximum Special Tax C applicable to an Assessor's Parcel of Developed Property shall be determined using the table below.

TABLE 6

MAXIMUM SPECIAL TAX C RATES

FOR DEVELOPED PROPERTY
FISCAL YEAR 2021-22
Land Use Type
Maximum Special
Tax C
Residential Property
$975 per Unit
Multifamily Residential Property
$22,609 per Acre
Non -Residential Property
$22,609 per Acre

2. Approved Property, Undeveloped Property and Provisional Exempt Property No Special Tax C shall be levied on Approved Property, Undeveloped Property, and Provisional Exempt Property.

3. Increase in the Maximum Special Tax C
On each July 1, commencing July 1, 2022, the Maximum Special Tax C shall be increased by an amount equal to five and six -tenths percent (5.6%) of the amount in effect for the previous Fiscal Year.

For each Fiscal Year following the Transition Year, the Maximum Special Tax C shall increase on each subsequent July 1, by an amount equal to the greater of three percent (3.0%) or the positive percentage change in CPI, over the amount in effect for the previous Fiscal Year, all as determined by the CFD Administrator without additional action by the Board of Directors.

B-16

SECTION M

METHOD OF APPORTIONMENT OF THE SPECIAL TAX C
For the Transition Year and each Fiscal Year thereafter, the Authority shall levy the Special Tax C at up to 100% of the applicable Maximum Special Tax C, Proportionately on each Assessor's Parcel of Developed Property until the amount of Special Tax C equals the Special Tax C Requirement.

Notwithstanding the foregoing, pursuant to Section 53321 (d) of the Act, the Special Tax C levied against an Assessor's Parcel used for private residential purposes shall under no circumstances increase more than ten (10%) as a consequence of delinquency of default by the owner of any other Assessor's Parcel or Assessor's Parcels and shall, in no event, exceed the Maximum Special Tax C in effect for the Fiscal Year in which the Special Tax C is being levied.

SECTION N

PREPAYMENT OF SPECIAL TAX C
No prepayments of Special Tax C are permitted.

SECTION O

TERM OF THE SPECIAL TAX A, SPECIAL TAX B, AND SPECIAL TAX C For each Fiscal Year that any Bonds are outstanding the Special Tax A shall be levied on all Assessor's Parcels subject to the Special Tax A. If any delinquent Annual Special Tax A amounts remain uncollected prior to or after the Transition Year, the Special Tax A may be levied to the extent necessary to reimburse CID 20-01 for uncollected Annual Special Tax A amounts associated with the levy of such Special Tax A amounts, but not later than the 2061-62 Fiscal Year.

Prior to the Transition Year, Special Tax B shall be levied as long as the Authorized Services are being provided. Special Tax B shall not be levied during or after the Transition Year.

For the Transition Year and each Fiscal Year thereafter, Special Tax C shall be levied in perpetuity as long as the Authorized Services are being provided.

SECTION P

EXEMPT PROPERTY
The CFD Administrator shall classify as Exempt Property within the applicable Zone, (i) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by the State of California, Federal or other local governments, including school districts, (ii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or which make use as a dwelling unit, or otherwise, infeasible by a homeowners' association, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Assessor's Parcels which are privately owned and are encumbered by or restricted solely for public uses, or (vi) other types of public uses determined by the CID Administrator. The CID Administrator shall classify such Assessor's Parcels as Exempt Property in the chronological order in which property becomes Exempt.

B-17

Notwithstanding the foregoing, the CFD Administrator for purposes of levying the Special Tax shall not, except for any Assessor's Parcel on which the Special Tax cannot be levied pursuant to the Mello -Roos Act, classify an Assessor's Parcel as Exempt Property if such classification would reduce the sum of all Taxable Property within the applicable Zone to less than the Acreage amounts listed in Table 6 below. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property within the applicable Zone to less than the Acreage amounts listed in Table 6 will be classified as Provisional Exempt Property, and will be subject to the levy of Special Tax pursuant to Step Five in Section F.

No Special Tax shall be levied on any Assessor's Parcel in any Fiscal Year in which such Assessor's Parcel is classified as Exempt Welfare Exemption Property.

TABLE 6

MINIMUM TAXABLE ACRES
Zone
Acres
Zone 1

6.78 Zone 2

4.75 Zone 3

2.31 SECTION Q

APPEALS AND INTERPRETATIONS
Any property owner claiming that the amount or application of the Annual Special Tax A, Annual Special Tax B, or Annual Special Tax C is not correct may file a written notice of appeal with the CFD Administrator not later than twelve months after having paid the first installment of the Annual Special Tax A, Annual Special Tax B, or Annual Special Tax C that is disputed. The CFD Administrator shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Annual Special Tax A, Annual Special Tax B, or Annual Special Tax C in dispute and rule on the appeal.

If the CFD Administrator's decision requires that the Annual Special Tax A, Annual Special Tax B, or Annual Special Tax C for an Assessor's Parcel be modified or changed in favor of the property owner, a cash refund shall not be made (except for the last year of levy in the case of the Annual Special Tax A), but an adjustment shall be made to the Annual Special Tax A, Annual Special Tax B, or Annual Special Tax C on that Assessor's Parcel in the subsequent Fiscal Year(s).

The Board of Directors may interpret this Rate and Method of Apportionment of Special Tax for purposes of clarifying any ambiguity or to correct or supplement any defective or inconsistent provision hereof.

SECTION R

MANNER OF COLLECTION
The Annual Special Tax A, Annual Special Tax B, and Annual Special Tax C shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD 20-01 may collect the Annual Special Tax A, Annual Special Tax B, and Annual Special Tax C at a different time or in a different manner if necessary to meet its financial obligations.

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Zone 2: Tentative Tract Map No. 37509, Lots 121-142, Lots H (portion), J-S, T (portion), and Y (portion).

Zone 3: Tentative Tract Map No. 37509, Lots 112-120, Lots A (portion), B-G, H (portion), I, T (portion), Y (portion), AA and AB.

B-19

APPENDIX C

SUMMARY OF THE FISCAL AGENT AGREEMENT
[to come]
C-1

APPENDIX D

FORM OF OPINION OF BOND COUNSEL
March 2024
Board of Directors
Temecula Public Financing Authority
41000 Main Street
Temecula, California 92589-9033
OPINION: $ Temecula Public Financing Authority Community Facilities District 20-01 (Heirloom Farms) 2024 Special Tax Bonds
Members of the Board of Directors:

We have acted as bond counsel in connection with the issuance by the Temecula Public Financing Authority (the "Authority"), for and on behalf of the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) (the "District"), of its $ Temecula Public Financing Authority Community Facilities District 20-01 (Heirloom Farms) 2024 Special Tax Bonds (the 'Bonds") pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (Section 53311 et seq., of the California Government Code) (the "Act"), a Fiscal Agent Agreement, dated as of March 1, 2024 (the "Fiscal Agent Agreement"), by and between the Authority, for and on behalf of the District, and U.S.

Bank Trust Company, National Association, as fiscal agent, and Resolution No. TPFA 2024- adopted by the Board of Directors of the Authority on February 13, 2024 (the "Resolution").

In connection with this opinion, we have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Authority contained in the Resolution and in the Fiscal Agent Agreement, and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation.

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

1. The Authority is duly created and validly existing as a joint exercise of powers agency, with the power to adopt the Resolution, enter into the Fiscal Agent Agreement and perform the agreements on its part contained therein, and to issue the Bonds.

2. The Fiscal Agent Agreement has been duly entered into by the Authority and constitutes a valid and binding obligation of the Authority enforceable upon the Authority in accordance with its terms.

3. Pursuant to the Act, the Fiscal Agent Agreement creates a valid lien on the funds pledged by the Fiscal Agent Agreement for the security of the Bonds, on a parity with the pledge thereof for the security of any Parity Bonds that may be issued under, and as such term is defined in, the Fiscal Agent Agreement.

D-1

4. The Bonds have been duly authorized, executed and delivered by the Authority and are valid and binding limited obligations of the Authority for the District, payable solely from the sources provided therefor in the Fiscal Agent Agreement.

5. Subject to the Authority's compliance with certain covenants, interest on the Bonds (i) is excludable from gross income of the owners thereof for federal income tax purposes, and (ii) is not included as an item of tax preference in computing the alternative minimum tax for individuals under the Internal Revenue Code of 1986, as amended. However, interest on the Bonds may affect the corporate alternative minimum tax for certain corporations.

Failure by the Authority to comply with certain of such covenants could cause interest on the Bonds to be includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds.

6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California.

Ownership of the Bonds may result in other tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.

The rights of the owners of the Bonds and the enforceability of the Bonds, the Resolution and the Fiscal Agent Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and also may be subject to the exercise of judicial discretion in accordance with general principles of equity.

In rendering this opinion, we have relied upon certifications of the Authority and others with respect to certain material facts. Our opinion represents our legal judgment based upon such review of the law and facts that we deem relevant to render our opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

Respectfully submitted,
D-2

APPENDIX E

FORM OF CONTINUING DISCLOSURE AGREEMENT

OF THE AUTHORITY
THIS CONTINUING DISCLOSURE AGREEMENT (the "Disclosure Agreement"), dated as of March 1, 2024, is by and between WEBB MUNICIPAL FINANCE, LLC, as dissemination agent (the "Dissemination Agent"), and the TEMECULA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the State of California (the "Authority").

RECITALS:

WHEREAS, the Authority has issued, for and on behalf of the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) (the "District"), its Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) 2024 Special Tax Bonds (the "Bonds"); and
WHEREAS, the Bonds have been issued pursuant to a Fiscal Agent Agreement, dated as of March 1, 2024 (the "Fiscal Agent Agreement"), by and between U.S. Bank Trust Company, National Association, as fiscal agent, and the Authority, for and on behalf of the District; and WHEREAS, this Disclosure Agreement is being executed and delivered by the Authority and the Dissemination Agent for the benefit of the owners and beneficial owners of the Bonds and in order to assist the underwriter of the Bonds in complying with S.E.C. Rule 15c2-12(b)(5).

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NOW, THEREFORE, for and in consideration of the premises and mutual covenants herein contained, and for other consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Definitions. In addition to the definitions of capitalized terms set forth in Section

1.03 of the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section or in the Recitals above, the following terms shall have the following meanings when used in this Disclosure Agreement:
"Annual Report" means any Annual Report provided by the Authority pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Beneficial Owner" shall mean any person who (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bond (including persons holding any Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bond for federal income tax purposes. "Disclosure Representative" means the Treasurer, or such person's designee, or such other officer or employee of the Authority as the Authority shall designate as the Disclosure Representative hereunder in writing to the Dissemination Agent from time to time. "Dissemination Agent" means Webb Municipal Finance, LLC, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Authority and which has filed with the Authority a written acceptance of such designation.

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"EMMA" or "Electronic Municipal Market Access" means the centralized on-line repository for documents to be filed with the MSRB, such as official statements and disclosure information relating to municipal bonds, notes and other securities as issued by state and local governments.
"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, or any other repository of disclosure information which may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
"Official Statement" means the Official Statement, dated March ___, 2024, relating to the Bonds.
"Participating Underwriter" means the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"Significant Event" means any of the events listed in Section 5(a) of this Disclosure Agreement.

Section 2. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Authority and the Dissemination Agent for the benefit of the owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.

Section 3. Provision of Annual Reports.
(a) Delivery of Annual Report. The Authority shall, or shall cause the Dissemination Agent to, not later than the March 1 occurring after the end of each fiscal year of the Authority, commencing with the report for the 2023-24 fiscal year, which is due not later than March 1, 2025, file with EMMA, in a readable PDF or other electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package and may cross-reference other information as provided in Section 4 of this Disclosure Agreement; provided that any audited financial statements of the Authority may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date.
(b) Change of Fiscal Year. If the Authority's fiscal year changes, it shall give notice of such change in the same manner as for a Significant Event under Section 5(b), and subsequent Annual Report filings shall be made no later than six months after the end of such new fiscal year end. (c) Delivery of Annual Report to Dissemination Agent. Not later than fifteen (15) Business Days prior to the date specified in subsection (a) (or, if applicable, subsection (b) of this Section 3 for providing the Annual Report to EMMA), the Authority shall provide the Annual Report to the Dissemination Agent (if other than the Authority). If by such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall notify the Authority. (d) Report of Non -Compliance. If the Authority is the Dissemination Agent and is unable to file an Annual Report by the date required in subsection (a) (or, if applicable, subsection (b)) of this Section 3, the Authority shall in a timely manner send a notice to EMMA substantially in the form attached hereto as Exhibit A. If the Authority is not the Dissemination Agent and is unable to E-2

provide an Annual Report to the Dissemination Agent by the date required in subsection (c) of this Section 3, the Dissemination Agent shall send a notice in a timely manner to EMMA in substantially the form attached hereto as Exhibit A in a timely manner. (e) Annual Compliance Certification. The Dissemination Agent shall, if the Dissemination Agent is other than the Authority, file a report with the Authority certifying that the Annual Report has been filed with EMMA pursuant to Section 3 of this Disclosure Agreement, stating the date it was so provided and filed.

Section 4. Content of Annual Reports. (a) Financial Statements. The Annual Report for each fiscal year commencing with the Annual Report for the 2023-24 fiscal year, shall contain or incorporate by reference audited financial statements of the Authority for the most recently completed fiscal year, 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 Authority's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Other Annual Information. The Annual Report for each fiscal year commencing with fiscal year 2023-24 shall also include the following information:
(i) The principal amount of Bonds Outstanding as of the September 30 next preceding the date of the Annual Report.
(ii) The balance in the Delinquency Maintenance Fund, if any, and in the Reserve Fund, and a statement of DMF Requirement (if more than $0) and the Reserve Requirement, as of the September 30 next preceding the date of the Annual Report. (iii) The balance in each of the accounts within the Improvement Fund, if any, as of the September 30 next preceding the date of the Annual Report. (iv) A table similar to Table 3 in the Official Statement (which shows Value -to - Lien by property owner) substituting the most recent County Assessed Values (if an appraisal not less than 120 days old is not available), except that the Authority may aggregate property owners that individually own property allocated less than two percent (2%) of the outstanding principal of the 2024 Bonds. (v) A table setting forth the annual aggregate Special Tax levy in the District for the most recent two Fiscal Years, and the number of parcels with delinquent Special Tax A, and the amount and percentage of the overall Special Tax A levy for the delinquent parcels, and an update of prior years' delinquencies as of a date not more than ninety (90) days prior to the date of the Annual Report. (vi) A table similar to Table 4 in the Official Statement summarizing for the then current Fiscal Year the value -to -lien ratio of the parcels in the District subject to the levy of Special Tax A using the most recently available County assessed values. (vii) The status of foreclosure proceedings for any parcels within the District on which the Special Taxes are levied and a summary or the results of any foreclosure sales, or other collection efforts with respect to delinquent Special Taxes, as of the September 30 next preceding the date of the Annual Report.
(viii) The identity of any property owner representing more than five percent (5%) of the annual Special Tax A levy who is delinquent in payment of such Special E-3

Taxes, as shown on the assessment roll of the County Assessor last equalized prior to the September 30 next preceding the date of the Annual Report, the number of parcels so delinquent, and the total dollar amount of all such delinquencies. (ix) The most recent annual information required to be provided to the California Debt and Investment Advisory Commission pursuant to Section 9.07(A) of the Fiscal Agent Agreement.
(c) Cross References. 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 Authority or related public entities, which are available to the public on EMMA. The Authority shall clearly identify each such other document so included by reference.

If the document included by reference is a final official statement, it must be available from EMMA.
(d) Further Information. In addition to any of the information expressly required to be provided under paragraph (b) of this Section 4, the Authority 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.

Section 5. Reporting of Significant Events.
(a) The Authority shall, or shall cause the Dissemination Agent (if not the Authority) to, give notice of the occurrence of any of the following events with respect to the Bonds:
(i) Principal and interest payment delinquencies;
(ii) Non—payment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701—TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security;
(vii) Modifications to rights of security holders, if material; (viii) Bond calls, if material, and tender offers;
(ix) Defeasances;
(x) Release, substitution, or sale of property securing repayment of the securities, if material;
(xi) Rating changes;
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(xii) Bankruptcy, insolvency, receivership or similar event of the Authority or other obligated person;
(xiii) The consummation of a merger, consolidation, or acquisition involving the Authority or an obligated person, or the sale of all or substantially all of the assets of the Authority or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material;
(xv) The incurrence of a financial obligation of the Authority or other obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the Authority or other obligated person, any of which affect security holders, if material; or
(xvi) A default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the Authority or other obligated person, any of which reflect financial difficulties.
(b) Whenever the Authority obtains knowledge of the occurrence of a Significant Event, the Authority shall, or shall cause the Dissemination Agent (if not the Authority) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Significant Event.

Notwithstanding the foregoing, notice of Significant Events described in subsection (a)(viii) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to owners of affected Bonds under the Fiscal Agent Agreement. (c) The Authority acknowledges that the events described in subparagraphs (a)(ii), (a)(vii), (a)(viii) (if the event is a bond call), (a)(x), (a)(xiii), (a)(xiv) and (a)(xv) of this Section 5 contain the qualifier "if material." The Authority shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the Authority determines the event's occurrence is material for purposes of U.S. federal securities law. The Authority intends that the words used in paragraphs (xv) and (xvi) and the definition of "financial obligation" to have the meanings ascribed thereto in SEC Release No. 34-83885 (August 20, 2018), or any further guidance or releases provided by Securities and Exchange Commission.
(d) For purposes of this Disclosure Agreement, any event described in paragraph (a)(xii) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Authority in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Authority, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Authority.

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

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Section 7. Termination of Reporting Obli ag tion. The Authority's obligations under this Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Authority shall give notice of such termination in the same manner as for a Significant Event under Section 5(b).

Section 8. Dissemination Agent.
(a) Appointment of Dissemination Agent. The Authority may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement and may discharge any such agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be Webb Municipal Finance, LLC.

If the Dissemination Agent is not the Authority, the Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Authority pursuant to this Disclosure Agreement. It is understood and agreed that any information that the Dissemination Agent may be instructed to file with EMMA shall be prepared and provided to it by the Authority. The Dissemination Agent has undertaken no responsibility with respect to the content of any reports, notices or disclosures provided to it under this Disclosure Agreement and has no liability to any person, including any Bond owner, with respect to any such reports, notices or disclosures. The fact that the Dissemination Agent or any affiliate thereof may have any fiduciary or banking relationship with the Authority shall not be construed to mean that the Dissemination Agent has actual knowledge of any event or condition, except as may be provided by written notice from the Authority.
(b) Compensation of Dissemination Agent. The Dissemination Agent shall be paid compensation by the Authority for its services provided hereunder as agreed to between the Dissemination Agent and the Authority from time to time and all expenses, legal fees and expenses and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder, with payment to be made from any lawful funds of the District. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the Authority, the owners of the Bonds, the Beneficial Owners, or any other party. The Dissemination Agent may rely, and shall be protected in acting or refraining from acting, upon any written direction from the Authority or a written opinion of nationally recognized bond counsel. The Dissemination Agent may at any time resign by giving written notice of such resignation to the Authority. The Dissemination Agent shall not be liable hereunder except for its negligence or willful misconduct. (c) Responsibilities of Dissemination Agent. In addition of the filing obligations of the Dissemination Agent set forth in Sections 3(e) and 5, the Dissemination Agent shall be obligated, and hereby agrees, to provide a request to the Authority to compile the information required for its Annual Report at least 30 days prior to the date such information is to be provided to the Dissemination Agent pursuant to subsection (c) of Section 3. The failure to provide or receive any such request shall not affect the obligations of the Authority under Section 3.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Authority may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the Authority that does not impose any greater duties or risk of liability on the Dissemination Agent), and any provision of this Disclosure Agreement may be waived, provided that all of the following conditions are satisfied:
(a) Change in Circumstances. If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a) or (b), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or the type of business conducted.

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(b) Compliance as of Issue Date. The undertaking, as amended or taking into account such waiver, would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances.
(c) Consent of Holders; Non -impairment Opinion. The amendment or waiver either (i) is approved by the Bond owners in the same manner as provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of Bond owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Bond owners or Beneficial Owners.

If this Disclosure Agreement is amended or any provision of this Disclosure Agreement is waived, the Authority shall describe such amendment or waiver in the next following Annual Report and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Authority. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Significant Event under Section 5(b), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

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

Section 11. Default. In the event of a failure of the Authority to comply with any provision of this Disclosure Agreement, any Bond owner, any Beneficial Owner, the Fiscal Agent or the Participating Underwriter may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Authority to comply with its obligations under this Disclosure Agreement. The sole remedy under this Disclosure Agreement in the event of any failure of the Authority to comply with this Disclosure Agreement shall be an action to compel performance.

Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Authority, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and the owners and the Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written.

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TEMECULA PUBLIC FINANCING

AUTHORITY
M
Aaron Adams,
Executive Director
WEBB MUNICIPAL FINANCE, LLC, as
Dissemination Agent
By:

Its:

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EXHIBIT A

NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Obligor: Temecula Public Financing Authority
Name of Bond Issue: Temecula Public Financing Authority Community Facilities District No. 20- 01 (Heirloom Farms), 2024 Special Tax Bonds
Date of Issuance: March 2024
NOTICE IS HEREBY GIVEN that the Obligor has not provided an Annual Report with respect to the above -named Bonds as required by Section 5.17 of the Fiscal Agent Agreement, dated as of March 1, 2024, between the Obligor and U.S. Bank Trust Company, National Association, as fiscal agent. The Obligor anticipates that the Annual Report will be filed by Date:

By: Webb Municipal Finance, LLC, as
Dissemination Agent
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APPENDIX F

FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE
This Developer Continuing Disclosure Certificate (the "Disclosure Certificate") dated as of March 1, 2024 is executed and delivered by Meritage Homes of California, Inc., a California corporation (the "Landowner") in connection with the issuance by Temecula Public Financing Authority (the "Authority") Community Facilities District No. 20-01 (Heirloom Farms) (the "District") of the Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms) 2024 Special Tax Bonds (the "Bonds"). The Bonds are being issued pursuant to the Fiscal Agent Agreement dated as of March 1, 2024 (the "Fiscal Agent Agreement") by and between the Authority and U.S. Bank Trust Company National Association, as fiscal agent. The Landowner covenants and agrees as follows:

SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Landowner to assist the Underwriter in the marketing of the Bonds.

SECTION 2. Definitions. Unless defined herein, capitalized terms used herein shall have the meanings ascribed thereto in the Indenture.
"Affiliate" shall mean, with respect to the Landowner, any other Person (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Landowner, and (ii) for whom information, including financial information or operating data, concerning such Person is material to potential investors in their evaluation of the District and investment decision regarding the Bonds (i.e. information regarding such Person's assets or funds that would materially affect the Landowner's ability to develop the Property as described in the Official Statement or to pay its Special Taxes on the portion of the Property then owned by the Landowner (to the extent the responsibility of the Landowner) prior to delinquency). For purposes hereof, the term "control" (including the terms "controlling," "controlled by" or "under common control with") means the present possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
"Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries).
"Dissemination Agent" shall mean the Landowner or any successor Dissemination Agent designated in writing by the Landowner and which has filed with the Landowner and the District a written acceptance of such designation. "District" shall mean Temecula Public Financing Authority Community Facilities District No. 20-01 (Heirloom Farms).
"EMMA" shall mean the Electronic Municipal Market Access system of the MSRB.
"Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.

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"MSRB" shall mean the Municipal Securities Rulemaking Board and any successor entity as the repository for filings.
"Official Statement" shall mean the Official Statement, dated 2024, relating to the Bonds.
"Person" shall mean an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, an unincorporated organization or a government or political subdivision thereof. "Property" means the real property within the boundaries of the District that is owned by the Landowner or any Affiliate.
"Repository" shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission as a repository of disclosure information.

Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http:/ /emma.msrb.org. "Semiannual Report" shall mean any report to be provided by the Landowner on or prior to June 15 and December 15 of each year, commencing with the Semiannual Report due June 15, 2024, pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
"State" shall mean the State of California.
"Underwriter" shall mean the original underwriter of the Bonds, which is Stifel, Nicolaus & Company, Incorporated.

SECTION 3. Provision of Semiannual Reports.
(a) The Landowner shall, or upon receipt of the Semiannual Report the Dissemination Agent shall, not later than June 15 and December 15 of each year, commencing June 15, 2024, provide to the Repository the Semiannual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If, in any year, June 15 or December 15 falls on a Saturday, Sunday or a federal holiday, such deadline shall be extended to the next following day that is not a Saturday, Sunday or federal holiday. The Semiannual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate. (b) If the Landowner utilizes the Dissemination Agent to file the Semiannual Report, then not later than 15 calendar days prior to the date specified in subsection (a) for providing the Semiannual Report to the Repository, the Landowner shall provide the Semiannual Report to the Dissemination Agent (if different from the Landowner), and shall provide a written certification with (or included as a part of) each Semiannual Report furnished to the Dissemination Agent, the Underwriter, and the District to the effect that such Semiannual Report constitutes the Semiannual Report required to be furnished by it under this Disclosure Certificate. If the Dissemination Agent (if different from the Landowner) does not receive a Semiannual Report from the Landowner and cannot verify that a Semiannual Report has been filed with the Repository by 15 calendar days prior to the date specified in subsection (a) for providing the Semiannual Report to the Repository, the Dissemination Agent shall send a reminder notice to the Landowner that the Semiannual Report has not been provided as required under Section 3(a) above. The reminder notice shall instruct the Landowner to F-2

determine whether its obligations under this Disclosure Certificate have terminated (pursuant to Section 6 below) and, if so, to provide the Dissemination Agent with a notice of such termination in the same manner as for a Listed Event (pursuant to Section 5 below). (c) If the Landowner does not provide, or cause the Dissemination Agent to provide, a Semiannual Report to the Repository on or prior to the date specified in subsection (a) for providing the Semiannual Report to the Repository, the Dissemination Agent shall send, in a timely manner, a notice to the Repository of the failure to file the Semiannual Report in the form required by the Repository.
(d) The Dissemination Agent shall:
(i) determine, prior to the date for providing the Semiannual Report, the name and address of the Repository; and
(ii) promptly after receipt of the Semiannual Report, file a report with the Landowner and the District certifying that the Semiannual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the Repository.
(e) Notwithstanding any other provision of this Disclosure Certificate, any of the required filings hereunder shall be made in accordance with the MSRB's EMMA system or in another manner approved by the MSRB or the Securities and Exchange Commission.

SECTION 4. Content of Semiannual Reports.
(a) The Landowner's Semiannual Report shall contain or include by reference the information which is updated through a date which shall not be more than 60 days prior to the date the applicable Semiannual Report is required to be filed, relating to the following:

1. To the extent not previously disclosed in a prior Semiannual Report, a discussion of any material change in the Landowner's sources of funds to finance its development of the Property as disclosed in the Official Statement, and, if applicable, whether any material defaults exist under any loan arrangement related to such financing. As disclosed in the Official Statement, the Landowner is financing its development of the Property through internal sources.

2. A summary of development activity conducted by the Landowner or any Affiliate within the District, including the number of parcels for which sales to homebuyers have closed.

3. Any sale by the Landowner or any Affiliate of Property to another Person, other than to buyers of completed homes, including a description of the property sold (acreage, number of lots, etc.) and the identity of the Person that so purchased the property, all since the most recent Semiannual Report.

4. Any major legislative, administrative and judicial challenges that the Landowner is currently involved in or has actual knowledge of, to or affecting the Landowner's development of the Property, or the time for construction of any public or private improvements to be made to the Property by the Landowner or any Affiliate (the "Landowner Improvements").

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5. Any significant amendments to land use entitlements known to the Landowner with respect to the Property owned by the Landowner or its Affiliates.

6. Information regarding any failure by the Landowner or any of its Affiliates to pay any real property taxes (including Special Taxes) levied on any Property owned by the Landowner or any Affiliates.
(b) Any and all of the items listed above may be included by specific reference to other documents, including official statements of debt issues which have been submitted to the Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Landowner shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Landowner shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material under clauses (b) and (c) as soon as practicable after the occurrence of any of the following events:

1. Failure to pay any real property taxes, special taxes or assessments levied within the District on a parcel owned by the Landowner or any Affiliate, to the extent such failure is not promptly cured by the Landowner or any Affiliate upon discovery thereof;

2. Material default by the Landowner or any Affiliate on any loan with respect to the construction or permanent financing of the Landowner Improvements to which the Landowner or any Affiliate has been provided a notice of default;

3. Material default by the Landowner or any Affiliate on any loan secured by property within the District owned by the Landowner or any Affiliate to which the Landowner or any Affiliate has been provided a notice of default;

4. Material payment default by the Landowner on any loan of the Landowner (whether or not such loan is secured by property within the District) which is beyond any applicable cure period in such loan;

5. The filing of any proceedings with respect to the Landowner, in which the Landowner, may be adjudicated as bankrupt or discharged from any or all of its debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts;

6. The filing of any proceedings with respect to an Affiliate of the Landowner, in which such Affiliate of the Landowner may be adjudicated as bankrupt or discharged from any or all of its respective debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts if such adjudication could materially adversely affect the completion of the Landowner Improvements or the development of the Property (including the payment of Special Taxes); and

7. The filing of any lawsuit against the Landowner or any of its Affiliates (with service of process on the Landowner or its Affiliates having occurred) which, in the reasonable judgment of the Landowner, will materially adversely affect the F-4

completion of the development of the Property owned by the Landowner or its Affiliates within the District, or litigation which if decided against the Landowner, or any of its Affiliates, in the reasonable judgment of the Landowner, would materially adversely affect the financial condition of the Landowner or any Affiliate of the Landowner owning any Property within the District, or their respective ability to pay Special Taxes levied on their respective Property within the District when due. (b) Whenever the Landowner obtains knowledge of the occurrence of a Listed Event, the Landowner shall as soon as possible determine if such event would be material under applicable federal securities laws. The Dissemination Agent (if different from the Landowner) shall have no responsibility to determine the materiality of any of the Listed Events.
(c) If the Landowner determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Landowner shall promptly file or cause the Dissemination Agent to file a notice of such occurrence with the Repository, with a copy to the District.

SECTION 6. Termination of Reporting Obligation. The Landowner's obligations under this Disclosure Certificate shall terminate upon the earlier to occur of the following events:
(a) the legal defeasance, prior redemption or payment in full of all of the Bonds, or
(b) the date on which, the Landowner has conveyed 257 of the residential units in the District to individual homeowners.

If such termination occurs prior to the final maturity of the Bonds, the Landowner shall give notice of such termination in the same manner as for a Semiannual Report hereunder.

SECTION 7. Dissemination Agent. The Landowner may from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If the Dissemination Agent is not the Landowner, the Dissemination Agent shall not be responsible in any manner for the form or content of any notice or report prepared by the Landowner pursuant to this Disclosure Certificate. The Dissemination Agent may resign by providing (i) thirty days written notice to the Landowner and (ii) upon appointment of a new Dissemination Agent hereunder.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Landowner may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements or change in law;
(b) The amendment or waiver either (i) is approved by the owners of the Bonds in the same manner as provided in the Indenture with the consent of owners of the Bonds, or (ii) does not, in the opinion of nationally recognized bond counsel F-5

addressed to the District and the Dissemination Agent, materially impair the interests of the owners or Beneficial Owners of the Bonds; and
(c) The Landowner, or the Dissemination Agent, shall have delivered copies of the amendment and any opinions delivered under (b) above to the District and the Trustee.

SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Landowner from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Semiannual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Landowner chooses to include any information in any Semiannual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Landowner shall have no obligation under this Disclosure Certificate to update such information or include it in any future Semiannual Report or notice of occurrence of a Listed Event.

The Landowner acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Landowner, and that under some circumstances compliance with this Disclosure Certificate, without additional disclosures or other action, may not fully discharge all duties and obligations of the Landowner under such laws.

SECTION 10. Default. In the event of a failure of the Landowner or the Dissemination Agent to comply with any provision of this Disclosure Certificate, any Underwriter or any owner 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 Landowner or the Dissemination Agent to comply with its obligations under this Disclosure Certificate. The sole remedy under this Disclosure Certificate in the event of any failure of the Landowner or the Dissemination Agent to comply with this Disclosure Certificate shall be an action to compel performance.

Temecula City CouncilFebruary 13, 2024

Temecula City Council
February 13, 2024