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HomeMy WebLinkAbout_City Council PacketCity Council / Successor Agency City of Lake Elsinore Regular Agenda 183 North Main Street Lake Elsinore, CA 92530 Natasha Johnson, Mayor Steve Manos, Mayor Pro-Tem Daryl Hickman, Council Member Robert E. "Bob" Magee, Council Member Brian Tisdale, Council Member Cultural Center7:00 PMTuesday, October 9, 2018 CLOSED SESSION at 6:15 PM PUBLIC SESSION at 7:00 PM The City of Lake Elsinore appreciates your attendance. Citizens’ interest provides the Council and Agency with valuable information regarding issues of the community. Meetings are held on the 2nd and 4th Tuesday of every month. In addition, meetings are televised live on Spectrum Cable Station Channel 29 and Frontier subscribers can view the meetings on Channel 31. If you are attending this meeting, please park in the parking lot across the street from the Cultural Center. This will assist us in limiting the impact of meetings on the Downtown Business District . Thank you for your cooperation. The agenda is posted 72 hours prior to each meeting outside of City Hall and is available at each meeting. The agenda and related reports are also available at City Hall on the Friday prior to the meeting and are available on the City ’s website at www.Lake-Elsinore.org. Any writings distributed within 72 hours of the meeting will be made available to the public at the time it is distributed to the City Council. In compliance with the Americans with Disabilities Act, any person with a disability who requires a modification or accommodation in order to participate in a meeting should contact the City Clerk ’s Department at (951) 674-3124 Ext. 269, at least 48 hours before the meeting to make reasonable arrangements to ensure accessibility. CITY VISION STATEMENT The City of Lake Elsinore will be the ultimate lake destination where all can live, work and play, build futures and fulfill dreams. Page 1 City of Lake Elsinore Printed on 10/4/2018 October 9, 2018City Council / Successor Agency Regular Agenda CALL TO ORDER 6:15 P.M. The Regular meeting of the City Council will be Called to Order. ROLL CALL PUBLIC COMMENTS CITY COUNCIL CLOSED SESSION 1) CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of Gov’t Code Section 54956.9: 1 potential case RECESS The City Council will recess to Closed Session. RECONVENE AND CALL TO ORDER - 7:00 P.M. The Regular meeting of the City Council will Reconvene and the Regular meeting of the Successor Agency will be Called to Order. PLEDGE OF ALLEGIANCE INVOCATION – MOMENT OF SILENCE ROLL CALL PRESENTATIONS / CEREMONIALS 1)Proclamation for Code Enforcement Officer Appreciation Week CLOSED SESSION REPORT PUBLIC COMMENTS – NON-AGENDIZED ITEMS – 1 MINUTE (Please read & complete a Request to Address the City Council/Successor Agency form prior to the start of the meeting and turn it in to the City Clerk/Clerk. The Mayor/Chair or City Clerk/Clerk will call on you to speak.) CITY COUNCIL CONSENT CALENDAR (All matters on the Consent Calendar are approved in one motion, unless a Council Member or any member of the public requests separate action on a specific item.) 1)CC Minutes of the Regular Meeting of September 25, 2018 Recommendation:Approve the minutes. 9-25-18 CCAttachments: 2)CC Warrant List Dated September 27, 2018 Recommendation:Receive and file. Page 2 City of Lake Elsinore Printed on 10/4/2018 October 9, 2018City Council / Successor Agency Regular Agenda Warrant - SR Warrant - Exhibit A - Summary Warrant - Exhibit B - List Attachments: 3)Residential Review for a Proposal to Construct a Five-Unit Apartment Complex on a 0.34-Acre Lot Located at the Northwest Corner of Graham Avenue and Lowell Street Recommendation:adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, FINDING THAT PLANNING APPLICATION NO. 2018-02 (RESIDENTIAL DESIGN REVIEW NO. 2018-01) IS CONSISTENT WITH THE WESTERN RIVERSIDE COUNTY MULTIPLE SPECIES HABITAT CONSERVATION PLAN (MSHCP); and, adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING PLANNING APPLICATION NO. 2018-02 (RESIDENTIAL DESIGN REVIEW NO. 2018-01) PROVIDING BUILDING DESIGNS AND RELATED IMPROVEMENTS FOR A FIVE-UNIT APARTMENT COMPLEX LOCATED AT 374-183-018 PA 2018-02 - SR PA 2018-02 - Exhibit A MSHCP Resolution PA 2018-02 - Exhibit B RDR Resolution PA 2018-02 - Exhibit C CofA PA 2018-02 - Exhibit D Vicinity Map PA 2018-02 - Exhibit E Aerial Map PA 2018-02 - Exhibit F Land Use and Zoning Maps PA 2018-02 - Exhibit G Design Review Package PA 2018-02 - Exhibit H Correspondence Attachments: 4)Vacation of a Portion of Acacia Drive Recommendation:adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, VACATING A PORTION OF ACACIA DRIVE Vacation of Acacia Drive - SR Vacation of Acacia Drive - Exhibit A Reso Vacation of Acacia Drive - Exhibit B Map Attachments: 5)Addendum No. 3 to Commercial Lease Agreement Recommendation:Authorize the City Manager to execute Addendum No. 3 to Commercial Lease Agreement for premises located at 114 S. Main Street in such final form as approved by the City Attorney. 114 S Main Street Lease - SR 114 S Main Street Lease - Exhibit A Addendum No. 3 114 S Main Street Lease - Exhibit B Addendum Nos. 1& 2, Original Agreement Attachments: 6)Construction Contract for the Emergency Work for the Holy Fire Storm Preparedness with Edmondson Construction Company Recommendation:1. Authorize the City Manager to execute agreement in the amount of $80,498.00. Page 3 City of Lake Elsinore Printed on 10/4/2018 October 9, 2018City Council / Successor Agency Regular Agenda Edmondson - SR Edmondson - Exhibit A Agreement Attachments: 7)Riverside County Flood Control District Cooperative Agreement towards the Realignment for the Temescal Canyon Bridge Project Recommendation:1. Authorize the City Manager to execute the agreement and approve the funding contribution for $3,369,700.00. RCFCD - SR RCFCD - Exhibit A Agreement Attachments: 8)Road Closures and Alcohol Exemption for the 50th Lake Elsinore Grand Prix Event Recommendation:Approve temporary street closures and an exemption to the Lake Elsinore Municipal Code Chapter 9.23, Public Consumption of Alcoholic Beverages for a beer garden at Lakepoint Park. Grand Prix - SR Grand Prix - Exhibit A Detour Map Attachments: 9)Professional Service Agreement for the Final Engineering Design and Construction Support to WKE Engineering, Inc, for the Temescal Canyon Bridge Realignment Project Recommendation:1.Authorize the City Manager to execute agreement in the amount of $1,641,248.00, for the preparation of the final engineering plans, specifications, and cost estimate (PS&E) and to provide engineering and environmental support during construction and for a period of one year after construction (through June 2023), as stipulated in the scope of work; and, 2. Authorize the City Manager, or their designee, to approve any contract extension and any additional work or change order up to 10 percent of the total contract amount. WKE Engineering - SR WKE Engineering - Exhibit A Agreement Attachments: 10)Final Map 31920-19, DR Horton, Summerly Recommendation:1. Approve Final Map No. 31920-19 subject to the City Engineer’s acceptance as being true and correct; and, 2. Authorize the City Clerk to sign the map and arrange for the recordation of. Final Map 31920-19 - SR Final Map 31920-19 - Exhibit A Vicinity Map Final Map 31920-19 - Exhibit B Index Map Attachments: 11)Road Closures for the 2018 Halloween Spooktacular Event Recommendation:Approve temporary street closures for the event on October 19, 2018. Halloween Spooktacular - SR Halloween Spooktacular - Exhibit A Detour Map Attachments: 12)Downtown Elsinore Specific Plan (SP 2018-02), General Plan Amendment No. 2018-02 and Zone Change No. 2018-02, 2nd Reading Page 4 City of Lake Elsinore Printed on 10/4/2018 October 9, 2018City Council / Successor Agency Regular Agenda Recommendation:waive further reading and adopt AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADOPTING THE DOWNTOWN ELSINORE SPECIFIC PLAN (SP 2018-02); and, waive further reading and adopt AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADOPTING ZONE CHANGE NO. 2018-02 DESP - Exhibit A Ordinance DESP - Exhibit B Ordinance Attachments: 13)Procurement of Products and Services for the Deployment of Audio and Camera Surveillance Systems at the Historic Downtown Parking Lot with Millennium Alarm Systems, Inc. Recommendation:1) Approve the purchase of audio products and services in the amount of $17,990.00; and, 2) Approve the purchase of Camera Surveillance products and services in the amount of $48,448.76; and, 3) Waive the formal bidding process per Municipal Code Section 3.08.070(G) for purchases from Millennium Alarm Systems, Inc. as the vendor that the City selected to implement the camera surveillance system and access control infrastructure. The City will realize a significant savings in integration of the hardware, and related upgrades because they are already aware of the system needs. The City has also established government pricing from this vendor. Millennium - SR Millennium - Exhibit A Audio Millennium - Exhibit B Parking Lot Camera Surveillance Attachments: SUCCESSOR AGENCY CONSENT CALENDAR 14)SA Minutes of the Regular Meeting of September 25, 2018 Recommendation:Approve the minutes. 9-25-18 SAAttachments: 15)SA Warrant List Dated September 27, 2018 Recommendation:Receive and file. Warrant - SR Warrant - Exhibit A - Summary Warrant - Exhibit B - List Attachments: CITY COUNCIL BUSINESS ITEMS 16)Community Facilities District No. 2007-4 (Makenna Court), Issuance of its Special Tax Bonds, Series 2018 Recommendation:adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX BONDS, SERIES 2018 IN A PRINCIPAL AMOUNT NOT TO EXCEED $4,000,000.00 AND APPROVING CERTAIN DOCUMENTS Page 5 City of Lake Elsinore Printed on 10/4/2018 October 9, 2018City Council / Successor Agency Regular Agenda AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH CFD 2007-4 (Makenna Court) - SR CFD 2007-4 (Makenna Court) - Exhibit A Resolution of Issuance CFD 2007-4 (Makenna Court) - Exhibit B Official Statement CFD 2007-4 (Makenna Court) - Exhibit C Bond Indenture CFD 2007-4 (Makenna Court) - Exhibit D Continuing Disclosure CFD 2007-4 (Makenna Court) - Exhibit E Bond Purchase Agreement CFD 2007-4 (Makenna Court) - Exhibit F Funding Agreement CFD 2007-4 (Makenna Court) - Exhibit G Form of JCFA CFD 2007-4 (Makenna Court) - Exhibit H Appraisal Report CFD 2007-4 (Makenna Court) - Exhibit I Good Faith Estimate Attachments: 17)Update from Castle & Cooke on Project Developments Recommendation:Receive and file. Castle & Cooke - SR Castle & Cooke - Exhibit A Holding & Development Area Castle & Cooke - Exhibit B Land Use Plan Attachments: PUBLIC COMMENTS – NON-AGENDIZED ITEMS – 3 MINUTES (Please read & complete a Request to Address the City Council/Successor Agency form prior to the start of the meeting and turn it in to the City Clerk/Clerk. The Mayor/Chair or City Clerk/Clerk will call on you to speak.) CITY MANAGER COMMENTS CITY ATTORNEY COMMENTS CITY COUNCIL COMMENTS ADJOURNMENT The Lake Elsinore City Council and Successor Agency will adjourn to the Regular meeting of Tuesday, October 23, 2018, at 7:00 p.m. in the Cultural Center located at 183 N. Main Street, Lake Elsinore. AFFIDAVIT OF POSTING I, Susan M. Domen, MMC, City Clerk of the City of Lake Elsinore, do hereby affirm that a copy of the foregoing agenda was posted at City Hall at _________ p.m. on October 4, 2018. __________________________ Susan M. Domen, MMC City Clerk Page 6 City of Lake Elsinore Printed on 10/4/2018 Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-835 Agenda Date: 10/9/2018 Status: Presentation/CeremonialVersion: 1 File Type: ReportIn Control: City Council / Successor Agency Agenda Number: 1) Page 1 City of Lake Elsinore Printed on 10/4/2018 Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-836 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: MinutesIn Control: City Council / Successor Agency Agenda Number: 1) Page 1 City of Lake Elsinore Printed on 10/4/2018 Page 1 of 4 City of Lake Elsinore City Council Regular Meeting Minutes Tuesday, September 25, 2018 Call to Order A Regular meeting of the Council of the City of Lake Elsinore was held in the Cultural Center, 183 North Main Street, on the above date. The meeting was called to order at 7:00 p.m. by Mayor Johnson. Pledge of Allegiance The Pledge of Allegiance was led by Council Member Tisdale. Invocation – Moment of Silence Mayor Johnson requested a moment of silence. Roll Call Present: Council Members Hickman, Magee and Tisdale; Mayor Pro-Tem Manos and Mayor Johnson. Absent: None Presentations / Ceremonials 1) Fire Prevention Week Mayor Pro-Tem Manos presented a Proclamation to Fire Chief Pemberton, who introduced new Battalion Chief Olson who will serve as the Lake Elsinore Fire Chief. 2) National Preparedness Month Mayor Pro-Tem Manos presented a Proclamation to Public Works Supervisor de Santiago, who provided an update on Winter Storm preparations. Public Comments – Non-Agendized Items Appearing to speak was Ace Vallejos. Consent Calendar It was moved by Council Member Tisdale, seconded by Council Member Magee, and unanimously carried, to approve the Consent Calendar. 1) CC Minutes of the Joint and Regular Meeting of September 11, 2018 – approved the minutes. 2) CC Warrant List Dated September 13, 2018 – received and filed. 3) CC Investment Report for August 2018 – received and filed. Page 2 of 4 4) Planning Application No. 2018-60 (The Glen at Summerly) - Design Review for the Construction of 57 Single-Family Residential Units – adopted the Resolutions. Resolution No. 2018-125 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, FINDING THAT PLANNING APPLICATION NO. 2018-60 (RESIDENTIAL DESIGN REVIEW NO. 2018-21) IS CONSISTENT WITH THE WESTERN RIVERSIDE COUNTY MULTIPLE SPECIES HABITAT CONSERVATION PLAN (MSHCP) Resolution No. 2018-126 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING PLANNING APPLICATION NO. 2018-60 (RESIDENTIAL DESIGN REVIEW NO. 2018-21) PROVIDING BUILDING DESIGNS AND RELATED IMPROVEMENTS FOR 57 SINGLE- FAMILY RESIDNETIAL UNITS LCOATED WITHIN TRACT 31920-18 OF THE SUMMERLY DEVELOPMENT OF THE EAST LAKE SPECIFIC PLAN (APNs: 371-270-006 AND 024) 5) First Amendment with Spicer Consulting Group, LLC (SCG) for Geographic Information System (GIS) for Consulting and Support Services – authorized the City Manager to execute the amendment in the amount of $50,000.00. 6) Road Closures for 2018 Day of the Dead Celebration and Go Human Event – approved temporary road closures on Main Street as identified in the Event Road Closure Traffic Plan for the Day of the Dead and Go Human Events on October 27, 2018. 7) Southern California Association of Governments (SCAG) Grant and Memorandum of Understanding (MOU) to fund the Go Human Demonstration Project (Project) – accepted the SCAG Grant and authorize the City Manager to execute the MOU for the Project on Saturday, October 27, 2018. 8) Notice of Completion for the Hazardous Waste Removal and Demolition of the Lake Elsinore Neighborhood Center (CIP Project #Z20015) and Concrete Patios for the RV Resort (CIP Project #Z40007) – accepted the improvements into the City Maintained System for the listed projects; and, authorized staff to file the Notice of Completion with the County Recorder for the listed projects; and, authorized staff to release all retention monies 35 days after the filing of the Notice of Completion. 9) First Amendment to Professional Services Agreement with Dennis Janda Inc. for On-Call Surveyor Services for City-Wide Requirements – authorized the City Manager to execute the amendment in the amount of $30,000.00, in final form as approved by the City Attorney. 10) Amendment No. 2 to Agreement for Consulting Services with Area 63 Productions – authorized the City Manager to execute Amendment No. 2 in an amount not to exceed $30,000.00, in final form as approved by the City Attorney. Public Hearing 11) Downtown Elsinore Specific Plan (SP 2018-02), General Plan Amendment No. 2018-02 and Zone Change No. 2018-02 The Public Hearing opened at 7:16 p.m. There were no Conflict of Interest disclosures. City Clerk Domen affirmed receipt of Proof of Publication and noted that no items of correspondence had been received. Community Development Director Taylor and Planning Manager McHott presented a Power Point presentation. Page 3 of 4 The Public Hearing was closed at 7:32 p.m. It was moved by Mayor Pro-Tem Manos, seconded by Council Member Magee, and unanimously carried, to adopt the Resolutions. Resolution No. 2018-127 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADOPTING FINDINGS THAT THE DOWNTOWN ELSINORE SPECIFIC PLAN (SP 2018-02), GENERAL PLAN AMENDMENT NO. 2018-02 AND ZONE CHANGE NO. 2018-02 ARE CONSISTENT WITH THE WESTERN RIVERSIDE COUNTY MULTIPLE SPECIES HABITAT CONSERVATION PLAN (MSHCP) Resolution No. 2018-128 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADOPTING THE DOWNTOWN ELSINORE SPECIFIC PLAN (SP 2018-02) It was moved by Mayor Pro-Tem Manos, seconded by Council Member Tisdale, and unanimously carried, to introduce the Ordinance. Ordinance No. 2018- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADOPTING THE DOWNTOWN ELSINORE SPECIFIC PLAN (SP 2018-02) It was moved by Mayor Pro-Tem Manos, seconded by Council Member Magee, and unanimously carried, to introduce the Ordinance. Ordinance No. 2018- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADOPTING ZONE CHANGE NO. 2018-02 Public Comments – Non-Agendized Items Appearing to speak was Todd Cottle. City Manager Comments City Manager Yates announced City Engineer Fagrell is leaving the City and thanked him for his service to Lake Elsinore. City Attorney Comments City Attorney Leibold thanked City Engineer Fagrell for his service. City Council Comments Council Member Hickman announced the results for the Riverside Transit Authority Summer Rider program and that the Fall 18/Winter 19 City Activity Guide is available online; and, provided an update on the high school football teams. Council Member Magee confirmed there was a fire incident at the former Military Academy and requested the owner be noticed to put security back in place and to be billed for City’s response; thanked City Engineer Fagrell for the Gunnerson project; announced the 4x4 Swap meet will be on October 20th, Carp Quest III will be on October 20th; commented on the C&C Housing project on Mission Trail and stated appreciation for the developer apologizing and appearing at the Council meeting and that staff should have shut down dirt hauling by the second day. Page 4 of 4 Council Member Tisdale welcomed the new Fire Chief; thanked City Engineer Fagrell and wished him well; announced the Riverside Area Veterans Expo and Stand Down on September 28th, the She Marches Forward: Annual Women Veterans Luncheon on October 13th, bricks are available for sale to be placed at the Veterans Memorial, the Teen C.E.R.T program is taking sign-ups October 5th-7th; and, provided information regarding the invasive Aedes Mosquitos and encouraged them to report and do not leave water stagnating outside. Mayor Pro-Tem Manos thanked City Engineer Fagrell for his work for the City and wished him well; and, announced the Historic Main Street Parking Lot is now open and that it is National Voter Registration Day and encouraged everyone to get involved and engaged. Council Member Hickman thanked City Engineer Fagrell for work on sidewalks on Lakeshore Drive. Mayor Johnson welcomed Chief Olson to the team; thanked City Engineer Fagrell for his service to the City and wished him well; reported she attended a meeting with Police Chief Anne and the traffic team on traffic in Lake Elsinore; encouraged parents to have patience in school zones during drop off and pick-up times; provided a Homeless Task Force Update; announced the State of the City on September 27th, and the Holy Flood Ready Community meeting on November 5th. Adjournment The Lake Elsinore City Council meeting adjourned at 8:05 p.m. to the Regular meeting of Tuesday, October 9, 2018, at 7:00 p.m. in the Cultural Center located at 183 N. Main Street, Lake Elsinore. Natasha Johnson Susan M. Domen, MMC Mayor City Clerk Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-837 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: WarrantsIn Control: City Council / Successor Agency Agenda Number: 2) Page 1 City of Lake Elsinore Printed on 10/4/2018 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Prepared by:Frances Ramirez, Account Specialist II Approved by:Jason Simpson, Assistant City Manager Date:October 16, 2018 Subject:Warrant List Dated September 27, 2018 Recommendation Receive and file. Background and Discussion The Warrant List is a listing of all general checks issued since the prior Warrant List. Exhibits: A -Warrant Summary B -Warrant List SEPTEMBER 27, 2018 CITY OF LAKE ELSINORE WARRANT SUMMARY FUND#FUND DESCRIPTION TOTAL 100 GENERAL 1,652,989.12$ 110 GAS TAX 40,933.42 130 LIGHTING, LANDSCAPE, MAINTENANCE DIST - CITYWIDE 51,423.42 135 LIGHTING, LANDSCAPE, MAINTENANCE DIST - NO. 1 25,704.14 180 LAUNCH POINTE 16,263.76 300 INSURANCE SERVICE 27,294.29 305 INFORMATION SYSTEMS SERVICE 62,272.30 310 SUPPORT SERVICE 1,085.22 315 FLEET SERVICE 19,444.69 320 FACILITIES SERVICE 12,945.06 331 CFD 2006-1 IA-CC SUMMERLY MPROVEMENT 2,000.00 332 CFD 2006-1 IA-B SUMMERLY IMPROVEMENT 2,800.00 345 CFD 2003-2 IA-D CANYON HILLS IMPROVEMENT 2,800.00 347 CFD 2006-1 IA-A SUMMERLY IMPROVEMENT 2,800.00 350 CFD 98-1 SUMMERHILL IMPROVEMENT 2,800.00 354 CFD 90-2 TUSCANY HILLS IMPROVEMENT 1,400.00 357 CFD 2003-2 IA-A CANYON HILLS IMPROVEMENT 2,100.00 366 CFD 2005-6 CITY CENTER TOWNHOMES IMPROVEMENT 1,575.00 368 CFD 2006-2 VISCAYA IMPROVEMENT 1,575.00 369 CFD 2004-3 IA-1 ROSETTA CANYON IMPROVEMENT 1,575.00 371 CFD 2005-1 SERENITY IMPROVEMENT 1,575.00 372 CFD 2005-2 IA-A ALBERHILL RANCH IMPROVEMENT 1,575.00 384 CFD 2003-2 IA-B CANYON HILLS IMPROVEMENT 1,575.00 385 CFD 2004-3 IA-2 ROSETTA CANYON IMPROVEMENT 1,575.00 387 CFD 2007-5 RED KITE IMPROVEMENT 80,525.00 389 CFD 88-3 WEST LAKE VILLAGES IMPROVEMENT 5,600.00 390 CFD 2003-2 IA-C CANYON HILLS IMPROVEMENT 4,900.00 392 CFD 95-1 CIVIC CENTER IMPROVEMENT 1,575.00 393 AD 93-1 COTTONWOOD HILLS IMPROVEMENT 2,800.00 394 CFD 2005-5 WASSON CANYON IMPROVEMENT 2,800.00 500 CAPITAL IMPROVEMENT PLAN 1,946,025.74 608 TRUST DEPOSITS 33,785.00 617 HOUSING 14,115.80 620 COST RECOVERY TRUST DEPOSITS 14,581.61 631 DESTRATIFICATION EQUIPMENT REPLACEMENT 841.71 GRAND TOTAL 4,045,630.28$ Exhibit A 1 of 1 SEPTEMBER 27, 2018 CITY OF LAKE ELSINORE WARRANT LIST WARRANT#VENDOR NAME TOTAL 1376 BLACK ROCK CONSTRUCTION, INC.165,635.44$ 1377-1378 BMW MOTORCYCLES OF RIVERSIDE 877.96 1379 CA EARLY LEARNERS, LLC 1,781.25 1380 CAROLE DONAHOE 337.50 1381-1383 EXCEL LANDSCAPE, INC.1,843.75 1384 GMS ELEVATOR SERVICES, INC.197.00 1385 GRANICUS, INC.7,796.73 1386 HDR ENGINEERING, INC.28,428.79 1387 LEIBOLD, MCCLENDON & MANN, PC 45,037.69 1388-1389 MAPLES & ASSOCIATES, INC.92,479.25 1390 MILLENNIUM ALARM SYSTEMS, INC.2,560.00 1391 REC1 188.99 1392 SOCAL BOAT AND TRAILER, INC.1,891.09 1393 VISION TECHNOLOGY SOLUTION, LLC 210.00 1394 YARABITH BUENFIL 1,098.75 1395-1399 DOWNS ENERGY 7,485.68 1400-1404 ENDRESEN DEVELOPMENT, LLC 33,025.00 1405 ENGINEERING RESOURCES OF SO CA 17,975.91 1406-1407 EXCEL LANDSCAPE, INC.79,019.99 1408-1416 INNOVATIVE DOCUMENT SOLUTIONS 1,033.01 1417 LEIBOLD, MCCLENDON & MANN, PC 52,524.80 1418-1422 MAPLES & ASSOCIATES, INC.142,513.71 1423 RIVERSIDE COUNTY SHERIFF'S, ACCOUNTING & FINANCE 830,555.94 1424-1427 AREA 63 PRODUCTIONS 4,279.16 1428-1429 BMW MOTORCYCLES OF RIVERSIDE 1,438.22 1430-1431 BUREAU VERITAS NORTH AMERICA, INC.12,270.54 1432-1434 ENDRESEN DEVELOPMENT, LLC 29,765.00 1435 EXCEL LANDSCAPE, INC.934.00 1436-1437 MAPLES & ASSOCIATES, INC.122,788.85 1438 MILLENNIUM ALARM SYSTEMS, INC.2,280.00 1439 SPICER CONSULTING GROUP 1,428.00 1440 WEST COAST SERVICES 230.00 134917 ACTION GAS & WELDING SUPPLY 92.13 134918 AGUILAR CONSULTING, INC.72,871.48 134919 ALBERT WEBB & ASSOCIATES 24,671.54 134920 ALLEGRA MARKETING PRINT MAIL 517.20 134921 ALPINE WATER 174.36 134922 AMERICAN BEST ASSETS 32,285.00 134923 ANGLER CHRONICLES, LLC 6,000.00 134924 ANIMAL FRIENDS OF THE VALLEY 7,500.00 134925 ARAMARK UNIFORM SERVICES 131.86 134926 BABCOCK LABORATORIES, INC.825.00 134927 C. R. & R., INC.15,230.27 134928 CALIFORNIA STATE FIRE PROTECTION 1,102.50 134929 CDW GOVERNMENT, INC.1,964.17 134930 CHANDLER AGGREGATES, INC.15,112.69 134931 CHRISTIANSEN AMUSEMENTS, INC.1,000.00 134932 COUNTY OF RIVERSIDE DEPT. OF ENVIRONMENTAL HEALTH 146.00 134933 COUNTY OF RIVERSIDE DEPT. OF ENVIRONMENTAL HEALTH 146.00 134934 COUNTY OF RIVERSIDE, EXECUTIVE OFFICE 183,714.00 Exhibit B 1 OF 4 SEPTEMBER 27, 2018 CITY OF LAKE ELSINORE WARRANT LIST WARRANT#VENDOR NAME TOTAL 134935 DELL MARKETING, LP 4,517.51 134936 DETROIT INDUSTRIAL TOOL 371.90 134937 DISCOUNT HAULING & CLEANUP SERVICE 4,800.00 134938 DUNBAR ARMORED, INC.386.42 134939 DUNCAN, LARRY 10.00 134940-134942 E. V. M. W. D.44,148.27 134943 E. V. M. W. D.12,116.31 134944 EWING 2,273.79 134945 FERGUSON WATERWORKS 665.46 134946 FRONTIER CALIFORNIA, INC.53.37 134947 GMC ENGINEERING, INC.506,021.88 134948 GORM, INC 1,858.80 134949 GOVERNMENT FINANCE OFFICERS ASSOC.75.00 134950 HAZZARD BACKFLOW CO.1,685.00 134951 HDL HINDERLITER, DE LLAMAS & ASSOCIATES 3,374.39 134952 INTERNATIONAL CODE COUNCIL, INC.1,164.11 134953 IRON MOUNTAIN, INC.127.13 134954 ITAV SOLUTIONS, INC.615.44 134955 JOHNATHAN SKINNER 542.80 134956 LAKE CHEVROLET 469.42 134957 LAKE ELSINORE TIRE & AUTO, INC.337.90 134958 LIEBERT CASSIDY WHITMORE 925.00 134959 MANPOWER TEMP SERVICES 1,754.68 134960 MAXIMUM SIGN CO.300.00 134961 MICHAEL BAKER INTERNATIONAL, INC.12,577.25 134962 PETTY CASH - CITY OF LAKE ELSINORE 138.73 134963 PLAINJOE STUDIOS 52,186.54 134964 THE PRESS ENTERPRISE 950.40 134965 PRODUCTION VIDEO 4,000.00 134966 PVP COMMUNICATIONS, INC.710.15 134967 QUICK CRETE PRODUCTS CORP.2,978.21 134968 QUINN COMPANY 4,549.23 134969 RIVERSIDE COUNTY TRANSPORTATION & LAND MANAGEMENT 17,981.69 134970 ROBBINS PEST MANAGEMENT, INC.3,505.00 134971 ROW TRAFFIC SAFETY, INC.719.23 134972 SONSRAY MACHINERY, LLC 484.19 134973 SOUTHERN CALIFORNIA EDISON CO.184.11 134974 STAPLES BUSINESS ADVANTAGE 133.49 134975 STAUFFER'S LAWN EQUIPMENT 151.91 134976 STEVE'S TOWING 1,072.00 134977 SUN PAC CONTAINERS 115.00 134978 SUNBELT RENTALS, INC.974.64 134979 SUSTAINABLE CIVIL ENG SOLUTIONS, INC.12,000.00 134980 TEAM AUTOAID, INC.396.52 134981 THE LANDSCAPE CENTER 12,016.20 134982 TIME WARNER CABLE 139.95 134983 TIME WARNER CABLE 269.99 134984 TIME WARNER CABLE 104.11 134985 TRI-STAR ELECTRIC 2,619.00 134986 TULIPS TROPHIES & TREASURES 94.71 Exhibit B 2 OF 4 SEPTEMBER 27, 2018 CITY OF LAKE ELSINORE WARRANT LIST WARRANT#VENDOR NAME TOTAL 134987 TUSCANY HILLS LANDSCAPE & REC. CO.4,602.50 134988 UNITED PARCEL SERVICE 52.21 134989 UTILITY COST MANAGEMENT, LLC 985.13 134990 VULCAN MATERIALS COMPANY 777.01 134991 WEKA, INC.359,847.65 134992 WILLDAN 412.50 134993 WILLIAMS BAIT & TACKLE, INC.7,995.00 134994 WILMINGTON TRUST, NATIONAL ASSOCIATION 2,000.00 134995 YONGXIAY YANG 105.03 134996 Z BEST BODY & PAINT SHOPS, INC.913.56 134997 I.C.M.A. RETIREMENT TRUST 8,364.00 134998 LIUNA LOCAL 777 588.00 134999 STANDARD INSURANCE COMPANY 1,161.16 135000 UNITED WAY OF THE INLAND VALLEY 25.00 135001 VISION SERVICE PLAN 1,454.51 135002 E. V. M. W. D.159,554.83 135003 COLONIAL LIFE 378.81 135004 LEGAL SHIELD 139.50 135005 ACOM SOLUTIONS 134.69 135006 ALLEGRA MARKETING PRINT MAIL 414.84 135007 ANDY'S GLASS & WINDOW CO.376.00 135008 ARAMARK UNIFORM SERVICES 129.82 135009 BEST POOL SERVICE, LLC 98.00 135010 BIO-TOX LABORATORIES 569.00 135011 CALIFORNIA, DEPARTMENT OF JUSTICE 32.00 135012 CANYON HILLS MARKETPLACE I 7,678.10 135013 CHANDLER AGGREGATES, INC.13,214.53 135014 CITYBYAPP, INC.2,574.00 135015 COUNTY OF RIVERSIDE DEPT. OF ENVIRONMENTAL HEALTH 1,632.00 135016 CRIME SCENE STERI-CLEAN, LLC 750.00 135017 DAVID TURCH & ASSOCIATES 3,500.00 135018 RICK DE SANTIAGO 343.51 135019 DMC ENTERPRISES 51,250.00 135020-135022 E. V. M. W. D.44,268.33 135023 G.R. LIGHTING SUPPLIES 7,147.06 135024 GLASSMAN PLANNING ASSOCIATES 451.50 135025 HAZZARD BACKFLOW CO.3,800.00 135026 INLAND URGENT CARE, MEDICAL CORP.340.00 135028 LAKE ELSINORE VALLEY CHAMBER OF COMMERCE 10,000.00 135029 LIFTOFF, LLC 25,500.00 135030 MANPOWER TEMP SERVICES 1,777.47 135031 MUNISERVICES, LLC 1,000.00 135032 NATIONAL CONSTRUCTION RENTALS, INC.1,705.68 135033 SERGIO ORTIZ 2,900.00 135034 JULIAN PEREZ 221.54 135035 PRATS, GENARO & MABLE 2,121.12 135036 THE PRESS ENTERPRISE 1,056.00 135037 RANCHO REPROGRAPHICS, INC.133.16 135038 SECURITY NETWORK, INC.555.00 135039 SHRED-IT USA, LLC 84.00 Exhibit B 3 OF 4 SEPTEMBER 27, 2018 CITY OF LAKE ELSINORE WARRANT LIST WARRANT#VENDOR NAME TOTAL 135040 SIGN DESIGN 6,150.53 135041-135044 SOUTHERN CALIFORNIA EDISON CO.15,316.72 135045 STAPLES BUSINESS ADVANTAGE 542.44 135046 STERLING MOTOR GROUP, INC.500.00 135047 STK ARCHITECTURE, INC.619.81 135048 SUN PAC CONTAINERS 75.00 135049 TEMECULA MOTORSPORTS 102.35 135050 THE LANDSCAPE CENTER 23,062.50 135051 TIME WARNER CABLE 84.84 135052 TIME WARNER CABLE 269.99 135053 TULIPS TROPHIES & TREASURES 53.88 135054 VANTAGE AUCTIONS, INC.1,058.70 135055 WESTERN RIVERSIDE COUNCIL OF GOVT'S 6,933.35 135056-135058 WILMINGTON TRUST, NATIONAL ASSOCIATION 44,800.00 135060 JOE ZAHABI 1,532.11 DFT19000085 PAYCHEX OF NEW YORK, LLC 229.90 DFT19000102 FRONTIER CALIFORNIA - INTERNET 358.98 DFT19000103 FH II, LLC 80,525.00 DFT19000104 PAYCHEX OF NEW YORK, LLC 991.57 DFT19000105 INTERNAL REVENUE SERVICE 59,905.14 DFT19000106 FRANCHISE TAX BOARD 11,552.45 DFT19000107 GUARDIAN 11,818.02 DFT19000108 TASC 2,704.65 DFT19000109 INTERNAL REVENUE SERVICE 190.00 DFT19000110 STATE DISBURSEMENT UNIT 201.69 DFT19000111 THE L.I.U. OF N.A.1,288.00 DFT19000112 CALPERS 145,013.11 DFT19000113 CALPERS 38,965.28 DFT19000114 CALPERS 82,627.49 GRAND TOTAL 4,045,630.28$ Exhibit B 4 OF 4 Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-838 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: ReportIn Control: City Council / Successor Agency Agenda Number: 3) Page 1 City of Lake Elsinore Printed on 10/4/2018 Page 1 of 4 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Prepared by: Damaris Abraham, Senior Planner Date:October 9, 2018 Subject:Planning Application No. 2018-02 (New Ventures)– Proposal to construct a five-unit apartment complex on a 0.34-acre lot located at the northwest corner of Graham Avenue and Lowell Street. Applicant:Chad Logan, New Ventures, LLC Recommendation adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, FINDING THAT PLANNING APPLICATION NO. 2018-02 (RESIDENTIAL DESIGN REVIEW NO. 2018-01) IS CONSISTENT WITH THE WESTERN RIVERSIDE COUNTY MULTIPLE SPECIES HABITAT CONSERVATION PLAN (MSHCP); and, adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING PLANNING APPLICATION NO. 2018-02 (RESIDENTIAL DESIGN REVIEW NO. 2018-01) PROVIDING BUILDING DESIGNS AND RELATED IMPROVEMENTS FOR A FIVE-UNIT APARTMENT COMPLEX LOCATED AT 374-183-018. Background Planning Commission Hearing The Project was heard by the Planning Commission on September 18, 2018. Prior to the Planning Commission hearing staff received an email communication from Mary Monise dated September 14, 2018 in opposition of the Project. Some of the concerns raised in the email include that the multi-family apartment project does not blend in with the surrounding area because of the height, design, and proposed density for the project. The applicant has provided an email response dated September 16, 2018. Both emails have been attached to the staff report (Exhibit H). Staff has reviewed and addressed the email as outlined below: The proposed Project is consistent with the site’s General Plan Land Use designation of Residential Mixed Use (RM) and the site’s zoning designation of Residential Mixed Use (RMU). The RMU zoning designation is intended primarily for medium to high-density residential mixed-use developments. The proposed apartment complex is a permitted use in the RMU zone. The Residential Mixed Use (RM) designation allows densities up to 24 Dwelling Units per Acre (D.U./Ac.). The Project’s density is 15 D.U./Ac. PA 2018-02 (New Ventures) 10/09/2018 Page 2 of 4 The Project’s Traditional Architectural Style is complies with the Goals and Policies of the Historic District of the General Plan. The design concept complements the existing surrounding development. The Project is proposing to construct three (3) buildings that are designed to have the appearance a single-family residence and duplexes in order for the Project to blend in with the surrounding area. The Project’s earth tone color palette also blends in well with the surrounding neighborhood. The maximum height for the proposed building is 29 ft. and the Project is setback 20 ft. from the westerly property line adjacent to the existing residence to provide additional buffer. At the hearing, the applicant explained that the initial Project design submitted for review included one (1) building with six (6) units. The applicant worked with staff to break the building into three, reduce the units to five, and redesign the Project layout to eliminate three (3) driveway approaches that were initially proposed from Lowell Street. Access to the Project site will now be from an existing an alleyway through Lowell Street. The driveway at Graham Street will be limited to a one-way exist from the Project site. The applicant also explained that they are working on submitting a Condominium Map in order to create five (5) units that can be sold as individual homes. The Planning Commission then unanimously recommended approval of the Project by a vote of 5-0. Discussion Project Request and Location The applicant is requesting approval of Planning Application No. 2018-02 (Residential Design Review No. 2018-01) to construct a five-unit apartment complex within three buildings on an approximately 0.34-acre vacant lot (Project). Units A through D will have a 1,573 sq. ft. living area, a 250 sq. ft. garage, and a 55 sq. ft. entry area. Unit E will have a 1,983 sq. ft. living area, a 479 sq. ft. garage, a 32 sq. ft. balcony, and a 38 sq. ft. porch. The Project is located at the northwesterly corner of Graham Avenue and Lowell Street, and more specifically referred to as Assessor Parcel Number 374-183-018. Environmental Setting EXISTING LAND USE GENERAL PLAN ZONING Project Site Vacant Residential Mixed Use (RM)Residential Mixed Use (RMU) North Residential Low Medium Residential (LMR)Single-Family Residential (R-1) South Residential Business Professional (BP)Commercial Office (CO) East Residential Residential Mixed Use (RM)Residential Mixed Use (RMU) West Residential Residential Mixed Use (RM)Residential Mixed Use (RMU) Analysis General Plan Consistency The Project site has a General Plan Land Use designation of Residential Mixed Use (RM) and is located in the Historic District. The RM designation provides for a mix of residential and non- PA 2018-02 (New Ventures) 10/09/2018 Page 3 of 4 residential uses within a single proposed development area with an emphasis on high-density residential uses. The proposed Project is an infill development project that is proposing to construct a five-unit apartment complex on an approximately 0.34-acre lot. The proposed Project is compatible with the existing surrounding uses and will blend in with the surrounding area. The Project is consistent with the General Plan. Municipal Code Consistency The Project site is currently zoned Residential Mixed Use (RMU). Staff has reviewed the proposed Project with respect to the relevant development standards as identified in the LEMC and has detailed the requirements and the proposed development standards as follows: DEVELOPMENT STANDARD REQUIRED PROPOSED Density (D.U./Ac.)18 15 Building Height Varied Roof Lines 27’-1” Setback (Street Front)10’-0” 10’-0” Minimum dwelling unit size: 2-bedroom & above 700 SF plus 100 SF for each additional bedroom Units A - D: 1,573 SF Unit E: 1,983 SF Parking: Multifamily with 2 or more bedrooms: (1 covered plus 1.33 open space) 5 (covered) + 7 (Open)6 (covered) + 6 (Open) Total = 12 Total = 12 The Project provides an efficient and safe site plan that provides adequate circulationand parking. The Project also complies with the residential development standards outlined in Chapter 17.44 of the LEMC. The Project incorporates a Traditional Architectural Style that includes asphalt shingle roof, decorative vents, window shutters and trims, fascia, lap siding, metal garage door, and brick veneer. The proposed landscaping plan will complement the architectural design of the residence. The Design Review Committee that includes staff from Planning, Building and Safety, Fire, and Engineering have reviewed the requested Design Review application, and support the proposed Project. Appropriate Conditions of Approval have been included that would mitigate any potential issues associated with the future development and establishment of use. Environmental Determination Staff has determined that the proposed Project is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15303 (Class 3: New Construction or Conversion of Small Structures). Class 3 consists of construction and location of limited numbers of new, small facilities or structures: (b) a duplex or similar multi-family residential structure totaling no more than four dwelling units. In urbanized areas, this exemption applies to apartments, duplexes, and similar structures designed for not more than six dwelling units. The Project is proposing to construct a multi-family apartment complex with five dwelling units in an urbanized area. The Project is consistent with the Western Riverside County Multiple Species Habitat Conservation Plan (MSHCP). The Project consists of constructing a five-unit apartment complex on a lot that been previously disturbed. The Project is not located in a Criteria Cell. Therefore, it was not required to be processed through the Lake Elsinore Acquisition Process (LEAP) and Joint PA 2018-02 (New Ventures) 10/09/2018 Page 4 of 4 Project Review (JPR) processes. The Project complies with all other applicable requirements of the MSHCP. Fiscal Impact The time and costs related to processing this Project have been covered by the Developer Deposit paid for by the applicant. No General Fund budgets have been allocated or used in the processing of this application. The approval of the Project does not fiscally impact the City’s General Fund. Mitigation Measures to protect the City fiscally have already been included in the Conditions of Approval. Exhibits A – MSHCP Resolution B – RDR Resolution C – Conditions of Approval D – Vicinity Map E – Aerial Map F – Land Use and Zoning Maps G – Design Review Package H – Correspondence RESOLUTION NO. 2018-__ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, FINDING THAT PLANNING APPLICATION NO. 2018-02 (RESIDENTIAL DESIGN REVIEW NO. 2018-01) IS CONSISTENT WITH THE WESTERN RIVERSIDE COUNTY MULTIPLE SPECIES HABITAT CONSERVATION PLAN (MSHCP) Whereas,Chad Logan, New Ventures, LLC has filed an application with the City of Lake Elsinore (City) requesting approval of Planning Application No. 2018-02 (Residential Design Review No. 2018-01) to construct a five-unit apartment complex within three buildings on an approximately 0.34-acre vacant lot (Project). Units A through D will have a 1,573 sq. ft. living area, a 250 sq. ft. garage, and a 55 sq. ft. entry area. Unit E will have a 1,983 sq. ft. living area, a 479 sq. ft. garage, a 32 sq. ft. balcony, and a 38 sq. ft. porch. The Project is located at the northwesterly corner of Graham Avenue and Lowell Street, and more specifically referred to as Assessor Parcel Number 374-183-018; and, Whereas,Section 6.0 of the Western Riverside County Multiple Species Habitat Conservation Plan (MSHCP) requires that all discretionary projects within a MSHCP criteria cell undergo the Lake Elsinore Acquisition Process (LEAP) and Joint Project Review (JPR) processes to analyze the scope of the proposed development and establish a building envelope that is consistent with the MSHCP criteria; and, Whereas,Section 6.0 of the MSHCP further requires that the City adopt consistency findings demonstrating that the proposed discretionary entitlement complies with the MSHCP criteria cell, and the MSHCP goals and objectives; and, Whereas,pursuant to Lake Elsinore Municipal Code (LEMC) Chapter 17.184 (Design Review) the Planning Commission (Commission) has been delegated with the responsibility of making recommendations to the City Council (Council) pertaining to the residential design reviews; and, Whereas,on September 18, 2018, at a duly noticed Public Hearing the Commission has considered evidence presented by the Community Development Department and other interested parties with respect to this item; and, Whereas,pursuant to Section 17.184.090 of the LEMC the Council has the responsibility of making decisions to approve, modify, or disapprove recommendations of the Commission for residential design review applications; and, Whereas,on October 9, 2018, at a duly noticed Public Meeting, the Council has considered the recommendation of the Commission as well as evidence presented by the Community Development Department and other interested parties with respect to this item. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1.The Council has considered the Project and its consistency with the MSHCP prior to adopting Findings of Consistency with the MSHCP. Section 2.That in accordance with the MSHCP, the Council makes the following findings for MSHCP consistency: CC Reso. No. 2018-____ Page 2 of 4 1. The Project is a project under the City’s MSHCP Resolution, and the City must make an MSHCP Consistency finding before approval. Pursuant to the City’s MSHCP Resolution, the Project is required to be reviewed for MSHCP consistency, including consistency with other “Plan Wide Requirements.” The Project site is not located within a MSHCP criteria cell. Based upon the site reconnaissance survey there are no issues regarding consistency with the MSHCP’s other “Plan Wide Requirements.” The only requirements potentially applicable to the Project were the Protection of Species Associated with Riparian/Riverine Areas and Vernal Pool Guidelines (Section 6.1.2 of the MSHCP) and payment of the MSHCP Local Development Mitigation Fee (Section 4 of the MSHCP Ordinance). The Project site is located in a previously disturbed site, and has no habitat, including riparian/riverine areas or vernal pools, present on site. 2. The Project is subject to the City’s LEAP and the Western Riverside County Regional Conservation Authority’s (RCA) Joint Project Review (JPR) processes. As stated above, the Project is not located within a criteria cell and therefore the Project was not processed through the City’s LEAP or JPR processes. 3. The Project is consistent with the Riparian/Riverine Areas and Vernal Pools Guidelines. The Project consists of the construction of a five-unit apartment complex on a previously disturbed site. As such, the Riparian/Riverine Areas and Vernal Pool Guidelines as set forth in Section 6.1.2 of the MSHCP are not applicable. 4. The Project is consistent with the Protection of Narrow Endemic Plant Species Guidelines. The site does not fall within any Narrow Endemic Plant Species Survey Areas. Neither a habitat assessment nor further focused surveys are required for the Project. Therefore, Protection of Narrow Endemic Plant Species Guidelines as set forth in Section 6.1.3 of the MSHCP are not applicable to the Project. 5. The Project is consistent with the Additional Survey Needs and Procedures. The MSHCP only requires additional surveys for certain species if the Project is located in Criteria Area Species Survey Areas, Amphibian Species Survey Areas, Burrowing Owl Survey Areas, and Mammal Species Survey Areas of the MSHCP. The Project site is not located within any of the Critical Species Survey Areas. Therefore, the provisions of MSHCP Section 6.3.2 are not applicable. 6. The Project is consistent with the Urban/Wildlands Interface Guidelines. The Project site is not within or adjacent to any MSHCP cell criteria or conservation areas. Therefore, the Urban/Wildlands Interface Guidelines of MSHCP Section 6.1.4 are not applicable. 7. The Project is consistent with the Vegetation Mapping requirements. The Project consists of the construction of a five-unit apartment complex on a previously disturbed site. There are no resources located on the Project site requiring mapping as set forth in MSHCP Section 6.3.1. CC Reso. No. 2018-____ Page 3 of 4 8. The Project is consistent with the Fuels Management Guidelines. The Project site is not within or adjacent to any MSHCP criteria cell or conservation areas. Therefore, the Fuels Management Guidelines of MSHCP Section 6.4 are not applicable. 9. The Project will be conditioned to pay the City’s MSHCP Local Development Mitigation Fee. As a condition of approval, the Project will be required to pay the City’s MSHCP Local Development Mitigation Fee at the time of issuance of building permits. 10. The Project is consistent with the MSHCP. The Project consists of the construction of a five-unit apartment complex on a previously disturbed site. As described above, the project complies with all applicable MSHCP requirements. Section 3.Based upon the evidence presented, both written and testimonial, and the above findings, the Council hereby finds that the Project is consistent with the MSHCP. Section 4.This Resolution shall take effect immediately upon its adoption. Section 5.The City Clerk shall certify to the adoption of this Resolution and enter it into the book of original Resolutions. Passed and Adopted on this 9 th day of October 2018. Natasha Johnson Mayor Attest: ___________________________________ Susan M. Domen, MMC City Clerk CC Reso. No. 2018-____ Page 4 of 4 STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Susan M. Domen, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify that Resolution No. 2018-____ was adopted by the City Council of the City of Lake Elsinore, California, at the regular meeting of October 9, 2018, and that the same was adopted by the following vote: AYES: NOES: ABSENT: ABSTAIN: Susan M. Domen, MMC City Clerk RESOLUTION NO. 2018-_____ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING PLANNING APPLICATION NO. 2018-02 (RESIDENTIAL DESIGN REVIEW NO. 2018-01) PROVIDING BUILDING DESIGNS AND RELATED IMPROVEMENTS FOR A FIVE-UNIT APARTMENT COMPLEX LOCATED AT 374-183-018 Whereas,Chad Logan, New Ventures, LLC has filed an application with the City of Lake Elsinore (City) requesting approval of Planning Application No. 2018-02 (Residential Design Review No. 2018-01) to construct a five-unit apartment complex within three buildings on an approximately 0.34-acre vacant lot (Project). Units A through D will have a 1,573 sq. ft. living area, a 250 sq. ft. garage, and a 55 sq. ft. entry area. Unit E will have a 1,983 sq. ft. living area, a 479 sq. ft. garage, a 32 sq. ft. balcony, and a 38 sq. ft. porch. The Project is located at the northwesterly corner of Graham Avenue and Lowell Street, and more specifically referred to as Assessor Parcel Number 374-183-018; and, Whereas,the proposed Project is exempt from the California Environmental Quality Act (Cal. Publ. Res. Code §§21000 et seq.:”CEQA”) and CEQA Guidelines (14. Cal. Code Regs §§15000 et seq.), specifically pursuant to Section 15303 (Class 3 –New Construction or Conversion of Small Structures); and, Whereas,pursuant to Lake Elsinore Municipal Code (LEMC) Chapter 17.184 (Design Review) the Planning Commission (Commission) has been delegated with the responsibility of making recommendations to the City Council (Council) pertaining to the residential design reviews; and, Whereas,on September 18, 2018, at a duly noticed Public Hearing, the Commission considered evidence presented by the Community Development Department and other interested parties with respect to this item; and, Whereas,pursuant to Section 17.184.090 of the LEMC the Council has the responsibility of making decisions to approve, modify, or disapprove recommendations of the Commission for residential design review applications; and, Whereas,on October 9, 2018, at a duly noticed Public Meeting, the Council has considered the recommendation of the Commission as well as evidence presented by the Community Development Department and other interested parties with respect to this item. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1.The Council has reviewed and analyzed the proposed Project pursuant to the California Planning and Zoning Laws (Cal. Gov. Code §§ 65000 et seq.), the Lake Elsinore General Plan (GP), the LEMC and finds and determines that the proposed Project is consistent with the requirements of California Planning and Zoning Law and with the goals and policies of the GP and the LEMC. Section 2.The Council finds that the proposed Project is exempt from the California Environmental Quality Act (Cal. Publ. Res. Code §§21000 et seq.:”CEQA”) and CEQA Guidelines (14. Cal. Code Regs §§15000 et seq.), specifically pursuant to Section 15303 (Class 3 –New Construction or Conversion of Small Structures). Class 3 consists of construction and location of CC Reso. No. 2018-____ Page 2 of 3 limited numbers of new, small facilities or structures: (b) a duplex or similar multi-family residential structure totaling no more than four dwelling units. In urbanized areas, this exemption applies to apartments, duplexes, and similar structures designed for not more than six dwelling units. The Project is proposing to construct a multi-family apartment complex with five dwelling units in an urbanized area. Section 3.That in accordance with State Planning and Zoning Law and the LEMC, the Council makes the following findings for the approval of Planning Application No. 2018-02 (Residential Design Review No. 2018-01): 1.The Project, as approved, will comply with the goals and objectives of the General Plan, and the Zoning District in which the Project is located. The Project complies with the goals and objectives of the General Plan because it will assist in achieving the development of a well-balanced and functional mix of residential, limited commercial, limited industrial, open space, recreational and institutional land uses by providing additional affordable housing within the City. The proposed Project is an infill development that is proposing to construct a five-unit apartment complex. The proposed Project will complement and enhance the existing developed areas in which the Project is located. 2.The Project complies with the design directives contained in the General Plan and all other applicable provisions of the LEMC. The Project is appropriate to the site and surrounding developments in that the proposed five-unit apartment complex has been designed in consideration of the size and shape of the property and meets all the development standards. Further, the Project as proposed will complement the quality of existing development and will create a visually pleasing, non-detractive relationship between the proposed and existing residences. 3.Subject to the attached conditions of approval, the Project is not anticipated to result in any significant adverse environmental impacts. Notwithstanding the fact that the Project is exempt from CEQA provisions pursuant to a Class 3 exemption, the Project was reviewed and conditioned by all applicable City departments to ensure that the Project blends into existing development, creates the least amount of disturbance, and does not negatively impact the residents in the area. The Project will not have a significant effect on the environment. 4.Conditions and safeguards pursuant to Chapter 17.184 of the LEMC, including guarantees and evidence of compliance with conditions, have been incorporated into the approval of the Project to ensure development of the property in accordance with the objectives of Chapter 17.184. Pursuant to Section 17.184.070 of the LEMC, the Project been considered by the Planning Commission at a duly noticed Public Hearing on September 18, 2018. The proposed Project, as reviewed and conditioned by all applicable City divisions, departments, and agencies, will not have a significant effect on the environment. Section 4. Based upon all of the evidence presented and the above findings, the Council hereby approves Planning Application No. 2018-02 (Residential Design Review No. 2018-01). Section 5: This Resolution shall take effect immediately upon its adoption. CC Reso. No. 2018-____ Page 3 of 3 Section 6.The City Clerk shall certify to the adoption of this Resolution and enter it into the book of original Resolutions. Passed and Adopted on this 9 th day of October 2018. Natasha Johnson Mayor Attest: ___________________________________ Susan M. Domen, MMC City Clerk STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Susan M. Domen, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify that Resolution No. 2018-____ was adopted by the City Council of the City of Lake Elsinore, California, at the Regular meeting of October 9, 2018, and that the same was adopted by the following vote: AYES: NOES: ABSENT: ABSTAIN: Susan M. Domen, MMC City Clerk Applicant’s Initials: _____ Page 1 of 12 CONDITIONS OF APPROVAL RESOLUTIONS:2018-XX and 2018-XX PROJECT:PA 2018-02/RDR 2018-01 PROJECT LOCATION:APN: 374-183-018 APPROVAL DATE:October 9, 2018 EFFECTIVE DATE:October 9, 2018 EXPIRATION DATE:October 9, 2020 GENERAL CONDITIONS 1.Planning Application No. 2018-02 (Residential Design Review No. 2018-01) proposes to construct a five-unit apartment complex within three buildings on an approximately 0.34- acre vacant lot (Project). Units A through D will have a 1,573 sq. ft. living area, a 250 sq. ft. garage, and a 55 sq. ft. entry area. Unit E will have a 1,983 sq. ft. living area, a 479 sq. ft. garage, a 32 sq. ft. balcony, and a 38 sq. ft. porch. The Project is located at the northwesterly corner of Graham Avenue and Lowell Street, and more specifically referred to as Assessor Parcel Number 374-183-018. 2.The applicant shall defend (with counsel acceptable to the City), indemnify, and hold harmless the City, its Officials, Officers, Employees, Agents, and its Consultants (Indemnitees) from any claim, action, or proceeding against the Indemnitees to attack, set aside, void, or annul an approval of the City, its advisory agencies, appeal boards, or legislative body concerning approval, implementation and construction of the Planning Application No. 2018-02 (Residential Design Review No. 2018-01), which action is bought within the time period provided for in California Government Code Sections 65009 and/or 66499.37, and Public Resources Code Section 21167, including the approval, extension or modification of Planning Application No. 2018-02 (Residential Design Review No. 2018-01) or any of the proceedings, acts or determinations taken, done, or made prior to the decision, or to determine the reasonableness, legality or validity of any condition attached thereto. The Applicant's indemnification is intended to include, but not be limited to, damages, fees and/or costs awarded against or incurred by Indemnitees and costs of suit,claim or litigation, including without limitation attorneys' fees, penalties and other costs, liabilities and expenses incurred by Indemnitees in connection with such proceeding. The City will promptly notify the applicant of any such claim, action, or proceeding against the City. If the project is challenged in court, the City and the applicant shall enter into formal defense and indemnity agreement, consistent with this condition. 3.Within 30 days of project approval, the applicant shall sign and complete an "Acknowledgment of Conditions" and shall return the executed original to the Community Development Department for inclusion in the case records. PLANNING DIVISION 4.Residential Design Review No. 2018-01, shall lapse and become void two (2) years following the date on which the design review became effective, unless one of the following: (1) prior to the expiration of two years, a building permit related to the design review is issued and construction commenced and diligently pursued toward completion; or (2) prior to the expiration of two years, the applicant has applied for and has been granted an extension of the design review approval pursuant to subsections (B) and (C) of Lake Elsinore Municipal Code (LEMC) Section 17.184.120. PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 2 of 12 5.Prior to the issuance of a building permit, the applicant shall obtain and submit a “Will Serve” letter from Elsinore Valley Municipal Water District to the Director of Community Development. The “will serve” letter shall specifically indicate the specific water flow volumes for both domestic and fire protection water supply. 6.The signed set of conditions of approval shall be reproduced upon page one of building plans submitted to the Building and Safety Division for Plan Check. All conditions of approval shall be met prior to the issuance of a Certificate of Occupancy and release of utilities. 7.All site improvements shall be constructed as indicated on the approved site plan and elevations. The applicant shall meet all required development standards as set forth in the Lake Elsinore Municipal Code (LEMC). Any other revisions to the approved site plan or building elevations shall be subject to the review of the Community Development Director or his designee. All plans submitted for Building Division Plan Check shall conform to the submitted plans as modified by these conditions of approval. 8.All materials and colors depicted on the approved plans shall be used. If the applicant wishes to modify any of the approved materials or colors depicted on the plans, the applicant shall submit a proposal setting forth the modifications for review by the Community Development Director or his designee. 9.All future development proposals shall be reviewed by the City on a project-by-project basis. If determined necessary by the Community Development Director or designee, additional environmental analysis will be required. 10.The Applicant shall comply with all applicable City codes and ordinances. 11.A cash bond of $1,000.00 shall be required for any construction trailers placed on the site and used during construction. Bonds will be released after removal of trailers and restoration of the site to a state acceptable to and approved by the Community Development Director or his designee. 12.The Applicant shall comply with the City’s Noise Ordinance. Construction activity shall be limited to the hours of 7:00 AM to 5:00 PM, Monday through Friday, and no construction activity shall occur on Saturdays, Sundays, or legal holidays. 13.Any exterior air conditioning or other mechanical equipment shall be ground mounted and screened so as to be invisible from neighboring property or public streets. Air conditioning units and related equipment may not encroach more than two-feet (2’) into the required minimum side yard setback. 14.Prior to issuance of a building permit, three (3) sets of the Final Landscaping / Irrigation Detail Plans shall be submitted with appropriate fees to the Community Development Department for review and approval by the Community Development Director or his designee. a) All planting areas shall have permanent and automatic sprinkler system with 50% plant coverage using a drip irrigation method. PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 3 of 12 b) All planting areas shall be separated from paved areas with a six inch (6”) high and six inch (6”) wide concrete curb. Runoff shall be allowed from paved areas into landscape areas. Planting within fifteen feet (15’) of ingress/egress points shall be no higher than twenty-four inches (24”). c) Landscape planters shall be planted with an appropriate parking lot shade tree pursuant to the LEMC and Landscape Design Guidelines. d) No required tree planting bed shall be less than 5 feet wide. e) Root barriers shall be installed for all trees planted within 10 feet of hardscape areas to include sidewalks. f)Any transformers and mechanical or electrical equipment shall be indicated on landscape plan and screened as part of the landscaping plan. g) The landscape plan shall provide for ground cover, shrubs, and trees and meet all requirements of the City’s adopted Landscape Guidelines. h) All landscape improvements shall be bonded 100% for material and labor for two years from installation sign-off by the City. Release of the landscaping bond shall be requested by the applicant at the end of the required two years with approval/acceptance reviewed by the Landscape Consultant and approved by the Community Development Director or Designee. i)All landscaping and irrigation shall be installed within affected portion of any phase at the time a Certificate of Occupancy is requested for any building. j)Final landscape plan must be consistent with approved site plan. k) Final landscape plans to include planting and irrigation details. l)Final landscape plans shall include drought tolerant planting consistent with Elsinore Valley Municipal Water District standards subject to plan check and approval by the City’s landscape plan check consultant. m) No front-yard grass turf shall be permitted. n) The Final landscape plan submitted shall have 50% of the total landscape area as ground cover. The proposed ground cover shall not exceed three (3) inches in height. 15.The Applicant shall construct to the City’s standard a six-foot (6’) high decorative masonry wall along the project perimeter as proposed on the submitted plans. If a double wall condition would result, the developer shall make a good faith effort work with the adjoining property owners to provide a single wall. Developer shall notify, by mail, all contiguous property owners at least 30 days prior to the removal of any existing walls/fences along the project perimeter. 16.The project shall provide landscaping along the perimeter fencing facing Graham Street and Lowell Street that is sufficient in height (ex. Shrubs and vines) to provide additional screening and prevent graffiti. 17.The building address shall be a minimum of four inches (4”) high and shall be easily visible from the public right-of-way. Care shall be taken to select colors and materials that contrast with building walls or trim. PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 4 of 12 18.For multiple-family development, laundry facilities shall be provided as required by the Lake Elsinore Municipal Code. 19.For multiple-family development, provide exterior lockable storage space as required by the California Green Building Code. 20.The Applicant shall provide assurance that all required fees to the Lake Elsinore Unified School District have been paid prior to issuance of building permits. 21.Prior to issuance of a building permit, the Applicant shall pay park-in-lieu fees at the rate in effect at the time that the applicant requests the building permit. 22.The Applicant shall satisfy all conditions of approval prior to the issuance of a Certificate of Occupancy and release of utilities. 23.The Applicant shall pay the Multiple Species Habitat Conservation Plan Fee (MSHCP) Local Development Mitigation Fee prior to obtaining building permits. 24.The Applicant shall pay all applicable Library Capital Improvement Fund fees. 25.If any of the conditions of approval set forth herein fail to occur, or if they are, by their terms, to be implemented and maintained over time, if any of such conditions fail to be so implemented and maintained according to their terms, the City shall have the right to revoke or modify all approvals herein granted, deny or further condition issuance of all future building permits, deny, revoke, or further condition all certificates of occupancy issued under the authority of approvals herein granted; record a notice of violation on the property title; institute and prosecute litigation to compel their compliance with said conditions or seek damages for their violation. BUILDING DIVISION General Conditions 26.Final Building and Safety Conditions. Final Building and Safety Conditions will be addressed when building construction plans are submitted to Building and Safety for review. These conditions will be based on occupancy, use, the California Building Residential Code, and related codes which are enforced at the time of building plan submittal.(Modified per PC on 9/18/18). 27.Compliance with Code. All design components shall comply with applicable provisions of the 2016 edition of the California Building Residential, Plumbing and Mechanical Codes: 2016 California Electrical Code; California Administrative Code, 2016 California Energy Codes, 2016 California Green Building Standards, California Title 24 Disabled Access Regulations, and Lake Elsinore Municipal Code.(Modified per PC on 9/18/18). 28.Street Addressing. Applicant must obtain street addressing for all proposed buildings by requesting street addressing and submitting a site plan for commercial or multi-family residential projects or a recorded final map for single- family residential projects. The applicant shall submit the request for addressing prior to submitting plans for plan check. Please note that it takes ten (10) business days to issue an address and notify other agencies. PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 5 of 12 29.Clearance from LEUSD. A receipt or clearance letter from the Lake Elsinore School District shall be submitted to the Building and Safety Department to ensure the payment or exemption from School Mitigation Fees. 30.Obtain Approvals Prior to Construction. Applicant must obtain all building plans and permit approvals prior to commencement of any construction work. 31.Obtaining Separate Approvals and Permits. Trash enclosures, patio covers, light standards, and any block walls will require separate approvals and permits. 32.Sewer and Water Plan Approvals. On-site sewer and water plans will require separate approvals and permits. Septic systems will need to be approved from Riverside County Environmental Health Department before permit issuance. At Plan Review Submittal 33.Submitting Plans and Calculations. Applicant must submit to Building and Safety four (4) complete sets of plans and two (2) sets of supporting calculations for review and approval including: a. An electrical plan including load calculations and panel schedule, plumbing schematic, and mechanical plan applicable to scope of work. b. A Sound Transmission Control Study in accordance with the provisions of the Section 1207, of the 2016 edition of the California Building Code the applicable sections of the 2016 edition of the California Residential Code. (Modified per PC on 9/18/18). c. Truss calculations that have been stamped by the engineer of record of the building and the truss manufacturer engineer. Prior to Issuance of Grading Permit(s) 34.Onsite Water and Sewer Plans. Onsite water and sewer plans, submitted separately from the building plans, shall be submitted to Building and Safety for review and approval. 35.Demolition Permits. A demolition permit shall be obtained if there is an existing structure to be removed as part of the project. Prior to Issuance of Building Permit(s) 36.Plans Require Stamp of Registered Professional. Applicant shall provide appropriate stamp of a registered professional with original signature on the plans. Provide electronic copy (CD) of approved plans to Building Division. Prior to Beginning of Construction 37.Pre-Construction Meeting. A pre-construction meeting is required with the building inspector prior to the start of the building construction. PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 6 of 12 ENGINEERING DIVISION General 38.All slopes and landscaping within public right-of-way shall be maintained by the property owner or property owner’s association or another maintenance entity approved by the City Council. All open space and slopes except for public parks and schools and flood control district facilities, outside the public right-of-way shall be owned and maintained by property owner or property owner’s association. 39.In accordance with the City’s Franchise Agreement for waste disposal & recycling, the developer shall be required to contract with CR&R Inc. for removal and disposal of all waste material, debris, vegetation and other rubbish generated during cleaning, demolition, clear and grubbing or all other phases of construction. 40.Developer shall mitigate to prevent any flooding and/or erosion downstream caused by development of the site and or diversion of drainage. 41.All required soils, geology, hydrology and hydraulic, and seismic reports shall be prepared by a Registered Civil Engineer. Fees 42.The developer shall pay all Engineering Division assessed, Development Impact Fees, Plan Check and Permit fees (LEMC 16.34). Applicable Development Impact Fees include: Railroad Canyon Road Benefit District, Stephens Kangaroo Habitat Fee (K-Rat), Traffic Infrastructure Fee (TIF), Transportation Uniform Mitigation Fee (TUMF), and Area Drainage Fee. 43.Mitigation Fees will be assessed at the prevalent rate at time of payment in full. STORMWATER MANAGEMENT / POLLUTANT PREVENTION / NPDES Design 44.Project hardscape areas and roof drains shall be designed and constructed to provide for drainage into adjacent landscape. 45.If CEQA identifies resources requiring Clean Water Act Section 401 Permitting, the applicant shall obtain certification through the Santa Ana Regional Water Quality Control Board and provide a copy to the Engineering Division. Construction 46.A Storm Water Pollution Prevention Plan (SWPPP) (as required by the NPDES General Construction Permit) and compliance with the Green Building Code for sediment and erosion control are required for this project. 47.Prior to grading or building permit for construction or demolition and/or weed abatement activity projects subject to coverage under the NPDES General Construction Permit shall demonstrate that compliance with the permit has been obtained by providing a copy of the PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 7 of 12 Notice of Intent (NOI) submitted to the State Water Resources Control Board and a copy of the notification of the issuance of a Waste Discharge Identification (WDID) Number or other proof of filing to the satisfaction of the City Engineer. A copy of the SWPPP shall be kept at the project site, updated, and be available for review upon request. 48.Erosion & Sediment Control – ALL PROJECTS - Prior to the issuance of any grading or building permit for construction or demolition, the applicant shall submit for review and approval by the City Engineer, an Erosion and Sediment Control Plan as a separate sheet of the grading plan submittal to demonstrate compliance with the City’s NPDES Program and state water quality regulations for grading and construction activities. At a minimum, the project shall consider and/or implement the following BMPs (Green Building Code Section 5.106.1.2): Scheduling of construction activity Preservation of natural features, vegetation & soil Protection of storm drain inlets Drainage swales to control stormwater flow Mulching/hydroseeding to stabilize disturbed soils Erosion Control on slopes Perimeter sediment control Sediment trap or basin to retain sediment onsite Wind erosion control Good housekeeping BMPs – storage control of wastes, debris, stockpiles, concrete cleanup, etc. 49.A copy of the plan shall be incorporated into the SWPPP as applicable, kept updated as needed to address changing circumstances of the project site, be kept at the project site and made available for review upon request. 50.Non-stormwater discharges from the site are a violation of the Lake Elsinore Municipal Code Section 14.08. UTILITIES 51.All arrangements for relocation of utility company facilities (power poles, vaults, etc.) out of the roadway shall be the responsibility of the property owner or his agent. 52.All overhead utilities shall be undergrounded in accordance with Chapter 12.16 of the Lake Elsinore Municipal Code (LEMC) 53.Underground water rights shall be dedicated to the City pursuant to the provisions of Section 16.52.030 (LEMC), and consistent with the City’s agreement with the Elsinore Valley Municipal Water District. 54.The developer shall apply for, obtain and submit to the City Engineering Division a letter from Southern California Edison (SCE) indicating that the construction activity will not interfere with existing SCE facilities (aka SCE NIL). 55.The developer shall submit a copy of the "Will Serve" letter to the City Engineering Division from the applicable water agency stating that water and sewer arrangements have been made for this project and specify the technical data for the water service at the location, such as water pressure and volume etc. PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 8 of 12 IMPROVEMENTS Design 56.Sight distance into and out of the project location shall comply with CALTRANS Standards. 57.The developer shall install blue dot markers in the roadway at a right angle to Fire Hydrant locations per Lake Elsinore Standards. 58.The developer shall coordinate with Riverside Transit Authority for location and installation of bus transit facilities. 59.10-year storm runoff shall be contained within the curb and the 100-year storm runoff shall be contained within the street right-of-way. When either of these criteria are exceeded, drainage facilities shall be provided. 60.All drainage facilities in this project shall be constructed to Riverside County Flood Control District Standards. 61.A drainage study shall be provided. The study shall identify the following: identify storm water runoff from and upstream of the site; show existing and proposed off-site and onsite drainage facilities and include a capacity analysis verifying the adequacy of the facilities. The drainage system shall be designed to ensure that runoff from a 10-yr storm of 6 hours or 24 hours duration under developed condition is equal or less than the runoff under existing conditions of the same storm frequency. Both 6 hour and 24 hour storm duration shall be analyzed to determine the detention basin capacities necessary to accomplish the desired results. 62.All natural drainage traversing the site shall be conveyed through the site, or shall be collected and conveyed by a method approved by the City Engineer. All off-site drainage, if different from historic flow, shall be conveyed to a public facility, accepted by adjacent property owners by a letter of drainage acceptance, or conveyed to a drainage easement. 63.Roof drains shall not be allowed to outlet directly through coring in the street curb. Roofs should drain to a landscaped area. 64.The site shall be planned and developed to keep surface water from entering buildings (California Green Building Standards Code 4.106.3). 65.All Public Works requirements shall be complied with as a condition of development as specified in the Lake Elsinore Municipal Code (LEMC) and Lake Elsinore Public Works Standard Plans. 66.The developer shall construct the new driveway approach to the City’s Standard 118B. The driveway approach can be located on the grading plan for plan check. 67.The developer shall construct half width improvements and dedicate right-of-way on the alley such that the ultimate right-of-way width conforms to standard alley cross sections. The total right of way of the alley should be 10’ from the centerline. The cross section of roadway improvements shall include a ribbon gutter in the center of the alley to convey water to the street. PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 9 of 12 68.The right of way of the alley includes a City Ordinance protected palm tree. This tree will have to be relocated per Municipal Code 5.116 (Significant Palm Trees). 69.The project shall demonstrate compliance with Riverside County standards for Streetlight placement. If compliance cannot be obtained, a new streetlight may be required on Lowell. The street light is to be designed to a LS3 rate standard, or as directed by the City Engineer. 70.If existing improvements are to be modified, the existing improvement plans on file shall be modified accordingly and approved by the City Engineer prior to issuance of building permit. Permitting/Construction 71.An Encroachment Permit shall be obtained prior to any work on City and/or State right-of- way. The developer shall submit the permit application, required fees and executed agreements, security and other required documentation prior to issuance. 72.All compaction reports, grade certifications, monument certifications (with tie notes delineated on 8 ½" x 11" Mylar) shall be submitted to the Engineering Division before final inspection of public works improvements will be scheduled and approved. 73.All streets shall be constructed per Lake Elsinore City Standards and/or applicable specific plan. Any deviation from City standards shall be approved by the City Engineer. GRADING Design 74.A grading plan signed and stamped by a California Registered Civil Engineer shall be submitted for City review and approval for all addition and/or movement of soil (grading) on the site. The plan shall include separate sheets for erosion control, haul route and traffic control. The grading submittal shall include all supporting documentation and be prepared using City standard title block, standard drawings and design manual (available at www.lake- elsinore.org). 75.All grading plan contours shall extend to minimum of 50 feet beyond property lines to indicate existing drainage pattern. 76.The grading plan shall show that no structures, landscaping, or equipment are located near the project entrances that could reduce sight distance. 77.If the grading plan identifies alterations in the existing drainage patterns as they exit the site, a Hydrology and Hydraulic Report for review and approval by City Engineer shall be required prior to issuance of grading permits. All grading that modifies the existing flow patterns and/or topography shall be approved by the City Engineer. 78.The developer shall obtain all necessary off-site easements and/or permits for off-site grading and the applicant shall accept drainage from the adjacent property owners. PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 10 of 12 Permit/Construction 79.Developer shall execute and submit grading and erosion control agreement, post grading security and pay permit fees as a condition of grading permit issuance. 80.A preconstruction meeting with the City Public Works Inspector (Engineering Division) is required prior to commencement of ANY grading activity. 81.Developer shall provide the city with a copy of the Notice of Intent (NOI) and Waste Discharge Identification (WDID) letter issued by the Regional Water Quality Control Board for the National Pollutant Discharge Elimination System (NPDES) program 82.Prior to commencement of grading operations, developer is to provide to the City with a map of all proposed haul routes to be used for movement of export material. All such routes shall be subject to the review and approval of the City Engineer. Haul route shall be submitted prior to issuance of a grading permit. Hauling in excess of 5,000 cy shall be approved by City Council. (LEMC 15.72.065) 83.Export sites located within the Lake Elsinore City limits must have an active grading permit. 84.All grading shall be done under the supervision of a geotechnical engineer. Slopes steeper than 2 to 1 shall be evaluated for stability and proper erosion control and approved by the City. 85.Submit an approved environmental clearance document to the Engineering Division. This approval shall identify and clear all proposed grading activity anticipated for this project. 86.Developer shall pay all grading permit applicable processing, permit, security and development fees including those fees identified in an applicable development agreement, Stephens Kangaroo Rat Habitat. PRIOR TO ISSUANCE OF BUILDING PERMIT 87.Provide final soils and geology, including recommendations for parameters for seismic design of buildings, and walls prior to building permit. 88.All required public right-of-way dedications and easements shall be prepared by the developer or his agent and shall be submitted to the Engineering Division for review and approval prior to issuance of building permit. 89.The developer shall pay all Capital Improvement TIF and Master Drainage Fees and Plan Check fees (LEMC 16.34). PRIOR TO OCCUPANCY 90.All public improvements shall be completed in accordance with the approved plans or as condition of this development to the satisfaction of the City Engineer. 91.All required public right-of-way dedications and easements shall be recorded with a recorded copy provided to the City. PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 11 of 12 92.All water and sewer improvements shall be completed in accordance with Water District requirements. 93.Proof of acceptance of maintenance responsibility of slopes, open spaces, landscape areas, and drainage facilities shall be provided. 94.As-built plans for all approved plan sets shall be submitted for review and approval by the City. The developer/developer/owner is responsible for revising the original mylar plans. 95.In the event of damage to City roads from hauling or other construction related activity, applicant shall pay full cost of restoring public roads to the baseline condition. 96.All final studies and reports, grade certifications, monument certifications (with tie notes delineated on 8 ½ x 11” mylar) shall be submitted in .tif format on a CD/DVD. Studies and reports include, Soils, Seismic, Hydrology, Hydraulics, Grading, SWPPP, WQMP, etc. All plan sets and recorded maps shall be digitized and provided on CD/DVD as follows: Final Map(s) - GIS Shape files* and .tif of recorded map. Improvement Plans – GIS Shape files* and .tif of approved as built mylar. Grading Plans - .tif of approved as built mylar. *GIS Shape files must be in projected Coordinate System: NAD 83 State Plane California Zone VI U.S. Fleet. 97.Final soil report showing compliance with recommendations, compaction reports, grade certifications, monument certifications (with tie notes delineated on 8 ½ x 11” mylar) shall be submitted in .tif format on CD to the Engineering Division before final inspection will be scheduled. 98.Prior to grading or building permit close-out and/or the issuance of a certificate of use or a certificate of occupancy, developer shall: 99.Demonstrate that all structural BMPs have been constructed, installed and are functioning in conformance with approved plans and specifications and the WQMP; 100.Demonstrate that they are prepared to implement all non-structural BMPs included in the conditions of approval or building/grading permit conditions; 101.Developer shall pay all outstanding applicable processing and development fees including but not all inclusive: TUMF, MSHCP, TIF, Stephens Kangaroo Rat Habitat and area drainage prior to occupancy/final approval. CITY OF LAKE ELSINORE FIRE MARSHAL 102.The applicant/operator shall comply with all requirements of the Riverside County Fire Department Lake Elsinore Office of the Fire Marshal. Questions should be directed to the Riverside County Fire Department, Lake Elsinore Office of the Fire Marshal at 130 S. Main St., Lake Elsinore, CA 92530. Phone: (951) 671-3124 Ext. 225. PA 2018-02/RDR 2018-01 PC: September 18, 2018 Conditions of Approval CC: October 9, 2018 Applicant’s Initials: _____ Page 12 of 12 I hereby state that I acknowledge receipt of the approved Conditions of Approval for the above named project and do hereby agree to accept and abide by all Conditions of Approval as approved by the City of Lake Elsinore City Council on October 9, 2018. I also acknowledge that all Conditions shall be met as indicated. Date: Applicant’s Signature: Print Name: Address: Phone Number: LOWELL STGRAHAM AVESCRIVENER STKELLOGG STLOWELL STGRAHAM AVESCRIVENER STKELLOGG STPlanning Application No. 2018-02APN: 374-183-018VICINITY MAP PROJECT SITE ´ LOWELL STGRAHAM AVESCRIVENER STKELLOGG ST Source: Esri, DigitalGlobe, GeoEye, Earthstar Geographics,CNES/Airbus DS, U SDA, USGS, AeroGRID, IGN, and the GIS UserCommunityLOWELL STGRAHAM AVESCRIVENER STKELLOGG ST Source: Esri, DigitalGlobe, GeoEye, Earthstar Geographics,CNES/Airbus DS, U SDA, USGS, AeroGRID, IGN, and the GIS UserCommunity Planning Application No. 2018-02APN: 374-183-018AERIAL MAP PROJECT SITE ´ All ideas, drawings,specifications shown heron are the property of West Coast Design Group and shall not be used, copied, reproduced, or disclosed to any person, firm or corporation, without the written consent of West Coast Design Group. Any infringement will be subject to legal action. The contractor shall verify and be responsible for all dimensions and conditions on the job and notify this office of any variations from dimensions and conditions shown herewith. Written dimensions take precedence over scaled dimensions. SHEET TITLE T-1 SHEET 13 DESCRIPTION PROJECT NO: MODEL FILE: DRAWN BY: CHK'D BY: MARK DATE PROJECT: CLIENT: 1 2 PLOT DATE: 9/5/2018 Planning Submittal 17-37 11/8/17 PLAN CHECK#:- 3 Revised per planning Comments6/29/18 Title Sheet New 5-Unit Apartment Complex 801 W. Graham Street Lake Elsinore, CA 92530 Logan Construction [[[[[[[[[[[[[]] [[[[[[[[[[[[[]] 41055 CHACO CANYON ROAD MURRIETA CA 92562 PLANNING:- DESIGN WEST COAST DESIGN GROUP 'T' Sheets Plans T-1 T-2 T-3 T-4 A-1 A-2 A-3 A-4 A-5 Title Sheet Site Plan Wall Plan Landscape Plan Floor Plan (1st.) Floor Plan (2nd) Exterior Elevations (Bldg. "A,B,C&D") Exterior ELevations (Bldg. "E") Exterior Elevations (Bldg. "E") 6/12/2018 801 W Graham Ave - Google Maps https://www.google.com/maps/place/801+W+Graham+Ave,+Lake+Elsinore,+CA+92530/@33.670744,-117.3382797,17z/data=!3m1!4b1!4m5!3m4!1s0…1/1 Map data ©2018 Google 200 ft 801 W Graham Ave Lake Elsinore, CA 92530 801 W Graham Ave Vicinity Map PROJECT DIRECTORY SCOPE OF WORK PROJECT INFORMATION TYPE OF CONSTRUCTION: OWNER: Designer: Logan Construction 801 W. Graham Street Lake Elsinore, CA 92530 West Coast Design Group 41055 Chaco Cyn. Rd. Murrieta, CA 92562 (951) 543-6002 Jerry Fabio NUMBER OF UNITS: NUMBER OF STORIES:2 Building 'E' -1 Building 'A & B' - 2 Building 'C & D' - 2 OCCUPANCY GROUP: R-3 V-B SITE AREA (E) LOT SIZE:14,810.4 SQ. FT. SPRINKLERS: 1. NEW RESIDENTIAL - ONE (1) STAND ALONE RESIDENCE 'E' 2. TWO (2) DUPLEXES - RESIDENCES 'A,B,C & D'. RESIDENCES 'A & B' WILL BE ONE BUILDING & 'C & D' WILL BE A SECOND BUILDING. A TOTAL OF 3 BUILDINGS ARE PROPOSED. RESIDENCE A - FIRST FLOOR AREA: 593 SQ. FT. RESIDENCE A - SECOND FLOOR AREA: 980 SQ. FT. RESIDENCE A - GARAGE AREA: 250 SQ. FT. RESIDENCE A - COVERED ENTRY AREA: 55 SQ. FT. RESIDENCE A - TOTAL LIVABLE AREA:1,573 SQ. FT. RESIDENCE A - TOTAL COVERED AREA:1,035 SQ. FT. RESIDENCE E - FIRST FLOOR AREA: 865 SQ. FT. RESIDENCE E - SECOND FLOOR AREA:1,118 SQ. FT. RESIDENCE E - GARAGE AREA: 479 SQ. FT. RESIDENCE E - COVERED ENTRY AREA: 38 SQ. FT. RESIDENCE E - BALCONY 2ND FLR. AREA: 32 SQ. FT. RESIDENCE E - TOTAL LIVABLE AREA:1,983 SQ. FT. RESIDENCE E - TOTAL COVERED AREA:1,156 SQ. FT. New 5-Unit Apartment Complex ZONE: RMU SITE AREA FOR BLDG. #3 - 'E':4,509 SQ. FT. SITE AREA FOR BLDG. #1 -UNITS 'A & B':5,412.60 SQ. FT. SITE AREA FOR BLDG. #2 -UNITS 'C & D':4,888.88 SQ. FT. RESIDENCE B - FIRST FLOOR AREA: 593 SQ. FT. RESIDENCE B - SECOND FLOOR AREA: 980 SQ. FT. RESIDENCE B - GARAGE AREA: 250 SQ. FT. RESIDENCE B - COVERED ENTRY AREA: 55 SQ. FT. RESIDENCE B - TOTAL LIVABLE AREA:1,573 SQ. FT. RESIDENCE B - TOTAL COVERED AREA:1,035 SQ. FT. RESIDENCE C - FIRST FLOOR AREA: 593 SQ. FT. RESIDENCE C - SECOND FLOOR AREA: 980 SQ. FT. RESIDENCE C - GARAGE AREA: 250 SQ. FT. RESIDENCE C - COVERED ENTRY AREA: 55 SQ. FT. RESIDENCE C - TOTAL LIVABLE AREA:1,573 SQ. FT. RESIDENCE C - TOTAL COVERED AREA:1,035 SQ. FT. RESIDENCE D - FIRST FLOOR AREA: 593 SQ. FT. RESIDENCE D - SECOND FLOOR AREA: 980 SQ. FT. RESIDENCE D - GARAGE AREA: 250 SQ. FT. RESIDENCE D - COVERED ENTRY AREA: 55 SQ. FT. RESIDENCE D - TOTAL LIVABLE AREA:1,573 SQ. FT. RESIDENCE D - TOTAL COVERED AREA:1,035 SQ. FT. SITE YES All ideas, drawings,specifications shown heron are the property of West Coast Design Group and shall not be used, copied, reproduced, or disclosed to any person, firm or corporation, without the written consent of West Coast Design Group. Any infringement will be subject to legal action. The contractor shall verify and be responsible for all dimensions and conditions on the job and notify this office of any variations from dimensions and conditions shown herewith. Written dimensions take precedence over scaled dimensions. SHEET TITLE T-2 SHEET 14 DESCRIPTION PROJECT NO: MODEL FILE: DRAWN BY: CHK'D BY: MARK DATE PROJECT: CLIENT: 1 2 PLOT DATE: 9/5/2018 Planning Submittal 17-37 11/8/17 PLAN CHECK#:- 3 Revised per planning Comments6/29/18 Site Plan New 5-Unit Apartment Complex 801 W. Graham Street Lake Elsinore, CA 92530 Logan Construction [[[[[[[[[[[[[]] [[[[[[[[[[[[[]] 41055 CHACO CANYON ROAD MURRIETA CA 92562 PLANNING:- DESIGN WEST COAST DESIGN GROUP PLAN NORTH 25'15'10'35'5'5'45'5'5'22'-6"22'-6"10'10'37'-3"23'20'11'-0"19'-0"21'-5"20'-0"164.97' N. LOWELL ST .GRAHAM AVE.ALLEYGARAGE A 11' X 19' GARAGE B 11' X 19' UNIT AUNIT B SIDE YARD SIDE YARD90.21'ADJACENT RESIDENCE 164.97'90.21'6' HIGH BLOCK WALL 6" CURB GARAGE C 11' X 19' GARAGE D 11' X 19' UNIT CUNIT D PARKING DRIVEWAY 12' x 20' GARAGE E 21'-5" X 20' RESIDENCE E PARKING DRIVEWAY 20'x20' PARKING DRIVEWAY 12' x 20' PARKING DRIVEWAY 12' x 20' PARKING DRIVEWAY 12' x 20' 42" WIDE PERVIOUS 18" SQ. WALK 6' HIGH BLOCK WALL LANDSCAPED AREA, TYP. TRASH ENCLOSURE 10' X 10' CONCRETE SLAB CONCRETE SLAB CONCRETE SLAB CONCRETE SLAB CONCRETE SLABSIDE YARDSIDE YARDSIDE YARDSIDE YARDBUILDING 1BUILDING 2BUILDING 3 TOTAL WIDTH 24' SHARED TOTAL WIDTH 24' SHARED COMMONDRIVEPROPERTY LINE, TYP. 1' LANDSCAPE AREA - A PLANTS OF SUFFICIENT HEIGHT TO COVER THE BLOCK WALL SHALL BE PLANTED 1' LANDSCAPE AREA - A PLANTS OF SUFFICIENT HEIGHT TO COVER THE BLOCK WALL SHALL BE PLANTED 48" SQ. PERVIOUS DRIVEWAY, TYP. 48" SQUARE PERVIOUS DRIVEWAY 18" SQUARE PERVIOUS WALK IMPERVIOUS CONCRETE SURFACE 42" WIDE PERVIOUS 18" SQ. WALK 42" WIDE PERVIOUS 18" SQ. WALK LANDSCAPE AREA ENTRY ENTRY ENTRY ENTRY ENTRY 42" WIDE PERVIOUS 18" SQ. WALK 36" WIDE PERVIOUS 18" SQ. BORDER FLUSH WITH THE DRIVE AISLE IMPERVIOUS SURFACE CALCULATION SURFACE Common Drive Aisle Roof Bldg. (A,B) Roof Bldg. (C,D) Roof Bldg. (E) Conc Front Porch Bldg. (A,B,C,D,E) Conc. Rear Patio Bldg. (A,B,C,D,E) Trash Enclosure Total AREA 2,799 Sq.Ft. 2,305 Sq.Ft. 2,305 Sq.Ft. 1,465 Sq.Ft. 109 Sq. Ft. 460 Sq.Ft. 100 Sq. Ft. 9,543 Sq. Ft. 0 5'10'20'SCALE: 1" = 10'1 Site Plan ENGINEERING NOTES: STREET LIGHTS SHALL BE INSTALLED PER CITY STANDARD LS2 OR LS3, AND COUNTY SPACING STANDARD. 1. UNDERGROUND OVERHEAD UTILITIES UNDER 36 KV. 2. DEDICATE ROW AT THE ALLEY FRONTAGE TO 10’ HALF WIDTH. 3. IMPROVE ALLEY FRONTAGE ½ WIDTH, PLUS 2’ TO INCLUDE RIBBON GUTTER. 4. PALM TREE IN ALLEY IS A PROTECTED VARIETY, RELOCATION IS REQUIRED. 5. LOWELL STREET PALM TREES ARE CITY MAINTAINED, RELOCATION IS PREFERRED. 6. SIDEWALK REMOVAL IS FULL PANEL. DEPENDENT UPON DRIVEWAY LOCATIONS, ALL SIDEWALK MAY NEED TO BE REMOVED AND REPLACED. 7. IF CURB AND GUTTER IS REMOVED, REPLACEMENT IS REQUIRED All ideas, drawings,specifications shown heron are the property of West Coast Design Group and shall not be used, copied, reproduced, or disclosed to any person, firm or corporation, without the written consent of West Coast Design Group. Any infringement will be subject to legal action. The contractor shall verify and be responsible for all dimensions and conditions on the job and notify this office of any variations from dimensions and conditions shown herewith. Written dimensions take precedence over scaled dimensions. SHEET TITLE T-3 SHEET 15 DESCRIPTION PROJECT NO: MODEL FILE: DRAWN BY: CHK'D BY: MARK DATE PROJECT: CLIENT: 1 2 PLOT DATE: 9/5/2018 Planning Submittal 17-37 11/8/17 PLAN CHECK#:- 3 Revised per planning Comments6/29/18 Wall Plan New 5-Unit Apartment Complex 801 W. Graham Street Lake Elsinore, CA 92530 Logan Construction [[[[[[[[[[[[[]] [[[[[[[[[[[[[]] 41055 CHACO CANYON ROAD MURRIETA CA 92562 PLANNING:- DESIGN WEST COAST DESIGN GROUP 3'161'-7" 6'-0" HIGH3'-0" HIGH 6' HIGH REDWOOD FENCE BETWEEN EACH YARD AS SHOWN, COLOR NATURAL REDWOOD 6' HIGH PRECISION BLOCK WALL WITH WOODEN TRELLIS ABOVE AT TRASH ENCLOSURE 6' HIGH REDWOOD FENCE BETWEEN EACH YARD AS SHOWN, COLOR NATURAL REDWOOD 6' ABOVE GRADE 8"X8"X16" PRECISION BLOCK WITH A BLOCK CAP COLOR TO MATCH "SAND" COLOR FROM RCP BLOCK AND BRICK RESIDENCE 'E'RESIDENCE 'D'RESIDENCE 'C'RESIDENCE 'B'RESIDENCE 'A' 6' ABOVE GRADE 8"X8"X16" PRECISION BLOCK WITH A BLOCK CAP COLOR TO MATCH "SAND" COLOR FROM RCP BLOCK AND BRICK 6' ABOVE GRADE 8"X8"X16" PRECISION BLOCK WITH A BLOCK CAP COLOR TO MATCH "SAND" COLOR FROM RCP BLOCK AND BRICK 6' ABOVE GRADE 8"X8"X16" PRECISION BLOCK WITH A BLOCK CAP COLOR TO MATCH "SAND" COLOR FROM RCP BLOCK AND BRICK 0 5'10'20'SCALE: 1" = 10'1 Wall Plan All ideas, drawings,specifications shown heron are the property of West Coast Design Group and shall not be used, copied, reproduced, or disclosed to any person, firm or corporation, without the written consent of West Coast Design Group. Any infringement will be subject to legal action. The contractor shall verify and be responsible for all dimensions and conditions on the job and notify this office of any variations from dimensions and conditions shown herewith. Written dimensions take precedence over scaled dimensions. SHEET TITLE T-4 SHEET 16 DESCRIPTION PROJECT NO: MODEL FILE: DRAWN BY: CHK'D BY: MARK DATE PROJECT: CLIENT: 1 2 PLOT DATE: 9/5/2018 Planning Submittal 17-37 11/8/17 PLAN CHECK#:- 3 Revised per planning Comments6/29/18 Landscape Plan New 5-Unit Apartment Complex 801 W. Graham Street Lake Elsinore, CA 92530 Logan Construction [[[[[[[[[[[[[]] [[[[[[[[[[[[[]] 41055 CHACO CANYON ROAD MURRIETA CA 92562 PLANNING:- DESIGN WEST COAST DESIGN GROUP 20'3' DROUGHT TOLERANT GRASS AT REAR YARDS GRASS LANDSCAPE LEGEND: A MIX OF DROUGHT TOLERANT PLANTS- 1. YARROW 2. HUMMINGBIRD SAGE 3. PURPLE THREE-AWN DROUGHT TOLERANT PLANTING AREA DROUGHT TOLERANT PLANTING, TYP. DROUGHT TOLERANT GRASS AREA SITE LANDSCAPE INFO.: SITE AREA: 14,810.4 SQ.FT. BUILDING FOOTPRINT: 4,732 SQ.FT. (INCLUDING PORCHES) HARDSCAPE AREA: 6,237 SQ.FT. (INCLUDING DRIVES, PARKING, TRASH) LANDSCAPE AREA: 3,841.1 SQ.FT. LANDSCAPE AREA PERCENTAGE: 26%6'8'-8"PRECISION BLOCK 2X6 @ 16" O.C. E.W. PAINTED TO MATCH SHERWIN WILLIAMS ROCKWOOD RED 6x6 POSTS PAINTED TO MATCH SHERWIN WILLIAMS ROCKWOOD RED PAIR OF 4' DOUBLE DOORS PAINTED TO MATCH BLOCK 0 5'10'20'SCALE: 1" = 10'1 Landscape Plan SCALE: 1/4" = 1'-0"2 Trash Enclosure Elevation All ideas, drawings,specifications shown heron are the property of West Coast Design Group and shall not be used, copied, reproduced, or disclosed to any person, firm or corporation, without the written consent of West Coast Design Group. Any infringement will be subject to legal action. The contractor shall verify and be responsible for all dimensions and conditions on the job and notify this office of any variations from dimensions and conditions shown herewith. Written dimensions take precedence over scaled dimensions. SHEET TITLE A-1 SHEET 8 DESCRIPTION PROJECT NO: MODEL FILE: DRAWN BY: CHK'D BY: MARK DATE PROJECT: CLIENT: 1 2 PLOT DATE: 9/5/2018 Planning Submittal 17-37 11/8/17 PLAN CHECK#:- 3 Revised per planning Comments6/29/18 Floor Plan (1st.) New 5-Unit Apartment Complex 801 W. Graham Street Lake Elsinore, CA 92530 Logan Construction [[[[[[[[[[[[[]] [[[[[[[[[[[[[]] 41055 CHACO CANYON ROAD MURRIETA CA 92562 PLANNING:- DESIGN WEST COAST DESIGN GROUP 12345678910111213141516UP 123456789101112141516UP 123456789101112141516UP 123456789101112141516UP 123456789101112141516UP F FFFFWWWWWDW DW DWDRDR DRDRDRDW DW 12'-7"22'-4 1/2" 34'-11 1/2"37'-1"28'-11 1/2"6' 34'-11 1/2"4'-10"14'-3"20'-11 1/2"19'-1"40'-1/2"4'-2"32'-11"2'-11 1/2"40'-1/2"5'-11 1/2"16'-6 1/2"16'-6 1/2"6' 45' 10'-7"11'-6 1/2"12'-3 1/2"10'-7" 45'4'-2"32'-11"37'-1"COVERED ENTRY CLOSET W.H.W.H. CLOSET W.H.W.H. CLOSET CLOSET NOTE: ALL DIMENSIONS SHOWN ON "C & D" ARE THE SAME FOR "A & B" Garage "E" Living Room Kitchen/Dining 1/4 Bath Kitchen/Dining (D) 1/4 Ba. (D) Garage (D) Living Rm. (D) Entry (D) Kitchen/Dining (B) 1/4 Ba. (D) Garage (B) Living Rm. (B) Entry (B) Kitchen/Dining (C) 1/4 Ba. (C) Garage (C) Living Room (C) Entry (C) Kitchen/Dining (A) 1/4 Ba. (A) Garage (A) Living Room (A) Entry (A) SCALE: 3/16" = 1'-0"1 Floor Plan (First) All ideas, drawings,specifications shown heron are the property of West Coast Design Group and shall not be used, copied, reproduced, or disclosed to any person, firm or corporation, without the written consent of West Coast Design Group. Any infringement will be subject to legal action. The contractor shall verify and be responsible for all dimensions and conditions on the job and notify this office of any variations from dimensions and conditions shown herewith. Written dimensions take precedence over scaled dimensions. SHEET TITLE A-2 SHEET 9 DESCRIPTION PROJECT NO: MODEL FILE: DRAWN BY: CHK'D BY: MARK DATE PROJECT: CLIENT: 1 2 PLOT DATE: 9/5/2018 Planning Submittal 17-37 11/8/17 PLAN CHECK#:- 3 Revised per planning Comments6/29/18 Floor Plan (2nd) New 5-Unit Apartment Complex 801 W. Graham Street Lake Elsinore, CA 92530 Logan Construction [[[[[[[[[[[[[]] [[[[[[[[[[[[[]] 41055 CHACO CANYON ROAD MURRIETA CA 92562 PLANNING:- DESIGN WEST COAST DESIGN GROUP 7'-9 1/2"7'-3"7'-2" 7 1/2" 7'-1 1/2"7'-3"7'-10" 22'-2" 7 1/2" 22'-2" 45'3'-2"8'-1"5'-7"14'-11"2'-5"16'-10"17'-4"10'-6 1/2"6"44'-8 1/2"11'-7"10'-10 1/2"10'-10 1/2"11'-7 1/2" 21'-9 1/2" 45'3'-2"8'-1"5'-7"14'-11"2'-5"16'-10"17'-4"10'-6 1/2"6"14'-2 1/2"2'-4 1/2"11'-9"11'-10 1/2"4'-1 1/2"40'-2 1/2"1'8'-8"7'-9 1/2"10'-7"7'-10 1/2" 16'-6"18'-6" 34'-11 1/2"10'-3"3'-4 1/2"7'13'-7 1/2"5'-11 1/2"9'-10"9'-1 1/2" 18'-11 1/2"16' 34'-11 1/2"44'-8 1/2"RAIL DN.42" HIGHWALLOPEN TO BELOW RAILDN.42" HIGHWALLOPEN TO BELOW RAIL DN.42" HIGHWALLOPEN TO BELOW RAILDN.42" HIGHWALLOPEN TO BELOW SEATOPEN TO BELOW DN. RAIL DECK NOTE: ALL DIMENSIONS SHOWN ON "C & D" ARE THE SAME FOR "A & B" Bedroom 1 (D)Bedroom 2 (D) Common Area (D)Master Bath (D) Bath (D) Common Area (D) Bedroom 1 (C)Bedroom 2 (C) Common Area (C)Master Bath (C) Bath (C) Common Area (C) Bedroom 1 (B)Bedroom 2 (B) Common Area (B)Master Bath (B) Bath (B) Common Area (B) Bedroom 1 (A)Bedroom 2 (A) Common Area (A)Master Bath (A) Bath (A) Common Area (A) Master Bath W.I.C. 1 W.I.C. 2 Master Bedroom Bedroom 2 Bedroom 3 Bathroom 1 Hall SCALE: 3/16" = 1'-0"1 Floor Plan (Second) All ideas, drawings,specifications shown heron are the property of West Coast Design Group and shall not be used, copied, reproduced, or disclosed to any person, firm or corporation, without the written consent of West Coast Design Group. Any infringement will be subject to legal action. The contractor shall verify and be responsible for all dimensions and conditions on the job and notify this office of any variations from dimensions and conditions shown herewith. Written dimensions take precedence over scaled dimensions. SHEET TITLE A-3 SHEET 10 DESCRIPTION PROJECT NO: MODEL FILE: DRAWN BY: CHK'D BY: MARK DATE PROJECT: CLIENT: 1 2 PLOT DATE: 9/5/2018 Planning Submittal 17-37 11/8/17 PLAN CHECK#:- 3 Revised per planning Comments6/29/18 Exterior Elevations (Bldg. "A,B,C&D") New 5-Unit Apartment Complex 801 W. Graham Street Lake Elsinore, CA 92530 Logan Construction [[[[[[[[[[[[[]] [[[[[[[[[[[[[]] 41055 CHACO CANYON ROAD MURRIETA CA 92562 PLANNING:- DESIGN WEST COAST DESIGN GROUP A B C D E 1 2 3 KEYNOTES MARK COLOR MARK FINISH SHERWIN WILLIAMS - RENWICK OLIVE - SW2815 SHERWIN WILLIAMS - LEMON DROP SW 7122 SHERWIN WILLIAMS - ROCKWOOD RED - SW2802 GAF - TIMBERLINE COOL SERIES BARKWOOD CORONADO - LA JOLLA BRICK OMEGA EXTERIOR PLASTER WITH A SAND FINISH JAMES HARDIE - HARDIE PLANK LAP SIDING 8.25" - 7" EXPOSURE EXPOSED WOOD PRIMED AND PAINTED B A A A A 1 E 3 C1 A D A A A C2 E A3 ASPHALT SHINGLE ROOF, TYP. DECORATED VENT PAINTED, WHERE SHOWN BACKGROUND COLOR, TYP. TRIM EXTERIOR PLASTER FINISH, WHERE SHOWN 8X8 WOOD POST BRICK VENEER BATT & BOARD & TRIM, TYP. FASCIA PAINTED SHUTTERS, WHERE SHOWN 4" TRIM AT TOP OF WINDOW 10" TRIM BETWEEN STUCCO FINISH AND SIDING FINISH, TYP. LAP SIDING BRICK VENEER 8X8 WOOD POST -8" 0" F.F. 24'-2" T.O.R. 29'-1" T.O.R. B B D A 3 1 2 AAA A A A A C1 ASPHALT SHINGLE ROOF, TYP. LAP SIDING- SMOOTH EXTERIOR PLASTER FINISH, WHERE SHOWN 6" EXPOSED PAINTED FASCIA METAL GARAGE DOOR, PAINTED, TYP. WOOD FRONT DOOR WOOD FRONT DOOR TRIM FASCIA DECORATED VENT PAINTED, WHERE SHOWN BACKGROUND COLOR, TYP. BATT & BOARD & TRIM, TYP. -8"0" F.F. 24'-2" T.O.R. 29'-1" T.O.R. 26'T.O.R.42"42"A3 E B 1 B 2 D A B 2 E A3 A LAP SIDING- SMOOTH 8X8 WOOD POST BRICK VENEER EXTERIOR PLASTER FINISH, WHERE SHOWN ASPHALT SHINGLE ROOF FASCIA WHITE VINYL WINDOWS, TYP. LAP SIDING- SMOOTH FRENCH DOOR TO REAR YARD BRICK VENEER 8X8 WOOD POST TRIM -8" 0" F.F. 24'-2" T.O.R. 29'-1" T.O.R. 26' T.O.R.D A3 B 1 E A A B 2 8X8 WOOD POST BRICK VENEEREXTERIOR PLASTER FINISH AT PLANTER ASPHALT SHINGLE ROOF FASCIA WOOD TRIM LAP SIDING- SMOOTH SCALE: 3/16" = 1'-0"1 South Elevation (UNIT A,B,C & D) SCALE: 3/16" = 1'-0"2 North Elevation (UNIT A,B,C & D) SCALE: 3/16" = 1'-0"3 East Elevation (UNIT A,B,C & D) SCALE: 3/16" = 1'-0"4 West Elevation (UNIT A,B,C & D) All ideas, drawings,specifications shown heron are the property of West Coast Design Group and shall not be used, copied, reproduced, or disclosed to any person, firm or corporation, without the written consent of West Coast Design Group. Any infringement will be subject to legal action. The contractor shall verify and be responsible for all dimensions and conditions on the job and notify this office of any variations from dimensions and conditions shown herewith. Written dimensions take precedence over scaled dimensions. SHEET TITLE A-4 SHEET 11 DESCRIPTION PROJECT NO: MODEL FILE: DRAWN BY: CHK'D BY: MARK DATE PROJECT: CLIENT: 1 2 PLOT DATE: 9/5/2018 Planning Submittal 17-37 11/8/17 PLAN CHECK#:- 3 Revised per planning Comments6/29/18 Exterior ELevations (Bldg. "E") New 5-Unit Apartment Complex 801 W. Graham Street Lake Elsinore, CA 92530 Logan Construction [[[[[[[[[[[[[]] [[[[[[[[[[[[[]] 41055 CHACO CANYON ROAD MURRIETA CA 92562 PLANNING:- DESIGN WEST COAST DESIGN GROUPA B C D E 1 2 3 KEYNOTES MARK COLOR MARK FINISH SHERWIN WILLIAMS - RENWICK OLIVE - SW2815 SHERWIN WILLIAMS - LEMON DROP SW 7122 SHERWIN WILLIAMS - ROCKWOOD RED - SW2802 GAF - TIMBERLINE COOL SERIES BARKWOOD CORONADO - LA JOLLA BRICK OMEGA EXTERIOR PLASTER WITH A SAND FINISH JAMES HARDIE - HARDIE PLANK LAP SIDING 8.25" - 7" EXPOSURE EXPOSED WOOD PRIMED AND PAINTED -8" GRADE 0" F.F 22'-5 1/2" T.O.R. 27'-1 1/2" T.O.R. C 2 A 3 B 1 D E A 3 A A 3 A 2 C LAP SIDING- SMOOTH TRIM AROUND SIDING EXTERIOR PLASTER FINISH, WHERE SHOWN ASPHALT SHINGLE ROOF, TYP. 18" SQ. PEDESTAL BRICK VENEER - WOOD/TEMP. GLAZING DOOR 8X8 POST WOOD/TEMP. GLAZING DBL. DOOR WOOD GUARD RAIL LAP SIDING- SMOOTH B 1 D E 3 A 3 A 2 C A 3 A 3 EXTERIOR PLASTER FINISH, WHERE SHOWN ASPHALT SHINGLE ROOF, TYP. 18" SQ. PEDESTAL BRICK VENEER - 8X8 POST 42" HIGH WOOD GUARD RAIL LAP SIDING- SMOOTH 6" EXPOSED FASCIA TRIM AROUND SIDING SCALE: 1/4" = 1'-0"1 South Elevation (Bldg. 'E') SCALE: 1/4" = 1'-0"2 East Elevation (Bldg. 'E') All ideas, drawings,specifications shown heron are the property of West Coast Design Group and shall not be used, copied, reproduced, or disclosed to any person, firm or corporation, without the written consent of West Coast Design Group. Any infringement will be subject to legal action. The contractor shall verify and be responsible for all dimensions and conditions on the job and notify this office of any variations from dimensions and conditions shown herewith. Written dimensions take precedence over scaled dimensions. SHEET TITLE A-5 SHEET 12 DESCRIPTION PROJECT NO: MODEL FILE: DRAWN BY: CHK'D BY: MARK DATE PROJECT: CLIENT: 1 2 PLOT DATE: 9/5/2018 Planning Submittal 17-37 11/8/17 PLAN CHECK#:- 3 Revised per planning Comments6/29/18 Exterior Elevations (Bldg. "E") New 5-Unit Apartment Complex 801 W. Graham Street Lake Elsinore, CA 92530 Logan Construction [[[[[[[[[[[[[]] [[[[[[[[[[[[[]] 41055 CHACO CANYON ROAD MURRIETA CA 92562 PLANNING:- DESIGN WEST COAST DESIGN GROUP -8" GRADE 0" F.F. 12'-9 3/4" T.O.R. 21'-7" T.O.R. 23'-4 1/2" T.O.R. 27'-1 1/2" 20'-11 3/4" T.O.R. B 1 D E 3 A 3 A 2 C A 3 A 3 E 3 A EXTERIOR PLASTER FINISH, WHERE SHOWN ASPHALT SHINGLE ROOF, TYP. 18" SQ. PEDESTAL BRICK VENEER - 42" HIGH WOOD GUARD RAIL LAP SIDING- SMOOTH 6" EXPOSED FASCIA TRIM AROUND SIDING 8X8 POST 18" SQ. PEDESTAL BRICK VENEER - 8X8 POST 3'-6"C A C 2 A 3 B 1 A 3 C2 A A D E 3 A A A BACKGROUND COLOR, TYP. DECORATED VENT PAINTED, WHERE SHOWN LAP SIDING- SMOOTH TRIM AROUND SIDING EXTERIOR PLASTER FINISH, WHERE SHOWN 6" EXPOSED FASCIA METAL GARAGE DOOR, PAINTED, TYP. WOOD FRONT DOOR WITH 18" SIDELIGHTS EACH SIDE ASPHALT SHINGLE ROOF, TYP. 18" SQ. PEDESTAL BRICK VENEER - 8X8 POST BATT & BOARD & TRIM, TYP. 4" TRIM AT WINDOW TOP, TYP. A B C D E 1 2 3 KEYNOTES MARK COLOR MARK FINISH SHERWIN WILLIAMS - RENWICK OLIVE - SW2815 SHERWIN WILLIAMS - LEMON DROP SW 7122 SHERWIN WILLIAMS - ROCKWOOD RED - SW2802 GAF - TIMBERLINE COOL SERIES BARKWOOD CORONADO - LA JOLLA BRICK OMEGA EXTERIOR PLASTER WITH A SAND FINISH JAMES HARDIE - HARDIE PLANK LAP SIDING 8.25" - 7" EXPOSURE EXPOSED WOOD PRIMED AND PAINTED SCALE: 1/4" = 1'-0"1 West Elevation (Bldg. 'E') SCALE: 1/4" = 1'-0"2 North Elevation (Bldg. 'E') Front Elevation Bldg. "E"Front Elevation (UNIT A,B,C & D)A. SHERWIN WILLIAMS - ROCKWOOD RED -SW2802B. SHERWIN WILLIAMS - LEMON DROP -SW7122C. SHERWIN WILLIAMS - RENWICK OLIVE -SW2815D. GAF - TIMBERLINE COOL SERIESBARKWOODE. CORONADO - LA JOLLA BRICK1. OMEGA EXTERIOR PLASTER WITH ASAND FINISH2. JAMES HARDIE - HARDIE PLANK LAPSIDING 8.25" - 7" EXPOSURE801 W. Graham Street,Lake Elsinore, CA 1 Damaris Abraham From:Mary Monise <Mary.Monise@coop.org> Sent:Friday, September 14, 2018 7:30 AM To:Damaris Abraham; Justin Kirk; Myles Ross; Michael Carroll; Adam Armit; John Gray; Rendell Klaarenbeek; Natasha Johnson; Steve Manos; Daryl Hickman; Robert Magee; Brian Tisdale Subject:Formal Objection Letter -Parcel Number 374-183-018 Importance:High Dear Planning Commission, City Planner, and Distinguished City Council Members,    I own the home located at 805 W. Graham Ave Lake Elsinore, CA 92530 and I am writing to you to formally object to  planning application number 2018‐02, a proposed five‐unit apartment complex planned for parcel number 374‐183‐018  located in the Historic District of Lake Elsinore.  I would normally attend this meeting in person however, I will be  traveling for business on this day and will not be able to be there.      I would first like to thank you for bringing this matter to our attention and allowing us to voice our concerns with regards  to this new proposed build located within the designated Historic District.  I would also like to commend this city on its  continual hard work and dedication to restoring the beauty and charm back to the City of Lake Elsinore.  This truly is a  community of people who care for each other and their city.  Thank you for all your hard work, it has returned city pride  to the residents of Lake Elsinore and is helping to the reputation of this charming lake community.      I am writing on behalf of my family, which owns the home on the lot adjacent to the proposed project.  I am sure that  some of you are familiar with the surrounding buildings in this area, they are single‐family, single story homes.   Some of  the homes in this neighborhood,  including mine, are almost as old as this city.  Our home and the one next to ours were  built in 1900.  It is a constant effort of love to keep these properties in good condition.  My family and my neighbors are  simple hard working people who make every effort to keep our neighborhood safe, clean, and attractive.      We object to this project because with the exception of some apartment buildings located at the southwesterly corner  of Graham Avenue and Scrivener Street there are no multi‐family apartment buildings in the blocks surrounding this  area.  The proposed multi‐family, five‐unit, two‐story project will be a towering monstrosity compared to the homes in  this area.      Placing a rental property in the neighborhood would significantly drive down the property values, which have been  steadily increasing over recent years.  As an example: In 2014 the house located at 805 W. Graham Ave was in disrepair  and sold to the previous owner for $85,000.  They did a full restoration on the home and we purchased it in 2015 for  $245,000.  This past summer, the comps in the area placed a value of $305,000 on the property.  That is a positive and  dramatic increase in home values in a very short period of time.  In Lake Elsinore, we now have a surge of investor home  owners coming in and restoring homes located in the historic district.  This is a very positive sign that our community  and the older homes located here are of great value.  We, meaning the neighborhood and the city, need to continue to  encourage this trend in order to preserve the continuity of this neighborhood.  We want to continue to gentrify this  community by inviting people who have a vested interest in this community (home owners) not  transient residents who  reside in a property for a year or so and have no regard for or investment in the property.      The proposed project would be less objectionable if it were small homes (like the ones for sale across from the US Post  Office on Graham Ave) or at the very least condominiums for sale but these are not, they are rental apartments!  There  are very few rental apartments located in the historic district and the ones that I have seen are considered ‘less then  desirable’.  In fact, to see an example of what I mean, look at the apartments located directly behind the Cultural  2 Center.  These apartments truly reflect our concerns.  When you invite a transient population into a neighborhood there  is also a concern of an increase in crime.  This again, comes from a population of people who have no vested interest in  the community.  Considering that this project is being funded by a venture capital company (I am basing this assumption  only by their name and the fact that I can find no information regarding the company New Ventures, LLC on the web)  and based on my past professional experiences dealing with venture capital companies they are in this project for a  quick return on their investment and will most likely sell the property as soon as they can to get their money back.  This  would most certainly leave the apartments to be managed by a remote individual who truly have no ties to the  community and will just be utilizing this property as just a stream of income.  Traditionally a landlord does only a credit  check on the prospective tenant listed on the agreement, they do not do a background check to see if the renter or the  other residents have a criminal background including felony arrests, outstanding warrants, or much worse…      I understand the desire to fill the vacant lots located throughout the city but we need to have some very strong  guidelines around these builds.  Within the Historic District  these guidelines need to preserve the aesthetic look and feel  of the area and surrounding buildings.  The guidelines need to ensure that current homes and residents are protected  from possible urban decay brought upon by multi‐unit rental properties.       Thank you for your time and consideration.  Please feel free to contact me at the number below should you like to  discuss my concerns further or have any additional questions.    _________________________ Mary k. Monise, PHR C (915) 808-3889 E mary.monise@coop.org   1 Damaris Abraham From:Chad Logan <chadloganconstruction@gmail.com> Sent:Sunday, September 16, 2018 6:14 PM To:Damaris Abraham Cc:Hollingshead Peter; Jerry Fabio Subject:Re: Formal Objection Letter -Parcel Number 374-183-018 Attention Lake Elsinore Planning Commision, and residents of the City of Lake Elsinore, I am writing this in response to the objection of our proposed project located at 801 W. Graham Ave, Lake Elsinore Ca, planning application 2018-02. Let me begin by stating my partners and I appreciate the input of the neighboring residents of our project, and the enthusiasm to maintain a higher property value for the Lake Elsinore Historical District. The responses to the assumptions in the objection letter will be answered solely with factual information and not the opinions of any members of New Ventures LLC, CLPH or any other professional group associated with this project. A) this project shall include a condo map to create 5 individual building lots, the project will contain 3 buildings on the divided lot B) the units will be sold as individual homes, and not rentals as stated below C) three of the six residential homes on the 700 block of w. Graham are two story residences, and several lots have multiple units within legal zoning rights D) New Ventures LLC, CLPH has worked directley with our design team and Lake Elsinore DRC, along with the city’s engineers to create the least amount of traffic impact to the corner of Graham and Lowell and also created what is to be believed the best architectural fit for the downtown historic district. (Although one may say these are opinions, the facts are based on submitals and approvals to the Lake Elsinore planning and engineering department. E) New Ventures LLC, CLPH is not a capital investment company We believe other assumptions in this objection letter do not contain to directly to our project and are ones opinions of the development of Lake Elsinore. In conclusion, To reiterate our project, we will be building 5 units consisting of 3 buildings, designed with the assistance of and under all Lake Elsinore authorities and local jurisdictions to conform with Historical Downtown. Our goal is to create desirable housing within walking distance of downtown. Respectfully, Chad Logan Partner New Ventures LLC, CLPH Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-839 Agenda Date: Status: Consent AgendaVersion: 1 File Type: ReportIn Control: City Council / Successor Agency Agenda Number: 4) Page 1 City of Lake Elsinore Printed on 10/4/2018 Page 1 of 2 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Date:October 9, 2018 Subject:Vacation of a Portion of Acacia Drive Recommendation adopt City Council Resolution No. 2018- A Resolution of the City Council of the City of Lake Elsinore, California, Vacating a Portion of Acacia Drive Background Acacia Drive is what is known as a “paper street.” A paper street is a road or street that appears only on final maps and has been offered for dedication as a public right of way, but has never actually been used or improved for street purposes. Acacia Drive runs parallel and very close to the north shore of Lake Elsinore. A review of applicable public records shows Acacia Drive as being dedicated in 1914. Despite this, a 1962 survey of the Lake’s boundaries shows Acacia Drive as “abandoned.” Indeed, in 1925, a part of Acacia was still in the County of Riverside when the County did take formal action to vacate the northern length of Acacia past Matich Street (and which may explain the surveyor’s conclusion of “abandonment” in 1962). Several property owners along Acacia Drive have appeared before the City Council to urge vacation of a portion of this street. Additionally, one property owner has filed an action against the City seeking a court determination that the public right of way constituting Acacia Drive has been abandoned by the City. (Dobihal v. City of Lake Elsinore, Riverside Superior Court Case No. RIC1722955.) Staff has determined that portions of Acacia Drive north of Davis Street and between Davis and Silver Streets (“vacation segments”) have not been used for travel, no public money has been spent, and the vacation segments are not required for any street or highway purpose. Additionally, the attorney for the property owner in the Dobihal case had agreed to dismiss the pending case following the completion of the vacation process. A settlement agreement has been circulated and should be completed shortly. VACATION OF A PORTION OF ACACIA DRIVE October 9, 2018 Page 2 of 2 Analysis Prior to City Council action to vacate a public right-of-way, the Planning Commission must first determine if the vacation is in conformity with the adopted General Plan (Government Code Section 65402). The General Plan does not designate the portion of Acacia Drive under consideration as a roadway, and it has never been used as a roadway. On August 21, 2018, the Planning Commission adopted Resolution No. 2018-65 finding that the vacation would be in conformity with the City’s General Plan. Recommendation Staff therefore recommends adoption of the Resolution of the City Council of the City of Lake Elsinore, California, Vacating a Portion of Acacia Drive. As provided in the resolution, the vacation is contingent upon the finalization of a settlement agreement in the above-referenced lawsuit. Attachments: 1.City Council Resolution No. 2018-___ 2.Vicinity map showing vacated area RESOLUTION NO. 2018-___ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, VACATING A PORTION OF ACACIA DRIVE Whereas, the City Council of the City of Lake Elsinore has determined that a certain street right-of-way is no longer necessary to be utilized as a public right-of-way, said street right-of-way being more particularly described in Exhibit A attached hereto (Vacation Segments); and Whereas,the City Council of the City of Lake Elsinore desires to vacate the Vacation Segments pursuant to the procedures set forth in Streets and Highways Code section 8335; and Whereas, the vacation is permitted by law pursuant to the conditions set forth in Streets and Highways Code section 8334; and Whereas, in accordance with Streets and Highways Code section 8313 and Government Code section 65402, the Planning Commission considered this summary vacation and determined that the vacation is consistent with the General Plan; and Whereas,that from and after the effective date of this Resolution, the street, highway, or public service easement vacated no longer constitutes a street, highway, or public service easement. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1.That the foregoing recitals are true and correct. Section 2.The City Council hereby finds that the Vacation Segments described in Exhibit A attached to this Resolution is unnecessary for present and prospective use. Section 3.That the right-of-way more particularly in Exhibit A attached to this resolution is hereby ordered to be vacated as provided herein. Section 4.Nothing contained in this Resolution is intended to affect any private property rights regarding the Vacation Segments. Section 5. Prior to the recordation of this Resolutions as provided in Section 6 below, the City Manager is hereby authorized to resolve the litigation in Dobihal v. City of Lake Elsinore, Riverside Superior Court Case No. RIC1722955, provided that such resolution results in the dismissal of the litigation and does not involve any monetary payment, the evidence of such resolution to be in a form approved by the City Attorney. Section 6.This Resolution shall take effect upon recordation of this Resolution in the of records of the County of Riverside and from such date the vacation will be complete and the Vacation Segments shall no longer constitute a public street. The City Clerk shall cause a certified copy of this Resolution, attested by the Clerk under seal, to be recorded in the Office of the County Recorder as provided herein. CC Reso. No. 2018- Page 2 of 3 Passed and Adopted this 9th day of October 2018. Natasha Johnson Mayor Attest: Susan M. Domen, MMC City Clerk STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Susan M. Domen, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify that Resolution No. 2018- was adopted by the City Council of the City of Lake Elsinore, California, at the regular meeting of , 2018, and that the same was adopted by the following vote: AYES: NOES: ABSENT: ABSTAIN: Susan M. Domen, MMC City Clerk EXHIBIT A DESCRIPTION OF VACATION SEGMENTS VACATION SEGMENT PARCEL 1: THAT PORTION OF ACACIA DRIVE BEGINNING AT THE NORTH AND WEST CORNERS OF THE INTERSECTION OF ACACIA DRIVE AND DAVIS STREET, PROCEEDING NORTHWEST TO THE TERMINUS OF ACACIA DRIVE, AS SHOWN ON THE LAKESHORE DRIVE ADDITION TO ELSINORE, IN THE CITY OF LAKE ELSINORE, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 9, PAGES 65, 66 AND 67 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. VACATION SEGMENT PARCEL 2: THAT PORTION OF ACACIA DRIVE WHICH LIES BETWEEN THE NORTH AND WEST CORNERS OF THE INTERSECTION OF ACACIA AND SILVER STREET, PROCEEDING NORTHWEST TO THE SOUTH AND EAST CORNERS OF THE INTERSECTION OF ACACIA DRIVE AND SILVER STREET, AS SHOWN ON THE LAKESHORE DRIVE ADDITION TO ELSINORE, IN THE CITY OF LAKE ELSINORE, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 9, PAGES 65, 66 AND 67 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. SAID VACATION SEGMENTS DO NOT INCLUDE DAVIS STREET OR SILVER STREET OR THE INTERSECTION OF SUCH STREETS WITH ACACIA DRIVE. Map of Vacation Segments - Acacia Drive Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-840 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: ReportIn Control: City Council / Successor Agency Agenda Number: 5) Page 1 City of Lake Elsinore Printed on 10/4/2018 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Prepared By: Catherine Eakins, Public Works Administrative Assistant Date:October 9, 2018 Subject:Addendum No. 3 to Commercial Lease Agreement Recommendation Authorize the City Manager to execute Addendum No. 3 to Commercial Lease Agreement for premises located at 114 S. Main Street in such final form as approved by the City Attorney. Background The City currently leases the premises at 114 S. Main Street. This building provides office space for the City’s Conference Room B, Information Technology Division, and the Fire Marshal. The City entered into the original Commercial Lease and Addendum No. 1 on December 18, 2006 for a five (5) year term, with an initial rent of $1,780 per month subject to annual adjustments. The City extended the Commercial Lease by Addendum No. 2 in January 2013 for an additional five (5) year term with an initial rent of $2,000 subject to annual Consumer Price Index (CPI) adjustments. Thereafter, the Commercial Lease continued on a month to month basis. Discussion City staff desires to extend the term of the Commercial Lease at 114 S. Main Street, for an additional five (5) year term. The initial rent will equal $2,121.12 per month and increase annually based on CPI. All other terms of the Commercial Lease as amended by Addendum No. 2 shall remain in effect. Fiscal Impact Approval of this Commercial Lease will commit the City to rent payments of $2,121.12 per month plus annual increases based on the CPI for the term of the lease. This expense is budgeted for in the FY18-19 operating budget. Exhibits Exhibit A – Addendum No. 3 to Commercial Lease Exhibit B – Addendum Nos. 1 & 2 & Original Agreement ADDENDUM NO. 3 TO COMMERCIAL LEASE Genaro and Mabel A. Pratts 114 South Main Street, Lake Elsinore, CA 92530 This Addendum No. 3 to Commercial Lease (“Addendum No. 3”) is made and entered into as of October 9, 2018 by and between the City of Lake Elsinore, a municipal corporation (“Lessee), and Genaro and Mabel A. Pratts (“Lessor”). RECITALS A.The City and Lessor entered into that certain Commercial Lease and Addendum No. 1 thereto dated December 18, 2006 for the lease of 114 South Main Street (APN 373-151-021) (the “Commercial Lease”). B.The term of the Commercial Lease was for five (5) years, commencing on December 18, 2006 and ending December 17, 2012. C. The Commercial Lease provided for monthly rent of $1,780 calculated at the rate of $1.25 per rentable square foot for the first two (2) years of the Lease Term subject to specified adjustments thereafter. D.Addendum No. 2 extended the term of the Commercial Lease for an additional five (5) year term, commencing January 1, 2013 with monthly rent commencing at $2,000 subject to annual adjustments based on Consumer Price Index (CPI) percentage change as reported by the Bureau of Labor Statistics for the Los Angeles- Riverside-Orange County Area. Addendum No.2 replaced and superseded Addendum No. 1. E.The parties now desire to extend the term of the Commercial Lease as amended by Addendum No. 2 for an additional five (5) year term, commencing November 1, 2018 and ending October 31, 2023. Except as otherwise defined herein, all capitalized terms used herein shall have the meanings set forth for such terms in the Commercial Lease as amended by Addendum No. 2. NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth herein, Lessee and Lessor agree as follows: 1.Section 3, Term, is hereby amended in its entirety as follows: The Term of that certain Commercial Lease dated as of December 18, 2006 by and between Genaro and Mabel A. Prats and the City of Lake Elsinore (the “Lease”) shall be extended such that the new term of the Lease shall be five (5) years, commencing on November 1, 2018 and ending October 31, 2023, unless terminated earlier as hereinafter provided. At the conclusion of the Lease (as extended as provided herein), the Lessor and the Lessee, at their option, can continue this Commercial Lease as a month to month lease agreement, based upon the written agreement of the parties. 2.Section 4, Rent, is hereby amended in its entirety as follows: Lessee shall pay monthly rent to Lessor in the amount of Two Thousand One Hundred Twenty One and 12/100th Dollars and Twelve Cents ($2,121.12). Commencing November 1, 2019 and each November 1st, thereafter during the Term, the monthly rent paid to Lessor shall be subject to an annual increase such annual increase to be based on the Consumer Price Index (CPI) percentage change as reported by Bureau of Labor Statistics for the Los Angeles-Riverside-Orange County Area for the period of September to September each year. 3.Except for the changes specifically set forth herein, all other terms and conditions of the Commercial Lease as amended by Addendum No. 2 shall remain in full force and effect. IN WITNESS WHEREOF, the parties have caused this Addendum No. 3 to be executed on the respective dates set forth below. “LESSEE” CITY OF LAKE ELSINORE, a municipal corporation Grant Yates, City Manager Date: ATTEST: City Clerk APPROVED AS TO FORM: City Attorney “LESSOR” Genaro and Mabel A. Pratts Genaro Pratts – Owner Date:_________________________ ______________________________ Mabel A. Pratts – Co Owner Date: Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-841 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: AgreementIn Control: City Council / Successor Agency Agenda Number: 6) Page 1 City of Lake Elsinore Printed on 10/4/2018 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Prepared By: Brad Fagrell, City Engineer Date:October 9, 2018 Subject:Construction Contract Award for Emergency Work for the Holy Fire Storm Preparedness to Edmondson Construction Company Recommendation 1.Award the Public Works Construction Agreement for Emergency Work for the Holy Fire Storm Preparedness to Edmondson Construction Company 2.Authorize the City Manager to execute the Agreement in the amount of $80,498 to Edmondson Construction Company Background The Holy Fire is among one of the worst disasters to affect the City of Lake Elsinore. Beyond the devastation to our hillside, the fire has left behind many impacts on our community. The City of Lake Elsinore recognizes the severe impact winter storms can have on the burn scar area; flooding, mud and debris flows can happen at any time. A potentially significant storm is expected to happen starting October 3, 2018. Discussion This emergency project is to install an approximate 1,300’ long earthen berm along the southerly edge of the creek at the entrance to Rice Canyon (north of the intersection of Dale Court and Lincoln Street, adjacent to Rice Canyon Elementary School) in the City of Lake Elsinore, Riverside County, California. The berm will be constructed by pushing native sediments from the centerline of the creek in a southerly direction and up-gradient to form a berm to help keep expected debris flows within the creek/channel and away from the elementary school and adjacent homes. The Holy fire burned the creek's watershed and severe debris flows are expected when the creek flows again. Edmondson Construction Agreement October 9, 2018 Page 2 Fiscal Impact Funding for this emergency project has been allocated from the General Fund. Exhibits A – Agreement @BCL@284D0206.docx Page 1 AGREEMENT FOR CONTRACTOR SERVICES Edmondson Construction Co. This Agreement for Contractor Services (the “Agreement”) is made and entered into as of October 9, 2018, by and between the City of Lake Elsinore, a municipal corporation (‘‘City") and Edmondson Construction Co., ("Contractor"). RECITALS A.The City has determined that it requires the following services: Emergency work to include install approximately 1,300’ long earthen berm to help keep expected debris flows within the creek/channel away from the elementary school and adjacent homes. B.Contractor has submitted to City a proposal, dated October 3, 2018, attached hereto as Exhibit A (“Contractor’s Proposal”) and incorporated herein, to provide services and related work to the City pursuant to the terms of this Agreement. C.Contractor possesses the skill, experience, ability, background, certification and knowledge to perform the services and related work described in this Agreement on the terms and conditions described herein. D.City desires to retain Contractor to perform the services and related work as provided herein and Contractor desires to provide such services and related work as set forth in this Agreement. AGREEMENT 1.Scope of Services. Contractor shall perform the services and related work described in Contractor’s Proposal (Exhibit A). Contractor shall provide such services and related work at the time, place, and in the manner specified in Contractor’s Proposal (Exhibit A), subject to the direction of the City through its staff that it may provide from time to time. 2.Time of Performance. a.Time of Essence. Time is of the essence in the performance of this Agreement. The time for completion of the services and related work to be performed by Contractor is an essential condition of this Agreement. Contractor shall prosecute regularly and diligently the services and related work contemplated pursuant to this Agreement consistent with Contractor’s Proposal (Exhibit A) and shall provide, furnish and pay all labor, materials, necessary tools, expendable equipment, and all taxes, utility and transportation services required to perform such the services and related work. b.Performance Schedule. Contractor shall commence the services and related work pursuant to this Agreement upon receipt of a written notice to proceed and shall perform all services and related work within the time period(s) established in the Contractor’s Proposal (Exhibit A). When requested by Contractor, extensions to the time period(s) specified may be approved in writing by the City Manager. Page 2 c.Term. The term of this Agreement shall commence upon execution of this Agreement and shall continue until the services and related work are completed in accordance with the Contractor’s Proposal (Exhibit A). Contractor hereby agrees and acknowledges that any and all work or services performed pursuant to this Agreement shall be based upon the issuance of a project task order by the City. Contractor acknowledges that it is not guaranteed any minimum or specific amount of work or services as all work or services shall be authorized through task order issued by the City. 3.Compensation. Compensation to be paid to Contractor shall be in accordance with the fees set forth in Contractor’s Proposal (Exhibit A), which is attached hereto and incorporated herein by reference. In no event shall Contractor’s compensation exceed Eighty Thousand Four Hundred Ninety Eight dollars ($80,498)without additional written authorization from the City. Notwithstanding any provision of Contractor’s Proposal to the contrary, out of pocket expenses set forth in Exhibit A shall be reimbursed at cost without an inflator or administrative charge. Payment by City under this Agreement shall not be deemed a waiver of defects, even if such defects were known to the City at the time of payment. 4.Method of Payment. Contractor shall promptly submit billings to the City describing the services and related work performed during the preceding month to the extent that such services and related work were performed. Contractor’s bills shall be segregated by project task, if applicable, such that the City receives a separate accounting for work done on each individual task for which Contractor provides services. Contractor’s bills shall include a brief description of the services performed, the date the services were performed, the number of hours spent and by whom, and a description of any reimbursable expenditures. City shall pay Contractor no later than forty-five (45) days after receipt of the monthly invoice by City staff. 5.Reserved. 6.Suspension or Termination. a.The City may at any time, for any reason, with or without cause, suspend or terminate this Agreement, or any portion hereof, by serving upon the Contractor at least ten (10) days prior written notice. Upon receipt of such notice, the Contractor shall immediately cease all work under this Agreement, unless the notice provides otherwise. If the City suspends or terminates a portion of this Agreement such suspension or termination shall not make void or invalidate the remainder of this Agreement. b.In the event this Agreement is terminated pursuant to this Section, the City shall pay to Contractor the actual value of the work performed up to the time of termination, provided that the work performed is of value to the City. Upon termination of the Agreement pursuant to this Section, the Contractor will submit an invoice to the City, pursuant to Section entitled “Method of Payment” herein. 7.Ownership of Documents. All plans, studies, documents and other writings prepared by and for Contractor, its officers, employees and agents and subcontractors in the course of implementing this Agreement, except working notepad internal documents, shall become the property of the City upon payment to Contractor for such work, and the City shall Page 3 have the sole right to use such materials in its discretion without further compensation to Contractor or to any other party. Contractor shall, at Contractor’s expense, provide such reports, plans, studies, documents and other writings to City upon written request. City acknowledges that any use of such materials in a manner beyond the intended purpose as set forth herein shall be at the sole risk of the City. City further agrees to defend, indemnify and hold harmless Contractor, its officers, officials, agents, employees and volunteers from any claims, demands, actions, losses, damages, injuries, and liability, direct or indirect (including any and all costs and expenses in connection therein), arising out of the City’s use of such materials in a manner beyond the intended purpose as set forth herein. a.Licensing of Intellectual Property. This Agreement creates a nonexclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Contractor under this Agreement ("Documents & Data"). Contractor shall require that all subcontractors agree in writing that City is granted a nonexclusive and perpetual license for any Documents & Data the subcontractor prepares under this Agreement. Contractor represents and warrants that Contractor has the legal right to license any and all Documents & Data. Contractor makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Contractor or provided to Contractor by the City. City shall not be limited in any way in its use of the Documents & Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City’s sole risk. b.Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents & Data either created by or provided to Contractor in connection with the performance of this Agreement shall be held confidential by Contractor. Such materials shall not, without the prior written consent of City, be used by Contractor for any purposes other than the performance of the services under this Agreement. Nor shall such materials be disclosed to any person or entity not connected with the performance of the services under this Agreement. Nothing furnished to Contractor which is otherwise known to Contractor or is generally known, or has become known, to the related industry shall be deemed confidential. Contractor shall not use City’s name or insignia, photographs relating to project for which Contractor’s services are rendered, or any publicity pertaining to the Contractor’s services under this Agreement in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City. 8.Contractor’s Books and Records. a.Contractor shall maintain any and all ledgers, books of account, invoices, vouchers, canceled checks, and other records or documents evidencing or relating to charges for services, or expenditures and disbursements charged to City for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Contractor to this Agreement. b.Contractor shall maintain all documents and records which demonstrate performance under this Agreement for a minimum period of three (3) years, or for any longer period required by law, from the date of termination or completion of this Agreement. Page 4 c.Any records or documents required to be maintained pursuant to this Agreement shall be made available for inspection or audit, at any time during regular business hours, upon written request by the City Manager, City Attorney, City Auditor or a designated representative of these officers. Copies of such documents shall be provided to the City for inspection at City Hall when it is practical to do so. Otherwise, unless an alternative is mutually agreed upon, the records shall be available at Contractor’s address indicated for receipt of notices in this Agreement. d.Where City has reason to believe that such records or documents may be lost or discarded due to dissolution, disbandment or termination of Contractor’s business, City may, by written request by any of the above-named officers, require that custody of the records be given to the City and that the records and documents be maintained in City Hall. Access to such records and documents shall be granted to any party authorized by Contractor, Contractor’s representatives, or Contractor’s successor-in-interest. 9.Independent Contractor. It is understood that Contractor, in the performance of the work and services agreed to be performed, shall act as and be an independent contractor and shall not act as an agent or employee of the City. 10.PERS Eligibility Indemnification. In the event that Contractor or any employee, agent, or subcontractor of Contractor providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, Contractor shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Contractor or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City. Notwithstanding any other federal, state and local laws, codes, ordinances and regulations to the contrary, Contractor and any of its employees, agents, and subcontractors providing service under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits. 11.Interests of Contractor. Contractor (including principals, associates and management employees) covenants and represents that it does not now have any investment or interest in real property and shall not acquire any interest, direct or indirect, in the area covered by this Agreement or any other source of income, interest in real property or investment which would be affected in any manner or degree by the performance of Contractor’s services hereunder. Contractor further covenants and represents that in the performance of its duties hereunder no person having any such interest shall perform any services under this Agreement. Contractor is not a designated employee within the meaning of the Political Reform Act because Contractor: a.will conduct research and arrive at conclusions with respect to his/her rendition of information, advice, recommendation or counsel independent of the control and direction of the City or of any City official, other than normal agreement monitoring; and Page 5 b.possesses no authority with respect to any City decision beyond rendition of information, advice, recommendation or counsel. (FPPC Reg. 18700(a)(2).) 12.Ability of Contractor. City has relied upon the training and ability of Contractor to perform the services hereunder as a material inducement to enter into this Agreement. Contractor shall therefore provide properly skilled personnel to perform all services under this Agreement. All work performed by Contractor under this Agreement shall be in accordance with applicable legal requirements and shall meet the standard of quality ordinarily to be expected of competent contractors in Contractor’s field of expertise. 13.Compliance with Laws. Contractor shall use the standard of care in its profession to comply with all applicable federal, state and local laws, codes, ordinances and regulations. 14.Licenses. Contractor represents and warrants to City that it has the licenses, permits, qualifications, insurance and approvals of whatsoever nature which are legally required of Contractor to practice its profession. Contractorrepresents and warrants to City that Contractor shall, at its sole cost and expense, keep in effect or obtain at all times during the term of this Agreement, any licenses, permits, insurance and approvals which are legally required of Contractor to practice its profession. Contractor shall maintain a City of Lake Elsinore business license. 15.Indemnity. Contractor shall indemnify, defend, and hold harmless the City and its officials, officers, employees, agents, and volunteers from and against any and all losses, liability, claims, suits, actions, damages, and causes of action arising out of any personal injury, bodily injury, loss of life, or damage to property, or any violation of any federal, state, or municipal law or ordinance, to the extent caused, in whole or in part, by the willful misconduct or negligent acts or omissions of Contractor or its employees, subcontractors, or agents, by acts for which they could be held strictly liable, or by the quality or character of their work. The foregoing obligation of Contractor shall not apply when (1) the injury, loss of life, damage to property, or violation of law arises from the sole negligence or willful misconduct of the City or its officers, employees, agents, or volunteers and (2) the actions of Contractor or its employees, subcontractor, or agents have contributed in no part to the injury, loss of life, damage to property, or violation of law. It is understood that the duty of Contractor to indemnify and hold harmless includes the duty to defend as set forth in Section 2778 of the California Civil Code. Acceptance by City of insurance certificates and endorsements required under this Agreement does not relieve Contractor from liability under this indemnification and hold harmless clause. This indemnification and hold harmless clause shall apply to any damages or claims for damages whether or not such insurance policies shall have been determined to apply. By execution of this Agreement, Contractor acknowledges and agrees to the provisions of this Section and that it is a material element of consideration. 16.Insurance Requirements. a.Insurance. Contractor, at Contractor’s own cost and expense, shall procure and maintain, for the duration of the contract, unless modified by the City’s Risk Manager, the following insurance policies. i.Workers’ Compensation Coverage. Contractor shall maintain Workers’ Compensation Insurance and Employer’s Liability Insurance for his/her employees in accordance with the laws of the State of California. In addition, Contractor shall require each subcontractor to similarly maintain Workers’ Compensation Insurance Page 6 and Employer’s Liability Insurance in accordance with the laws of the State of California for all of the subcontractor’s employees. Any notice of cancellation or non-renewal of all Workers’ Compensation policies must be received by the City at least thirty (30) days prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Contractor for City. In the event that Contractor is exempt from Worker’s Compensation Insurance and Employer’s Liability Insurance for his/her employees in accordance with the laws of the State of California, Contractor shall submit to the City a Certificate of Exemption from Workers Compensation Insurance in a form approved by the City Attorney. ii.General Liability Coverage. Contractor shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal injury and property damage. If a commercial general liability insurance form or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement or the general aggregate limit shall be at least twice the required occurrence limit. Required commercial general liability coverage shall be at least as broad as Insurance Services Office Commercial General Liability occurrence form CG 0001 (ed. 11/88) or Insurance Services Office form number GL 0002 (ed. 1/73) covering comprehensive General Liability and Insurance Services Office form number GL 0404 covering Broad Form Comprehensive General Liability. No endorsement may be attached limiting the coverage. iii.Automobile Liability Coverage. Contractor shall maintain automobile liability insurance covering bodily injury and property damage for all activities of the Contractor arising out of or in connection with the work to be performed under this Agreement, including coverage for owned, hired and non-owned vehicles, in an amount of not less than one million dollars ($1,000,000) combined single limit for each occurrence. Automobile liability coverage must be at least as broad as Insurance Services Office Automobile Liability form CA 0001 (ed. 12/90) Code 1 (“any auto”). No endorsement may be attached limiting the coverage. b.Endorsements. Each general liability and automobile liability insurance policy shall be with insurers possessing a Best’s rating of no less than A:VII and shall be endorsed with the following specific language: i.The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insured with respect to liability arising out of work performed by or on behalf of the Contractor, including materials, parts or equipment furnished in connection with such work or operations. ii.This policy shall be considered primary insurance as respects the City, its elected or appointed officers, officials, employees, agents and volunteers. Any insurance maintained by the City, including any self-insured retention the City may have, shall be considered excess insurance only and shall not contribute with it. iii.This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. Page 7 iv.The insurer waives all rights of subrogation against the City, its elected or appointed officers, officials, employees or agents. v.Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the City, its elected or appointed officers, officials, employees, agents or volunteers. vi.The insurance provided by this Policy shall not be suspended, voided, canceled, or reduced in coverage or in limits except after thirty (30) days written notice has been received by the City. c.Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by the City. At the City’s option, Contractor shall demonstrate financial capability for payment of such deductibles or self-insured retentions. d.Certificates of Insurance. Contractor shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Certificates of such insurance shall be filed with the City on or before commencement of performance of this Agreement. Current certification of insurance shall be kept on file with the City at all times during the term of this Agreement. 17.Notices. Any notice required to be given under this Agreement shall be in writing and either served personally or sent prepaid, first class mail. Any such notice shall be addressed to the other party at the address set forth below. Notice shall be deemed communicated within 48 hours from the time of mailing if mailed as provided in this section. If to City:City of Lake Elsinore Attn: City Manager 130 South Main Street Lake Elsinore, CA 92530 With a copy to:City of Lake Elsinore Attn: City Clerk 130 South Main Street Lake Elsinore, CA 92530 If to Contractor:Edmondson Construction Co. Attn: Chance Edmondson 18135 Grand Avenue Lake Elsinore, CA 92530 18.Entire Agreement. This Agreement constitutes the complete and exclusive statement of Agreement between the City and Contractor. All prior written and oral communications, including correspondence, drafts, memoranda, and representations, are superseded in total by this Agreement. 19.Amendments. This Agreement may be modified or amended only by a written document executed by both Contractor and City and approved as to form by the City Attorney. Page 8 20.Assignment and Subcontracting. The parties recognize that a substantial inducement to City for entering into this Agreement is the reputation, experience and competence of Contractor and the subcontractors listed in Exhibit B. Contractor shall be fully responsible to City for all acts or omissions of any subcontractors. Assignments of any or all rights, duties or obligations of the Contractor under this Agreement will be permitted only with the express consent of the City. Contractor shall not subcontract any portion of the work to be performed under this Agreement except as provided in Exhibit B without the written authorization of the City. If City consents to such subcontract, Contractor shall be fully responsible to City for all acts or omissions of those subcontractors. Nothing in this Agreement shall create any contractual relationship between City and any subcontractor nor shall it create any obligation on the part of the City to pay or to see to the payment of any monies due to any such subcontractor other than as otherwise is required by law. 21.Waiver. Waiver of a breach or default under this Agreement shall not constitute a continuing waiver of a subsequent breach of the same or any other provision under this Agreement. 22.Severability. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 23.Controlling Law Venue. This Agreement and all matters relating to it shall be governed by the laws of the State of California and any action brought relating to this Agreement shall be held exclusively in a state court in the County of Riverside. 24.Litigation Expenses and Attorneys’ Fees. If either party to this Agreement commences any legal action against the other party arising out of this Agreement, the prevailing party shall be entitled to recover its reasonable litigation expenses, including court costs, expert witness fees, discovery expenses, and attorneys’ fees. 25.Mediation. The parties agree to make a good faith attempt to resolve any disputes arising out of this Agreement through mediation prior to commencing litigation. The parties shall mutually agree upon the mediator and share the costs of mediation equally. If the parties are unable to agree upon a mediator, the dispute shall be submitted to JAMS or its successor in interest. JAMS shall provide the parties with the names of five qualified mediators. Each party shall have the option to strike two of the five mediators selected by JAMS and thereafter the mediator remaining shall hear the dispute. If the dispute remains unresolved after mediation, either party may commence litigation. 26.Authority to Enter Agreement. Contractor has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and to bind each respective party. The City Manager is authorized to enter into an amendment or otherwise take action on behalf of the City to make the following modifications to the Agreement: (a) a name change; (b) grant extensions of time; (c) non- monetary changes in the scope of services; and/or (d) suspend or terminate the Agreement. 27.Prohibited Interests. Contractor maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Contractor, to solicit or secure this Agreement. Further, Contractor warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely Page 9 for Contractor, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom. 28.Equal Opportunity Employment. Contractor represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. 29.Prevailing Wages. Contractor is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on "public works" and "maintenance" projects. Contractor agrees to fully comply with all applicable federal and state labor laws (including, without limitation, if applicable, the Prevailing Wage Laws). It is agreed by the parties that, in connection with the Work or Services provided pursuant to this Agreement, Contractor shall bear all risks of payment or non-payment of prevailing wages under California law, and Contractor hereby agrees to defend, indemnify, and hold the City, and its officials, officers, employees, agents, and volunteers, free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. The foregoing indemnity shall survive termination of this Agreement. 30.Execution. This Agreement may be executed in several counterparts, each of which shall constitute one and the same instrument and shall become binding upon the parties when at least one copy hereof shall have been signed by both parties hereto. In approving this Agreement, it shall not be necessary to produce or account for more than one such counterpart. [Signatures on next page] Page 10 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first written above. “CITY” CITY OF LAKE ELSINORE, a municipal corporation Grant Yates, City Manager ATTEST: City Clerk APPROVED AS TO FORM: City Attorney “CONTRACTOR” Edmondson Construction Co. By:_____________________ Its:_____________________ Attachments: Exhibit A – Contractor’s Proposal EXHIBIT A EXHIBIT A CONTRACTOR’S PROPOSAL [ATTACHED] Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-834 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: AgreementIn Control: City Council / Successor Agency Agenda Number: 7) Page 1 City of Lake Elsinore Printed on 10/4/2018 Page 1 of 2 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Prepared By: Brad Fagrell, City Engineer Date:October 9, 2018 Subject:Riverside County Flood Control District Cooperative Agreement towards the Realignment for the Temescal Canyon Bridge Project Recommendation The City Council approve the following actions: 1. Approve Riverside County Flood Control District (RCFCD) funding contribution for $3,369,700.00. 2. Authorize the City Manager to execute the funding agreement. Background A portion of the City westerly of Lake Street is within Flood Control District Zone-2 drainage area which existing Temescal Canyon Bridge over the Temescal Canyon Wash is located. The existing Temescal Canyon Bridge (over Temescal Wash) has been rated as functionally obsolete with a low sufficiency rating by Caltrans. The Bridge is also severely undersized to handle the storm flows, and as a result Temescal Canyon Road westerly of Lake Street is subject to constant flooding and road closure. The City initiated the Planning Approval and Environmental Document (PA&ED) phase to determine the best roadway and Bridge alignment back in February 2015, after securing Federal Highway Bridge Program Funding (HBP) and Transportation Uniform Mitigation Fee (TUMF) contribution toward this project. The PA&ED phase of this project is complete and the CEQA/NEPA clearance was received on July 11, 2018. However, the project local funding contribution required to complete the final design, right-of-way acquisition, and construction exceeds the available TUMF allocation for this project. To fulfill the project cost shortfall, the City obtained support and funding contribution from RCFCD for this master planned project. Discussion On December 13, 2017, the City presented this project to the Riverside County Flood Control and Water Conservation District Zone-2 Commissioners for funding contribution consideration at the Public Budget Hearing. On February 14, 2018, the Riverside County Flood Control and Water Conservation District Zone-2 Commissioners approved the City’s funding contribution request of $3,369,700.00. RCFCD Cooperative Agreement October 9, 2018 Page 2 of 2 The approved funding contribution allocated towards the final design, right-of-way and construction of the Temescal Canyon Bridge Replacement Project is part of the Zone-2, 5-year Capital Improvement Budget starting Fiscal Year 2018-2019. Fiscal Impact The execution of this agreement would supplement the existing committed local and federal funds and would fulfill the required Local Match needed to complete this project. There is no impact on the General Fund. Exhibits A – Agreement INGTemescal Wash Improvement, Stage 1Temescal Canyon Bridge ReplacementProject No. 2-0-00264This Funding Agreement ("Agreement"), dated as of2225562019, isentered into by and between the RIVERSIDE COI-INTY FLOOD CONTROL AND WATERCONSERVATION DISTRICT, a body politic ("DISTRICT"), and the CITY OF LAKEELSINORE, a municipal corporation ("CITY") who agree as follows:RECITALSA. CITY has budgeted for and plans to design, prepare plans and specifications,construct and subsequently operate and maintain: Temescal Wash Improvements - TemescalCanyon Bridge Replacement ("BRIDGE"). BRIDGE is comprised of a section of TemescalCanyon Road as it traverses Temescal Wash, approximately three hundred (300') feet south ofInterstate-l5 and 0.22 miles west of Lake Street located in the city of Lake Elsinore. Uponconstruction completion, BRIDGE will be able to convey storm flows and Temescal CanyonRoad westerly of Lake Street will be better protected from flooding and road closures; andB. In its current state, BRIDGE is only sixty four (64') feet long with less thanfive (5') feet of clearance. BRIDGE has been rated as "Functionally Obsolete," with a lowSufficiency rating by Caltrans. BRIDGE is severely undersized to convey storm flows. As aresult, Temescal Canyon Road westerly of Lake Street is subject to constant flooding and roadclosures. In this area, Temescal Canyon Road is the only viable alternate route to Interstate-l5;andC. The proposed BRIDGE is a new 4-lane, three hundred seventy five (375')foot long bridge, with a fifteen (15') foot clearance over Temescal Wash as shown in concept inblue on Exhibit "A" attached hereto and made aparthereof; and1 222556D. BRIDGE is hereinafter called "PROJECT"; andE. CITY desires that DISTRICT contribute funding for the design, right of wayacquisition, construction, mitigation and monitoring of pROJECT; andF. DISTRICT wishes to support CITY's efforts to construct PROJECT byproviding a financial contribution towards PROJECT's design, right of way acquisition,construction, mitigation and monitoring costs as set forth herein; andG. DISTRICT's financial contributions shall be as follows:(i) Fifteen percent (15%) of cITY's engineering design proposal cost, not toexceed two hundred forty thousand dollars ($240,000) to offset CITY's costs associated withmapping, surveying, engineering, and other typical ancillary costs related to the preparation of thenecessary plans and specifications to construct PROJECT, hereinafter called ("DESIGNCONTRIBUTION"); and(iD Fifteen percent (15%) of the actual cost, not to exceed three hundredfifty two thousand three hundred fifty dollars ($352,350) for right of way acquisition, right ofentry and temporary construction easements, hereinafter called ("ACQUISITIONCONTzuBUTION"); and(iii) Fifteen percent (15%) of the lowest responsible bid contract price forPROJECT construction, not to exceed two million five hundred eighty seven thousand threehundred fifty dollars ($2,587,350), hereinafter called ("CONSTRUCTION CONTRIBUTION");and(iv) Twenty percent (20%) of the actual cost, not to exceed one hundredninety thousand dollars ($190,000) for monitoring and mitigation, hereinafter called("MONITORING CONTRIBUTION"); anda 222ss6H. Altogether, DESIGN CONTRIBUTION, ACeUISITIONCONTRIBUTION, CONSTRUCTION CONTRIBUTION and MONITORINGCONTRIBUTION are hereinafter called "TOTAL DISTRICT CONTRIBUTION". TOTALDISTRICT CONTRIBUTION shall not exceed a total sum of three million three hundred sixtynine thousand seven hundred dollars ($3,369,700); andI. It is in the best interest of the public to proceed with the construction ofPROJECT at the earliest possible date; andJ. The purpose of this AGREEMENT is to memorialize the mutualunderstandings by and between DISTRICT and CITY with respect to funding, design, acquisition,construction, inspection, ownership, operation and maintenance and monitoring and mitigation ofPROJECT.NOW, THEREFORE, in consideration of the preceding recitals and the mutualcovenants hereinafter contained, the parties hereto mutually agree as follows:SECTION ICITY shall:1. Pursuant to the California Environmental Quality Act (CEQA), act as LeadAgency and assume responsibility for preparation, circulation and adoption of all necessary andappropriate CEQA documents pertaining to the construction, operation and maintenance ofPROJECT.2. Endeavor to award a public works construction contract for PROJECT andbegin construction within twenty-four (24) months of execution of AGREEMENT.3. Prepare or cause to be prepared, all the necessary plans and specifications forPROJECT, hereinafter called "IMPROVEMENT PLANS", in accordance with the applicableCITY standards.-3- 222s564. Prior to commencing construction, obtain, at its sole cost and expense, allnecessary permits, approvals or agreements as may be required by any federal, state and localresource or regulatory agencies pertaining to the construction, operation and maintenance ofPROJECT. Such documents may include, but are not limited to, a Section 404 permit issued bythe U.S. Army Corps of Engineers, a Section 401 Water Quality Certification issued by theCalifornia Regional Water Quality Control Board (CRWQCB), a Streambed AlterationAgreement issued by the California Department of Fish and Wildlife, and a National PollutantDischarge Elimination System Permit issued by the State Water Resources Control Board orCRWQCB and Western Riverside County Regional Conservation Authority ("REGULATORYPERMITS").5. Keep an accurate accounting of all acquisition costs associated with the rightof way acquisition, rights of entry and temporary construction easements for PROJECT andinclude this accounting when invoicing DISTRICT for ACQUISITION CONTRIBUTION.6. Invoice DISTRICT for (Attention: Planning Section) DESIGNCONTRIBUTION within thirty (30) days of execution of this Agreement.7. Within thirty (30) days of awarding PROJECT construction contract, pay theWestem Riverside County Multiple Species Habitat Conservation Plan fees to RiversideConservation Agency.8. Obtain all necessary permits, licenses, agreements, approvals, rights of way,rights of entry and temporary construction easements as may be needed to construct, operate andmaintain PROJECT.9. Invoice DISTRICT (Attention: Planning Section) for ACQUISITIONCONTRIBUTION at the time all necessary rights of way have been obtained as set forth inSection I.8.4 22255610. Advertise, award and administer a public works construction contract forPROJECT at its sole cost and expense. Advertise PROJECT for bids pursuant to the applicableprovisions of the California Public Contract Code.11. Provide DISTRICT with written notice (Attention: Planning Section) thatCITY has awarded a public works construction contract for PROJECT. The written notice shallinclude the Contractor's actual bid amounts for PROJECT, setting forth the successful lowestresponsible bid contract price for PROJECT construction as set forth herein.12. Invoice DISTRICT (Attention: Planning Section) for CONSTRUCTIONCONTRIBUTION and MONITORING CONTRIBUTION at the time of providing written noticeof the award of a construction contract as set forth in Section I.1 1 .13. Construct or cause to be constructed, PROJECT pursuant to a CITYadministered public works construction contract, in accordance with IMPROVEMENT PLANSapproved by CITY and pay all costs associated therewith.14. Inspect PROJECT construction or cause PROJECT's construction to beinspected by its construction manager, and pay all costs associated therewith. .15. Furnish or cause its construction manager to furnish, all construction surveyand materials testing services necessary to ensure PROJECT construction is accomplished inaccordance with CITY approved IMPROVEMENT PLANS.16. Order the relocation of all other utilities installed by permit or franchisewithin CITY rights of way which conflict with the construction of PROJECT and which must berelocated at the utility company's expense.17. CITY shall indemnify, defend, save and hold harmless DISTRICT andCounty of Riverside (including their respective officers, districts, special districts anddepartments, their respective directors, officers, Board of Supervisors, elected and appointed-5- 222556officials, employees, agents, representatives, independent contractors, and subcontractors) fromany liabilities, claim, damage, proceeding or action, present or future, based upon, arising out ofor in any way relating to CITY's (including its officers, employees, agents, representatives,independent contractors, and subcontractors) actual or alleged acts or omissions related to thisAgreement, performance under this Agreement, or failure to comply with the requirements of thisAgreement, including but not limited to: (a) property damage; (b) bodily injury or death (c)payment of attorney's fees; or (d) any other element of any kind or nature whatsoever.18. Without limiting or diminishing CITY's obligation to indemnify or holdDISTRICT harmless, CITY shall require its construction contractor(s) to procure and maintain orcause to be maintained, at its sole cost and expense, the following insurance coverage's during theterm of AGREEMENT:A. Workers'Compensation:In accordance with cITY's Agreement for Public works constructionSection 9(a) Insurance Requirements - Insurance paragraph (i).B. Commercial General Liabilit)':In accordance with CITY's Agreement for Public Works ConstructionSection 9(a) Insurance Requirements - Insurance paragraph (ii).C. Vehicle Liability:In accordance with CITY's Agreement for Public Works ConstructionSection 9(a) Insurance Requirements - Insurance paragraph (iii).D. ProfessionalLiability:In accordance with CITY's Agreement for Public Works ConstructionSection 9(a) Insurance Requirements - Insurance paragraph (v).-6- 222556E. General Insurance Provisions - All Lines:In accordance with CITY's Agreement for Public Works ConstructionSection 9(b) Insurance Requirements - Endorsements all paragraphs,section 9(c) Insurance Requirements - Deductibles and Self-InsuredRetentions and Section (9d) Insurance Requirements - certificates ofInsurance.19. CITY shall require its construction contractor(s) to comply with allCaVOSHA safety regulations including regulations concerning confined space and maintain a safeworking environment for all GITY and DISTRICT employees on the site.20. Assume ownership and sole responsibility for the operation and maintenanceof PROJECT.SECTION IIDISTRICT shall:1. Act as a Responsible Agency under CEQA, taking all necessary andappropriate action to comply with CEQA.2. Pay CITY, within thirty (30) days after receipt of CITY's appropriate invoicefor DESIGN CONTRIBUTION as set forth in Section I.6.3. Pay CITY, within thirty (30) days after receipt of CITY's appropriateinvoice, ACQUISITION CONTRIBUTION, as set forth in Section I.9.4. Pay CITY, within thirty (30) days after receipt of CITY's appropriate invoiceCONSTRUCTION CONTRIBUTION and MONITORING CONTzuBUTION as set forth inSection I.12.SECTION IIIIt is further mutually agreed:-7 - 222556l. Notwithstanding any other provision herein this Agreement, TOTALDISTRICT CONTRIBUTION shall not exceed a total sum of three million three hundred sixtynine thousand seven hundred dollars ($3,369,700) and shall be used by CITY solely for thepu{pose of designing constructing, acquisition for, mitigation and monitoring for PROJECT asset forth herein.2. Any waiver by DISTRICT or by CITY of any breach of any one or more ofthe terms of this Agreement shall not be construed to be a waiver of any subsequent or otherbreach of the same or of any other term hereof. Failure on the part of DISTRICT or CITy torequire exact, full and complete compliance with any terms of this Agreement shall not beconstrued as in any manner changing the terms hereof, or estopping DISTRICT or CITy fromenforcement hereof.3. This Agreement is to be construed in accordance with the laws of the Stateof California.4. Any and all notices sent or required to be sent to the parties of this Agreementwill be mailed by first class mail, postage prepaid, to the following addresses:RIVERSIDE COUNTY FLOOD CONTROLAND WATER CONSERVATION DISTRICT1995 Market StreetRiverside, CA 92501Attn: Planning SectionCITY OF LAKE ELSINORE130 S. Main StreetLake Elsinore, CA 92530Attn: City Engineer5. If any provision in this Agreement is held by a court of competent jurisdictionto be invalid, void, or unenforceable, the remaining provisions will nevertheless continue in fullforce without being impaired or invalidated in any way.6. This Agreement is the result of negotiations between the parties hereto, andthe advice and assistance of their respective counsel. The fact that this Agreement was preparedas a matter of convenience by DISTRICT shall have no import or significance. Any uncertainty-8- 222556or ambiguity in this Agreement shall not be construed against DISTRICT because DISTRICTprepared this Agreement in its final form.7. This Agreement is made and entered into for the sole protection and benefitof the parties hereto. No other person or entity shall have any right or action based upon theprovisions of this Agreement.8. Any action at law or in equity brought by any of the parties hereto for thepu{pose of enforcing a right or rights provided for by the Agreement, shall be tried in a court ofcompetent jurisdiction in the County of Riverside, State of Califomia, and the parties hereto waiveall provisions of law providing for a change of venue in such proceedings to any other county.9. DISTRICT and CITY each pledge to cooperate in regard to the operation andmaintenance of their respective facility as set forth herein and to discharge their respectivemaintenance responsibilities in an expeditious fashion so as to avoid the creation of any nuisancecondition or undue maintenance impact upon the others' facility.10. Time is of the essence in prosecuting the work contemplated under thisAgreement. At any time during the term of this Agreement, DISTRICT may terminate thisAgreement for cause, including but not limited to CITY's failure to prosecute the work in atimelymanner, upon providing CITY thirty (30) days written notice stating the extent and effective dateof termination.11. The obligation(s) of DISTRICT are limited by and contingent upon theavailability of DISTRICT funds for DISTRICT's financial contribution towards PROJECT as setforth herein. In the event that such funds are not forthcoming for any reason, DISTRICT shallimmediately notify CITY in writing.12. This Agreement is intended by the parties hereto as a final expression of theirunderstanding with respect to the subject matter hereof and as a complete and exclusive statement-9- 222556of the terms and conditions thereof and supersedes any and all prior and contemporaneousagreements and understandings, oral and written, in connection therewith. This Agreement maybe changed or modified only upon the written consent of the parties hereto.- 10- 222556IN WITNESS WHEREOF, the parties hereto have executed this Agreement on(to be filled in by Clerk of the Board)RECOMMENDED FOR APPROVAL:RIVERSIDE COUNTY FLOOD CONTROLAND WATER CONSERVATION DISTRICTByJASON E. UHLEYGeneral Manager-Chief EngineerAPPROVED AS TO FORM:GREGORY P. PRIAMOSCounty CounselByLEILA MOSHREF-DANESHDeputy County CounselFunding Agreement with City of Lake ElsinoreTemescal Wash Improvement, Stage 1Project No. 2-0-0026409lr2l18TRI:blmMARION ASHLEY, ChairmanRiverside County Flood Control and WaterConservation District Board of SupervisorsATTEST:KECIA HARPER-IHEMClerk of the BoardByDeputy(sEAL)By- 11- 222556RECOMMENDED FOR APPROVAL: CITY OF LAKE ELSINOREByGRANT YATESCity ManagerByGRANT YATESCity ManagerAPPROVED AS TO FORM:ATTEST:BByBARBARA LEIBOLDCity AttorneySUSAN DOMENCity Clerk(sEAL)Funding Agreement with City of Lake ElsinoreTemescal Wash Improvement, Stage IProject No. 2-0-0026409ltzt18TRI:blm-12- 222s56RECOMMENDED FOR APPROVAL: CITY OF LAKE ELSINOREByGRANT YATESCity ManagerByGRANT YATESCity ManagerAPPROVED AS TO FORM:ATTEST:ByBARBARA LEIBOLDCity AttorneyFunding Agreement with City of Lake ElsinoreTemescal Wash Improvement, Stage 1Project No. 2-0-0026409lt2lt8TRI:blmSUSAN DOMENCity Clerk(sEAL)-t2- 222556RECOMMENDED FOR APPROVAL: CITY OF LAKE ELSINOREByGRANT YATESCity ManagerByGRANT YATESCity ManagerAPPROVED AS TO FORMATTEST:ByBARBARA LEIBOLDCity AttorneyFunding Agreement with City of Lake ElsinoreTemescal Wash Improvement, Stage 1Project No. 2-0-0026409lt2lt8TRI:blmSUSAN DOMENCity Clerk(sEAL)-12- 222556RECOMMENDED FOR APPROVAL: CITY OF.LAKE ELSINOREByGRANT YATESCity ManagerByGRANT YATESCity ManagerAPPROVED AS TO FORM:ATTEST:BByBARBARA LEIBOLDCity AttomeyFunding Agreement with City of Lake ElsinoreTemescal Wash Improvement, Stage IProject No. 2-0-0026409lt2ll8TRI:blmSUSAN DOMENCity Clerk(sEAL)-t2- 222556RECOMMENDED FOR APPROVAL: CITY OF. LAKE ELSINOREByGRANT YATESCity ManagerByGRANT YATESCity ManagerAPPROVED AS TO FORM:ATTEST:ByFunding Agreement with City of Lake ElsinoreTemescal Wash Improvement, Stage 1Project No. 2-0-0026409lt2lt8TRI:blmBARBARA LEIBOLDCity AttorneySUSAN DOMENCity Clerk(sEAL)-12- Exhibit AFUNDING AGREEMENTTemescal Wash Improvement, Stage 1 -Temescal Canyon Bridge ReplacementProject No. 2-0-00264,tolBrldfrlProtErd T@..od CEtmXortPage 1 of I Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-842 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: ReportIn Control: City Council / Successor Agency Agenda Number: 8) Page 1 City of Lake Elsinore Printed on 10/4/2018 Page 1 of 2 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Through:Johnathan O. Skinner, Community Services Director Prepared by: Melissa Houtz, Special Events Coordinator Date:October 9, 20178 Subject:50th Grand Prix Recommendation Approve Temporary Street Closures for the 50th Annual Lake Elsinore Grand Prix on Friday, November 9, 2018, Saturday, November 10, 2018, and Sunday, November 11, 2018 Approve exemption to the Lake Elsinore Municipal Code (LEMC) Chapter 9.23 Public Consumption of Alcoholic Beverages at Lakepoint Park during the event hours indicated below. Background This is the 50th annual Lake Elsinore Grand Prix hosted by the Dirt Series LLC. This very popular event is typically held in Downtown Lake Elsinore, at Lakepoint Park, and throughout the City’s in proximity to those locations. The Lake Elsinore Grand Prix consists of multiple days, classes, and heats for motorcycles and UTVs to test their apparatuses and riding ability against their peers. The race course for the 50th running will bring LEGP through the streets of downtown Lake Elsinore, while incorporating other street and off-road elements to the 5-day event. Discussion The previous LEGP events were held primarily on the 2nd weekend of November and focused on the racing aspect. This year's event is creating an experience for the racing enthusiast as well as the Lake Elsinore residents or City visitor looking for something exciting to experience in the City. Beginning on Wednesday, November 7th with a Red-Carpet Event at the UEC Theater. Thursday with a Vintage and Veterans bike show on Main Street. And the running of the Harvey Mushman Race down the streets of Lake Elsinore, the 50th running of the Lake Elsinore Grand Prix will have something for everyone. The Race course will incorporate the hills and roads of previous tracks and bring in the nostalgic Harvey Mushman Race starting on Graham Street on Saturday. As a result, staff are recommending road closures for event staging and festivities. The Sherriff’s Department, Fire Department, Public Works Department and Community Services Department have met and Lake Elsinore Grand Prix Page 2 of 2 agreed on the routes and closures needed for this event. Departments will coordinate resources to ensure the event is a safe and memorable experience. In order to ensure the safety of the participants, staff is recommending the following road closures, as detailed in Exhibit A In addition, staff recommend the exemption of LEMC Chapter 9.28 Public Consumption of Alcoholic Beverages at City Park in Lake Elsinore between the hours of 11 a.m. to 10 p.m. on November 8, 2018, November 9, 2018 and November 10, 2018. A beer and wine garden is proposed to be located in City Park in a contained area as dictated by the Alcohol Beverage Control (ABC). The applicable Alcohol Beverage Control (ABC) Permit will be obtained and the associated regulations will be strictly adhered to, as detailed in the event conditions of approval. Fiscal Impact Costs for City personnel staffing will be accommodated via the Community Services fiscal budget and fees assessed to the race promoter. In addition, the City has agreed to contribute $11,000 from the Community Services Department’s budget line item for Grand Prix in order to cover the costs for police services, fire services, and portable restrooms. Exhibits A – Grand Prix Street Closures Map Road Closures Hard Closures – NO TRAFFIC November 9 – 11 Limited St - Spring to Main Library St, Line St to Main St Main St - Limited to Lakeshore Main St - Graham to Limited 12:30 – 2:30ish November 10 - 11 Lakeshore Dr - Lakepoint Park to Center St. Country Club Blvd - Lakeshore Dr to Mill St Soft Closures – Residential or race event traffic only November 9-11 Library to Line St / Line at Lakeshore Dr Spring St - Limited to Lakeshore Lakeshore – Lakepoint Park entrance west to end November 10-11 Lake St,- Country Club to Center St Acacia St - Country Club to Center St Mill St- at Country Club Ave 1 at Mill St Ave 6 - Mill St to Bancroft Way Franklin St. Main Street HIGH ST ROGER ST COLE ST Bancroft Wy/Franklin St LIBRARY ST Legend Full Course Short Course Connection Suggested Detour Roads Road closure points ROAD CLOSURES/DETOUR ROUTE November 9, 2018 / 6:30 AM – 5:30 PM November 10, 2018 / 6:30 AM – 10:00 PM November 11, 2018 / 6:30 AM – 5:00 PM Lakeshore Main to Lakepoint Park, local access only. AVENUE 1 CENTER City Park Lakepoint Park Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-843 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: AgreementIn Control: City Council / Successor Agency Agenda Number: 9) Page 1 City of Lake Elsinore Printed on 10/4/2018 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Prepared By: Brad Fagrell, City Engineer Date:October 9, 2018 Subject:Award the Professional Service Agreement for the Final Engineering Design and Construction Support to WKE Engineering, Inc., for the Temescal Canyon Bridge Realignment Project Recommendation The City Council approve the following actions: 1. Award the Professional Services Agreement to WKE Engineering, Inc., for the preparation of the final engineering plans, specifications, and cost estimate (PS&E) for the Temescal Canyon Bridge Realignment Project. WKE Engineering, Inc., will also provide engineering and environmental support during construction and for a period of one year after construction (through June 2023), as stipulated in the scope of work, in a form as approved by the City Attorney. 2. Authorize the City Manager to execute the Agreement for $1,641,248.00 to WKE Engineering, Inc. 3. Authorize the City Manager, or designee, to approve any contract extension and any additional work or change order up to 10% of the total contract amount. Background The existing Temescal Canyon Bridge over Temescal Wash has been rated as Functionally Obsolete with a low Sufficiency rating by Caltrans. The Bridge is also severely undersized to handle the storm flows, and as a result Temescal Canyon Road, west of Lake Street is subject to constant flooding and road closure. The City initiated the Planning Approval and Environmental Document (PA&ED) phase to determine the best roadway and Bridge alignment back in February 2015, after securing Federal Highway Bridge Program Funding (HBP) and Transportation Uniform Mitigation Fee (TUMF) contributions toward this project. The PA&ED phase of this project has been completed and CEQA/NEPA clearance was received on July 11, 2018. Professional Services Agreement WKE October 9, 2018 Page 2 Discussion To select the most qualified firm to perform the Final Engineering Design (PS&E) services for this project and provide the required Engineering and Environmental Support during the Construction phase, the Request for Proposal (RFP) was released in accordance with Caltrans Local Assistance Consultant Selection Procedures and was posted on the City and Planet Bids Website on April 09, 2018. A total of 3 firms downloaded the RFP; and staff responded to all questions submitted by potential proposers on April 21, 2018. On May 11, 2018, the City received proposal from three engineering firms which included WKE, CNS Engineering and MGE Engineering for review and consideration. Based on evaluation criteria set forth in the RFP, the firms were evaluated and scored by an evaluation committee comprised of the City Engineer, an Engineering Department Senior Engineer and a Sustainable Civil Engineering Solutions staff member. All three firms were invited to the interview phase of the selection process which was held on May 31, 2018. Following the interviews, the evaluation committee scored the firms based on their oral interviews and written proposals. Accordingly, the evaluation committee recommends contract award to the WKE team to provide PS&E and construction support services for the project, as it earned the highest total evaluation score. Subsequently, City staff and SCES negotiated the scope of work, schedule and cost received from WKE for the required services. The scope of work includes Value Engineering early on during the final design stage to identify any design enhancement to reduce the environmental impacts and means to deliver the project earlier, while coordinating with Caltrans Local Assistance and California Department of Fish & Wildlife. The proposed schedule to complete the PS&E process is approximately 20 months from the Notice to Proceed. Fiscal Impact This action does not have any General Fund fiscal impact. The Funding for the PS&E phase, Construction Support and Post Construction are secured through the following sources: Federal HBP, TUMF and an RCFCD Cooperative Agreement. Exhibits A – Agreement AGREEMENT FOR PROFESSIONAL SERVICES WKE Engineering, Inc. Temescal Canyon Bridge Realignment Project This Agreement for Professional Services (the “Agreement”) is made and entered into as of October 9, 2018, by and between the City of Lake Elsinore, a municipal corporation (‘‘City") and WKE Engineering, Inc., ("Consultant"). RECITALS A.The City has determined that it requires the following professional services: Final Engineering Design and Construction Support . B.Consultant has submitted to City a proposal, dated August 7, 2018, attached hereto as Exhibit A (“Consultant’s Proposal”) and incorporated herein, to provide professional services to City pursuant to the terms of this Agreement. C.Consultant possesses the skill, experience, ability, background, certification and knowledge to perform the services described in this Agreement on the terms and conditions described herein. D.City desires to retain Consultant to perform the services as provided herein and Consultant desires to provide such professional services as set forth in this Agreement. AGREEMENT 1.Scope of Services. Consultant shall perform the services described in Consultant’s Proposal (Exhibit A). Consultant shall provide such services at the time, place, and in the manner specified in Consultant’s Proposal (Exhibit A), subject to the direction of the City through its staff that it may provide from time to time. 2.Time of Performance. a.Time of Essence. Time is of the essence in the performance of this Agreement. The time for completion of the professional services to be performed by Consultant is an essential condition of this Agreement. Consultant shall prosecute regularly and diligently the professional services contemplated pursuant to this Agreement according to the agreed upon performance schedule in Consultant’s Proposal (Exhibit A). b.Performance Schedule. Consultant shall commence the services pursuant to this Agreement upon receipt of a written notice to proceed and shall perform all services within the time period(s) established in the Consultant’s Proposal (Exhibit A). When requested by Consultant, extensions to the time period(s) specified may be approved in writing by the City Manager. Exhibit A - Agreement.docx Page 1 Page 2 c.Term. The term of this Agreement shall commence upon execution of this Agreement and shall continue until the services and related work are completed in accordance with the Consultant’s Proposal (Exhibit A). Consultant hereby agrees and acknowledges that any and all work or services performed pursuant to this Agreement shall be based upon the issuance of a project task order by the City. Consultant acknowledges that it is not guaranteed any minimum or specific amount of work or services as all work or services shall be authorized through task order issued by the City. 3.Compensation. Compensation to be paid to Consultant shall be in accordance with the fees set forth in Consultants’ Proposal (Exhibit A), which is attached hereto and incorporated herein by reference. In no event shall Consultant’s compensation exceed One Million Six Hundred Forty One Thousand Two Hundred Forty Eight dollars ($1,641,248.00) without additional written authorization from the City. Notwithstanding any provision of Consultant’s Proposal to the contrary, out of pocket expenses set forth in Exhibit A shall be reimbursed at cost without an inflator or administrative charge. Payment by City under this Agreement shall not be deemed a waiver of defects, even if such defects were known to the City at the time of payment. 4.Method of Payment. Consultant shall promptly submit billings to the City describing the services and related work performed during the preceding month to the extent that such services and related work were performed. Consultant’s bills shall be segregated by project task, if applicable, such that the City receives a separate accounting for work done on each individual task for which Consultant provides services. Consultant’s bills shall include a brief description of the services performed, the date the services were performed, the number of hours spent and by whom, and a description of any reimbursable expenditures. City shall pay Consultant no later than forty-five (45) days after receipt of the monthly invoice by City staff. 5.Reserved. 6.Suspension or Termination. a.The City may at any time, for any reason, with or without cause, suspend or terminate this Agreement, or any portion hereof, by serving upon the Consultant at least ten (10) days prior written notice. Upon receipt of such notice, the Consultant shall immediately cease all work under this Agreement, unless the notice provides otherwise. If the City suspends or terminates a portion of this Agreement such suspension or termination shall not make void or invalidate the remainder of this Agreement. b.In the event this Agreement is terminated pursuant to this Section, the City shall pay to Consultant the actual value of the work performed up to the time of termination, provided that the work performed is of value to the City. Upon termination of the Agreement pursuant to this Section, the Consultant will submit an invoice to the City, pursuant to Section entitled “Method of Payment” herein. 7.Ownership of Documents. All plans, studies, documents and other writings prepared by and for Consultant, its officers, employees and agents and subcontractors in the course of implementing this Agreement, except working notepad internal documents, shall Page 3 become the property of the City upon payment to Consultant for such work, and the City shall have the sole right to use such materials in its discretion without further compensation to Consultant or to any other party. Consultant shall, at Consultant’s expense, provide such reports, plans, studies, documents and other writings to City upon written request. City acknowledges that any use of such materials in a manner beyond the intended purpose as set forth herein shall be at the sole risk of the City. City further agrees to defend, indemnify and hold harmless Consultant, its officers, officials, agents, employees and volunteers from any claims, demands, actions, losses, damages, injuries, and liability, direct or indirect (including any and all costs and expenses in connection therein), arising out of the City’s use of suchmaterials in a manner beyond the intended purpose as set forth herein. a.Licensing of Intellectual Property. This Agreement creates a nonexclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consultant under this Agreement ("Documents & Data"). Consultant shall require that all subcontractors agree in writing that City is granted a nonexclusive and perpetual license for any Documents & Data the subcontractors prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to license any and all Documents & Data. Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Consultant or provided to Consultant by the City. City shall not be limited in any way in its use of the Documents & Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City’s sole risk. b.Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents & Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of City, be used by Consultant for any purposes other than the performance of the services under this Agreement. Nor shall such materials be disclosed to any person or entity not connected with the performance of the services under this Agreement. Nothing furnished to Consultant which is otherwise known to Consultant or is generally known, or has become known, to the related industry shall be deemed confidential. Consultant shall not use City’s name or insignia, photographs relating to project for which Consultant’s services are rendered, or any publicity pertaining to the Consultant’s services under this Agreement in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City. 8.Consultant’s Books and Records. a.Consultant shall maintain any and all ledgers, books of account, invoices, vouchers, canceled checks, and other records or documents evidencing or relating to charges for services, or expenditures and disbursements charged to City for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant to this Agreement. b.Consultant shall maintain all documents and records which demonstrate performance under this Agreement for a minimum period of three (3) years, or for any longer period required by law, from the date of termination or completion of this Agreement. Page 4 c.Any records or documents required to be maintained pursuant to this Agreement shall be made available for inspection or audit, at any time during regular business hours, upon written request by the City Manager, City Attorney, City Auditor or a designated representative of these officers. Copies of such documents shall be provided to the City for inspection at City Hall when it is practical to do so. Otherwise, unless an alternative is mutually agreed upon, the records shall be available at Consultant’s address indicated for receipt of notices in this Agreement. d.Where City has reason to believe that such records or documents may be lost or discarded due to dissolution, disbandment or termination of Consultant’s business, City may, by written request by any of the above-named officers, require that custody of the records be given to the City and that the records and documents be maintained in City Hall. Access to such records and documents shall be granted to any party authorized by Consultant, Consultant’s representatives, or Consultant’s successor-in-interest. 9.Independent Consultant. It is understood that Consultant, in the performance of the work and services agreed to be performed, shall act as and be an independent Consultant and shall not act as an agent or employee of the City. 10.PERS Eligibility Indemnification. In the event that Consultant or any employee, agent, or subcontractors of Consultant providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City. Notwithstanding any other federal, state and local laws, codes, ordinances and regulations to the contrary, Consultant and any of its employees, agents, and subcontractors providing service under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits. 11.Interests of Consultant. Consultant (including principals, associates and professional employees) covenants and represents that it does not now have any investment or interest in real property and shall not acquire any interest, direct or indirect, in the area covered by this Agreement or any other source of income, interest in real property or investment which would be affected in any manner or degree by the performance of Consultant’s services hereunder. Consultant further covenants and represents that in the performance of its duties hereunder no person having any such interest shall perform any services under this Agreement. Consultant is not a designated employee within the meaning of the Political Reform Act because Consultant: a.will conduct research and arrive at conclusions with respect to his/her rendition of information, advice, recommendation or counsel independent of the control and direction of the City or of any City official, other than normal agreement monitoring; and Page 5 b.possesses no authority with respect to any City decision beyond rendition of information, advice, recommendation or counsel. (FPPC Reg. 18700(a)(2).) 12.Professional Ability of Consultant. City has relied upon the professional training and ability of Consultant to perform the services hereunder as a material inducement to enter into this Agreement. Consultant shall therefore provide properly skilled professional and technical personnel to perform all services under this Agreement. All work performed by Consultant under this Agreement shall be in accordance with applicable legal requirements and shall meet the standard of quality ordinarily to be expected of competent professionals in Consultant’s field of expertise. 13.Compliance with Laws. Consultant shall use the standard of care in its profession to comply with all applicable federal, state and local laws, codes, ordinances and regulations. 14.Licenses. Consultant represents and warrants to City that it has the licenses, permits, qualifications, insurance and approvals of whatsoever nature which are legally required of Consultant to practice its profession. Consultant represents and warrants to City that Consultant shall, at its sole cost and expense, keep in effect or obtain at all times during the term of this Agreement, any licenses, permits, insurance and approvals which are legally required of Consultant to practice its profession. Consultant shall maintain a City of Lake Elsinore business license. 15.Indemnity. (a)Indemnification for Professional Liability. To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City and any and all of its officials, employees and agents (“Indemnified Parties”) from and against any and all claims, losses, liabilities, damages, costs and expenses, including attorney’s fees and costs, to the extent they arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Consultant. Consultant’s duty to defend shall consist of reimbursement of defense costs incurred by City in direct proportion to the Consultant’s proportionate percentage of fault. Consultant’s percentage of fault shall be determined, as applicable, by a court of law, jury or arbitrator. In the event any loss, liability or damage is incurred by way of settlement or resolution without a court, jury or arbitrator having made a determination of the Consultant’s percentage of fault, the parties agree to mediation with a third party neutral to determine the Consultant’s proportionate percentage of fault for purposes of determining the amount of indemnity and defense cost reimbursement owed to the City. (b)Indemnification for Other Than Professional Liability. Other than in the performance of professional services and to the full extent permitted by law, Consultant shall indemnify, defend and hold harmless City, and any and all of its employees, officials and agents from and against any liability (including liability for claims, suits, actions, arbitration proceedings, administrative proceedings, regulatory proceedings, losses, expenses or costs of any kind, whether actual, alleged or threatened, including attorneys’ fees and costs, court costs, interest, defense costs, and expert witness fees), where the same arise out of, are a consequence of, or are in any way attributable to, in whole or in part, the performance of this Agreement by Consultant or by any individual or entity for which Consultant is legally liable, including but not limited to officers, agents, employees or sub-consultants of Consultant. Consultant shall not be liable to third parties for any liability exempted by statute. (c)General Indemnification Provisions. Consultant agrees to obtain executed indemnity agreements with provisions identical to those set forth here in this section from each and every sub-consultant or any other person or entity involved by, for, with or on behalf of Consultant Page 6 in the performance of this Agreement. In the event Consultant fails to obtain such indemnity obligations from others as required here, Consultant agrees to be fully responsible according to the terms of this section. Failure of City to monitor compliance with these requirements imposes no additional obligations on City and will in no way act as a waiver of any rights hereunder. This obligation to indemnify and defend City as set forth here is binding on the successors, assigns or heirs of Consultant and shall survive the termination of this Agreement or this section. 16.Insurance Requirements. a.Insurance. Consultant, at Consultant’s own cost and expense, shall procure and maintain, for the duration of the contract, unless modified by the City’s Risk Manager, the following insurance policies. i.Workers’ Compensation Coverage. Consultant shall maintain Workers’ Compensation Insurance and Employer’s Liability Insurance for his/her employees in accordance with the laws of the State of California. In addition, Consultant Page 7 shall require each subcontractors to similarly maintain Workers’ Compensation Insurance and Employer’s Liability Insurance in accordance with the laws of the State of California for all of the subcontractor’s employees. Any notice of cancellation or non-renewal of all Workers’ Compensation policies must be received by the City at least thirty (30) days prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Consultant for City. In the event that Consultant is exempt from Worker’s Compensation Insurance and Employer’s Liability Insurance for his/her employees in accordance with the laws of the State of California, Consultant shall submit to the City a Certificate of Exemption from Workers Compensation Insurance in a form approved by the City Attorney. ii.General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal injury and property damage. If a commercial general liability insurance form or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement or the general aggregate limit shall be at least twice the required occurrence limit. Required commercial general liability coverage shall be at least as broad as Insurance Services Office Commercial General Liability occurrence form CG 0001 (ed. 11/88) or Insurance Services Office form number GL 0002 (ed. 1/73) covering comprehensive General Liability and Insurance Services Office form number GL 0404 covering Broad Form Comprehensive General Liability. No endorsement may be attached limiting the coverage. iii.Automobile Liability Coverage.Consultant shall maintain automobile liability insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with the work to be performed under this Agreement, including coverage for owned, hired and non-owned vehicles, in an amount of not less than one million dollars ($1,000,000) combined single limit for each occurrence. Automobile liability coverage must be at least as broad as Insurance Services Office Automobile Liability form CA 0001 (ed. 12/90) Code 1 (“any auto”). No endorsement may be attached limiting the coverage. iv.Professional Liability Coverage.Consultant shall maintain professional errors and omissions liability insurance appropriate for Consultant’s profession for protection against claims alleging negligent acts, errors or omissions which may arise from Consultant’s services under this Agreement, whether such services are provided by the Consultant or by its employees, subcontractors, or sub consultants. The amount of this insurance shall not be less than one million dollars ($1,000,000) on a claims-made annual aggregate basis, or a combined single limit per occurrence basis. b.Endorsements. Each general liability and automobile liability insurance policy shall be with insurers possessing a Best’s rating of no less than A:VII and shall be endorsed with the following specific language: i.The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insured with respect to liability arising out of work performed by or on behalf of the Consultant, including materials, parts or equipment furnished in connection with such work or operations. Page 8 ii.This policy shall be considered primary insurance as respects the City, its elected or appointed officers, officials, employees, agents and volunteers. Any insurance maintained by the City, including any self-insured retention the City may have, shall be considered excess insurance only and shall not contribute with it. iii.This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv.The insurer waives all rights of subrogation against the City, its elected or appointed officers, officials, employees or agents. v.Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the City, its elected or appointed officers, officials, employees, agents or volunteers. vi.The insurance provided by this Policy shall not be suspended, voided, canceled, or reduced in coverage or in limits except after thirty (30) days written notice has been received by the City. c.Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by the City. At the City’s option, Consultant shall demonstrate financial capability for payment of such deductibles or self-insured retentions. d.Certificates of Insurance. Consultant shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Certificates of such insurance shall be filed with the City on or before commencement of performance of this Agreement. Current certification of insurance shall be kept on file with the City at all times during the term of this Agreement. 17.Notices. Any notice required to be given under this Agreement shall be in writing and either served personally or sent prepaid, first class mail. Any such notice shall be addressed to the other party at the address set forth below. Notice shall be deemed communicated within 48 hours from the time of mailing if mailed as provided in this section. If to City:City of Lake Elsinore Attn: City Manager 130 South Main Street Lake Elsinore, CA 92530 With a copy to:City of Lake Elsinore Attn: City Clerk 130 South Main Street Lake Elsinore, CA 92530 If to Consultant:WKE Engineering, Inc. 400 North Tustin Ave, Ste. 275 Santa Ana, CA 92705 Page 9 18.Entire Agreement. This Agreement constitutes the complete and exclusive statement of Agreement between the City and Consultant. All prior written and oral communications, including correspondence, drafts, memoranda, and representations, are superseded in total by this Agreement. 19.Amendments. This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 20.Assignment and Subcontracting. The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant and the subcontractors listed in Exhibit B. Consultant shall be fully responsible to City for all acts or omissions of any subcontractors. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express consent of the City. Consultant shall not subcontract any portion of the work to be performed under this Agreement except as provided in Exhibit B without the written authorization of the City. If City consents to such subcontract, Consultant shall be fully responsible to City for all acts or omissions of those subcontractors. Nothing in this Agreement shall create any contractual relationship between City and any subcontractors nor shall it create any obligation on the part of the City to pay or to see to the payment of any monies due to any such subcontractors other than as otherwise is required by law. 21.Waiver. Waiver of a breach or default under this Agreement shall not constitute a continuing waiver of a subsequent breach of the same or any other provision under this Agreement. 22.Severability. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 23.Controlling Law Venue. This Agreement and all matters relating to it shall be governed by the laws of the State of California and any action brought relating to this Agreement shall be held exclusively in a state court in the County of Riverside. 24.Litigation Expenses and Attorneys’ Fees. If either party to this Agreement commences any legal action against the other party arising out of this Agreement, the prevailing party shall be entitled to recover its reasonable litigation expenses, including court costs, expert witness fees, discovery expenses, and attorneys’ fees. 25.Mediation. The parties agree to make a good faith attempt to resolve any disputes arising out of this Agreement through mediation prior to commencing litigation. The parties shall mutually agree upon the mediator and share the costs of mediation equally. If the parties are unable to agree upon a mediator, the dispute shall be submitted to JAMS or its successor in interest. JAMS shall provide the parties with the names of five qualified mediators. Each party shall have the option to strike two of the five mediators selected by JAMS and thereafter the mediator remaining shall hear the dispute. If the dispute remains unresolved after mediation, either party may commence litigation. 26.Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and to bind each respective party. The City Manager is authorized to enter Page 10 into an amendment or otherwise take action on behalf of the City to make the following modifications to the Agreement: (a) a name change; (b) grant extensions of time; (c) non- monetary changes in the scope of services; and/or (d) suspend or terminate the Agreement. 27.Prohibited Interests. Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom. 28.Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractors, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. 29.Prevailing Wages. Consultant is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on "public works" and "maintenance" projects. Consultant agrees to fully comply with all applicable federal and state labor laws (including, without limitation, if applicable, the Prevailing Wage Laws). It is agreed by the parties that, in connection with the Work or Services provided pursuant to this Agreement, Consultant shall bear all risks of payment or non-payment of prevailing wages under California law, and Consultant hereby agrees to defend, indemnify, and hold the City,and its officials, officers, employees, agents, and volunteers, free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. The foregoing indemnity shall survive termination of this Agreement. 30.Execution. This Agreement may be executed in several counterparts, each of which shall constitute one and the same instrument and shall become binding upon the parties when at least one copy hereof shall have been signed by both parties hereto. In approving this Agreement, it shall not be necessary to produce or account for more than one such counterpart. [Signatures on next page] Page 11 IN WITNESSWHEREOF, the parties have caused this Agreement to be executed on the date first written above. “CITY” CITY OF LAKE ELSINORE, a municipal corporation “CONSULTANT” WKE Engineering, Inc. Grant Yates, City Manager ATTEST: By: Its: City Clerk APPROVED AS TO FORM: City Attorney Attachments: Exhibit A – Consultant’s Proposal EXHIBIT A EXHIBIT A CONSULTANT’S PROPOSAL [ATTACHED] 1 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project SCOPE OF WORK FOR TEMESCAL CYN BRIDGE OVER TEMESCAL WASH REPLACEMENT PROJECT TASK 1 –PROJECT MANAGEMENT/COORDINATION/ADMINISTRATION 1.1 Administration and Management This taskshall include general management and coordination with the City,Caltrans, regulatoryagencies, andother key stakeholders. Projectmeetingswill beconductedtomaintain goodprojectcommunication. Project coordination shall be established by frequent progress review meetings or conference calls. ProjectDevelopmentTeam(PDT)meetingsin theCityHallor byconferencecallsshallbe conducted. 1.2 Meetings Duringthecourseofthecontract,theCONSULTANTshallparticipateinthefollowingmeetings: Monthly Project Development Team (PDT) Progress Review Meetings or Conference Calls,as needed Follow‐up Technical Focus Meetings,as needed Agency Coordination/Technical Workshop Right‐of‐Way Coordination Constructability Workshop CONSULTANT will prepare notices, agendas, handouts, minutes, and progress plans. CONSULTANT will also prepare monthly progress reports; establish design criteria; post project issues to all individuals; mitigateallindependentcheckandreviewcomments;maintaintheprojectschedule. 1.3 Schedule CONSULTANT shall develop and submit an initial Project Schedule. Following approval by the City, this schedule will become the Project Target Schedule. Project schedule will be updated after each PDT. The followingelementswillbe includedbyCONSULTANTintheSchedule: Design,Right of Way,Environmental,and Construction Phases Agency Review time Order of Sequence of significant work Major Milestones Critical Path Tasks 1.3‐1 Progress Reports Along with an invoice at the end of each month,CONSULTANT shall report the progress of the work with a narrative of the monthly Progress Report which shall describe the overall progress of the work, discuss significant problems and present proposed corrective action and show the status of major changes. 1.4 QA/QC Plan CONSULTANT shall prepare, implement and maintain a Quality Assurance/Quality Control Plan throughout the services under this Agreement. The QA/QC will establish Quality Assurance and Quality Control processes and procedures; describe how the quality of the work products will be managed to minimize or eliminate errors and omissions; ensure that all design reports,studies, plans, specifications, 2 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project quantities, estimates and other design documents are complete, accurate, consistent, checked, and reviewed. 1.5 HBP Request for Authorization/Local Assistance Support CONSULTANT shall assist the City in preparing Request for Authorizations (RFA), Finance letters, record audits in accordance with Caltrans Local Assistance Procedures Manual. CONSULTANT shall provide technical support and attendup to four (4) meetings with the City and Caltrans District 8 Local Assistance asrequiredtodiscussthefundingauthorizationmatters. Deliverables:Monthly Invoices,Progress Reports,Schedule Updates,Document Logs, Meeting Agendas,Meeting Minutes,Coordination Memorandums,Requests for Authorization Forms,Annual Bridge Survey Updates,Finance Letters,and detail records meeting the Federal Audit requirements. Assumptions: A total of 24 Monthly team meetings are assumed. TASK 2 –Surveying and Topographic Mapping 2.1 Topographic Surveys and Mapping (Temescal Wash &Temescal Cyn Rd) CONSULTANT shall Perform topographic survey and provide cross‐sections every 100 feet in the channel that covers the proposedwash grading, roadway realignment andconnection points to existing Temescal CanyonRoadway. The topographic data will be downloaded, processed and tied to the horizontal and vertical control established forthis project.The topographic datawill be plotted in CAD and a digitalterrainmodel (DTM) created for the existing ground surface. The final deliverables will include the digital terrain model, topographicdataplottedinCADandanASCIIfileofthetopographicsurveypoints.Thetopographicsurvey informationwillbedeliveredin aMicroStationv8i format. Horizontalandverticalcontrol:HorizontalandVerticalprojectcontrolwillbeestablishedfor this project,beingNAD83, CaliforniaStatePlaneCoordinateSystemZone6, andNAVD88. If required,any existing surveydata willbereviewed,translatedandrotatedtothenewprojectdatum. We will densify control throughout the project area. Survey control monuments will be established outside of anticipated construction area(s), so these points may be used by the design team and future construction teams. Conventional survey, GPS and digital levels will be utilized to establish the horizontal andverticalcontrol. A surveycontrolreportwillbe prepareddocumentingtheprimarycontrolsutilized,thenewlyestablished project controls, methods and procedures, adjustment results, and survey field notes, sketches and photos. A project control sheetwill be preparedwhich will include theprimaryand project horizontalandvertical controls,northings,eastingsandelevationsofeachcontrolpoint,basisofbearings,datumandbenchmark statements. TopographicDesignSurveys:Conventionalgroundsurveyandwill beutilized,withinthe abovedescribed project limits, to augment the aerial mapping and existingdesign surveys done byothers. Thesesurveys 3 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project will include the edge of pavement and concrete, edge of traveled way, flowline, signs, drainage, surface visibleutilityfeaturesandothersurfacevisiblefeatureswithintheprojectlimits. 2.2 HEC‐RAS Model Survey and Mapping CONSULTANT shall update the survey to cover the recently graded areas westerly of Lake Street, for the purposeofmoreaccurateHEC‐RASmodeling. 2.3 As Needed Miscellaneous Survey and Mapping CONSULTANT shall include additional topography to support the design of the channel grading, slope protection,&stormdrainfacilities. 2.4 Prepare Landnet Base Map CONSULTANT shall provide updated utility base plan based on information provided by the utility coordinationsub‐consultant. 2.5 Corner Record/Record of Survey CONSULTANTshallfile CornerRecordsand/orRecordofSurveyas required. Deliverables:Updated topographic survey,Update utility base plan,Survey street cross‐ sections,Corner Records and/or Record of Survey. Assumptions: The limits of the survey and mapping are as shown in the figure below and include: Existing Temescal Canyon Rd.500’northwesterly and 700’southeasterly of Bernard St. Cross Section Temescal Creek Channel 700’westerly and 700’easterly of the proposed bridge location HEC‐RAS Modeling area,westerly of Lake St. Survey Assumptions: 1.Caltrans District 8 Right‐of‐Way Departmentwill not have review oversight. 2.Existing project control will be made available to the survey team. 3.Aerial topographic mapping was completed during an earlier phase of this project.Additional aerial mapping will not be required. 4.Some topographic surveys were completed by others during the earlier phase of the project. All existing topographic surveys will be provided to the survey team in MicroStation (or other CADD)format. 4 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project A preliminary Landnet was completed by others during an earlier phase of the project.The Landnet will be provided to the survey team in MicroStation (or other CADD)format. TASK 2 –Additional Scope Added 2.6 Tree Survey Within the project limits, we understand that there are ten (10) trees that need to be located as part of the topographic design surveys. A field survey will be completed after 65% design with mapping completedshowinglocation,trunksizeanddriplines. Assumptions: A total of ten (10)trees that need to be located as part of the topographic design survey. TASK 3 –Geotechnical Investigations and Design Reports 3.1 Preliminary Foundation Report CONSULTANT shall conduct a field investigation (Borings and Cone Penetration Tests [CPTs]), perform laboratorytests,andconduct analysestodevelopgeotechnicalparametersandrecommendationsforthe PreliminaryFoundationReport. 3.2 Foundation Report (FR)(Draft and Final) Engineering Analyses Results obtained from the field investigation and laboratory testing program shall be used to establish idealized soil profiles and strength parameters for the bridge and retaining wall foundationdesignfortheFoundationReport. 3.3 Geotechnical Design Report (GDR) Engineering Analyses Results obtained from the field investigation and laboratory testing program shall be used to establish idealized soil profiles and strength parameters for slope stability and settlement calculations for the roadway embankment. R‐value shall be used to determine flexible pavement structural sections at the approaches and temporary bypass road using traffic indices provided by the TrafficConsultant. TASK 3 –Additional Scope Added 3.4 Ground Water Monitoring Wells Three (3) groundwater monitoring wells will be installed during the geotechnical field investigation at threelocations: (1)at the upstream limit of proposed wash grading, (2)at the downstream limit of the proposed wash grading,and (3)within the bridge footprint. The groundwater monitoring wells will be installed inside borings drilled with a track‐mounted drill rig equipped with 8‐inch diameter hollow‐stem augers down to a depth of no more than 50 feet below existing grade or refusal, whichever occurs first. The monitoring wells will consist of 2‐inch‐diameter Schedule 40 polyvinylchloride (PVC) screen and solid schedule 40 PVCcasing installed at thecompletion 5 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project of the boring. The screenedportion of the wells will consistof 0.01‐inch wide slots and will be placed at a depth of approximately 10 feet below the ground surface to about 2 feet above the bottom of the borehole.Depthsofthe screenedportionofthewellsmay be adjustedpendingonthe findingsfromeach boring. The solid PVC casing will be placed between about 0.5 feet below ground surface and the well screen. Number 2/12 Monterey sand will be placed in the annulus of the screened interval with approximately 2 feet above the screen, and 1 foot below the screen. A bentonite‐chip seal will be placed above the filter pack to within approximately 2 feet of the ground surface. The upper portion of the well will be sealed with quick set concrete. The wells will be finished with a cap or a box set in concrete to minimizethepossibilityofvandalism. After the wells are constructed, EMI will collect and record groundwater elevations on a monthly basis during dry season, and one day after and five days after each significant rainfall event, but no less than monthly during the rainy season. Monitoring of the groundwater table will be performed for a period of at least 2 years (from a year prior to start of project construction to a year after start of project construction).EMIwillprovidea“running”spreadsheettoreportthesegroundwatermeasurements. Soil specimens will also be collected at each of the three well locations at depth of zero, 5 and 10 feet below existing grade. Laboratory grain‐size analysis will be performed on selected specimens and the resultswill be usedbyothersin a sedimenttransportstudy. 3.5 Ground Water Testing CONSULTANTshall,basedupontheCaltransWaterQualityTool,testforthefollowingpollutants: Indicator Bacteria, Nutrients, Organic Enrichments/Low Dissolved Oxygen, PCBs, Sediment Toxicity and UnknownToxicity. CDFW has concerns regarding construction‐related impacts to groundwater quality, specifically for subsurface flows in TemescalCanyon Wash. As such, Group Delta (under contract from LSA) will monitor three wells in the project vicinity, as outlined in Task 3.4, for water quality parameters before project construction initiates and after project construction is complete. Because there is no known subsurface contamination in the underlying groundwater in the project Site, water quality will be assessed only for water quality parameters that can be measured using a hand‐held device and not contaminant constituents (e.g., heavy metals, total petroleum hydrocarbons, or volatile organic compounds). The locationforthethree (3)wellsare listedunderTask3.4. Thescopeof workwillincludethe following: 3.5a Draft and Final Groundwater Monitoring Work Plan:Group Delta will prepare a concise work plan,inletterformat,forapprovalbyCDFWpriortoinitiatinggroundwatermonitoring.Theworkplanwill summarizetheproposedgroundwatermonitoringmethodologyandanalyses. 3.5b Groundwater Monitoring:Group Delta will conduct two groundwater monitoring events for three wells located in the project area. The evets will be conducted prior to initiating construction and afterconstructionhasbeencompleted.Groundwatermonitoringeventswillincludethefollowing: Take water level measurements at each well using a water level sounder. Collect samples using either a low‐flow or no‐purge sampling methodology.If purging is required,wells will be purged using either a bailer or peristaltic pump. Record water quality parameters for the groundwater samples using a Horiba U‐52 Water Quality Meter.The following parameters will be recorded: o Temperature 6 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project o Dissolved oxygen o pH o Conductivity o Total Dissolved Solids o Turbidity o Oxidation Reduction Potential Costsforoptionalgroundwatermonitoringeventsincludingoneadditionalbaselineeventandoneevent during construction have also been included to provide a better picture of groundwater conditions and moredefensibledata. 3.5c Groundwater Monitoring Report:Group Delta will prepare a concise Groundwater Monitoring Report including a table summarizing analytical results, a site map with well sample locations, a discussionandevaluationofanalyticalresults. Assumptions: 1.The wells will be installed and properly developed by others. 2.Low‐flow purging,bailer purging,or no purge sampling methodologies are acceptable to CDFW for this sampling program. 3.Purge water can be reused onsite for dust control. 4.No specific groundwater contaminants are known to be present.Therefore,analysis for general water quality parameters is considered the best gauge in determining changes to water chemistry due to the project.We assume this approach will be acceptable to CDFW. Assumptions: The pollutants are based on Caltrans Water Quality Tool (the RWQB can have their own requirements as well). Deliverables:A Foundation Report (FR)for the bridge final PS&E,a Geotechnical Design Report (GDR)for the approach embankments and retaining walls (Pavement recommendations will be provided in the GDR,rather than preparing a separate Materials Report). Assumptions: Geotechnical borings will be performed per the following table: Design Element Proposed Number of Borings Approximate Proposed Depth (feet) Temescal Canyon Bridge and Wingwalls 4 100 Roadway Improvements 1 20 1 40 5.Geotechnical Investigation is allowed between 7am and 7pm on weekdays. 6.No investigation of hazardous materials.If hazardous materials are encountered during the geotechnical field investigation,work will be terminated,and the City notified. 7 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project 7.We have allocated $2,500 for the Riverside County Flood Control District encroachment permit, and no permit fee was assumed for City of Lake Elsinore. 8.Existing pavement rehabilitation recommendations not included. Geotechnical design report will not be reviewed by Caltrans. TASK 4 –Utilities Coordination 4.1 Reports of Investigation CONSULTANTshallsubmitimprovementplanstoutilitycompaniesinaccordancewiththeirrequirements. Identifyanyimpacttoexistingutilities. 4.2 Notice to Owner CONSULTANT shall determine and document any prior rights, prepare utility relocation agreements and CaltransLocalAssistanceformsforutilityconflictsplusacontingencyofatleasttwoutilities.CONSULTANT shall issue the Relocation Claim Letters and Notice to Owner to relocate. Existing utilities include, overheadSCElines,EVMWDWater&Sewerlines,HighpressureGasline,FiberOpticline,SWAPA30‐inch line. EVMWD 30‐inch irrigation line is located within the Temescal Wash which has to be relocated prior to anygrading. 4.3 Utility Relocation Plan &Protection Plan CONSULTANT shall review potholing plans and coordinate with the design team and utility owners to determine actual “conflicts,” protection in place, relocation alternatives, including the relocation of the EVMWD30‐inchirrigationlinelocatedwithin theTemescalWashtotheexistingbridge. Deliverables:Reports of Investigations,Notice to Owner,Utility Relocation Plan & Protection plan,Utility Agreements (if applicable),FHWA Specific Authorization forms (if applicable) Assumptions: A total of 8 utility relocations are assumed.Utility Agreements by Others. TASK 5 –Utility Potholing 5.1 Pothole Workplan CONSULTANT shall coordinate up to 12 pothole locations with the help of the design team and the utility owners.The CONSULTANTshallprovidenotificationstothe utilityowners forthepotholing. 5.2 Field Work Potholing sub‐consultant shall provide potholing traffic controls and encroachment permit applications. Potholing sub‐consultant shall verify vertical elevation measurements from top of utility to an installed hubmarker on thesurface. 8 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project 5.3 Test Hole Mapping &Report RoadwayrestorationshallbecompactedABCmaterialwithUPMcold‐patchunlessotherwisespecified. Deliverables:Test hole Data Summary and Test hole Data Reports. Assumptions: 1.Up to 12 potholes will be performed to locate utilities. 2.Each pothole will be surveyed for vertical and horizontal mapping. TASK 6 –Civil Roadway PS&E 6.1 Draft Roadway Plans (65%) CONSULTANT shall prepare the 65% complete Civil plans based on the preliminary geometric layout. The plansshallbepreparedat1"=40'scale,on24"x36"improvementplansheets.CONSULTANTshallprovide street cross sections at 100‐foot intervals minimum. The plan shall reflect the existing and proposed gradesoverexistingutilities. 6.1.1‐6.1.10 Roadway Plans (65%) Plans shall include Layout &Profile,Signing/Striping,Construction Details,Grading,Water Pollution Control,Erosion Control,Grading,Drainage,Electrical,Landscaping,and Traffic Control Plans/TMP. 6.11 Draft Special Provisions CONSULTANT shall prepare special provisions for items of work and conditions that are not covered by the Standard Specifications for Public Work Construction (Green Book). Construction Technical Specifications for the roadway improvements shall be prepared using the City’s format andtheprovidedboilerplatematerials.Eachitemofworkshallincludeamethodofmeasurement andpayment.QuantitycalculationandconstructioncostestimatesinMicrosoftExcelformatwith a contingency directed by the City shall be prepared. CONSULTANT shall conduct an internal QA/QCreviewoftheprojectdeliverablespriortosubmittal. 6.12 Update Quantity and Cost Estimates QuantitycalculationandconstructioncostestimatesinMicrosoftExcelformatwitha contingencydirectedbytheCityshallbeprepared.CONSULTANTshallconductaninternal QA/QCreviewoftheprojectdeliverablespriortosubmittal. Final estimate of Quantities and Costs must be broken down between the HBP eligible and non‐ eligibleitems ofwork. CONSULTANTshallprovide a construction quantityandcostestimate with each submittal of plans. The unit costs shall be based upon the most current cost information for recentsimilar projectsintheareacompiledby the CONSULTANTandapprovedbytheCity. 6.2 Roadway Plans (95%) This submittal will include comments, reviews, coordination efforts, and updated information. CONSULTANT will update all Roadway Plans. Any Revised and/or New Standard Plans developed by Caltrans shall be included with CONSULTANT’s Roadway Plan submittal. Response and resolution of all review comments for each deliverable from the 65% submittal will take place priorto 95% submittal. All 9 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project roadway quantities shall be independently checked, and all issues raised by independent quantity checker(s)willberesolvedprior tothesubmittal. 6.3 Final Roadway Plans (100%) CONSULTANT will submit the Final PS&E package to the City for final approval. The submittal will only incorporate all applicable previous comments, and no further agency review is anticipated. All required formsin theRTL Guidewillbe provided.Electroniccopieswill beincludedwiththe100%submittal. TASK 6 –Additional Scope Added 6.0 Constructability Workshop (Design Implementation Workshop) CONSULTANT will conduct a Design Implementation Workshop with the City and City’s Project Manager to present and discuss the optional technical enhancements with the City. Each, or all, of the enhancements can be implemented into the project, while maintaining the project environmental footprint evaluated in the PA/ED. CONSULTANT will conduct the workshop with the goal of obtaining consensusofthedesiredimplemented enhancementsandobtainconsensusonthebridgetype,aesthetic featuresandgeometricsforproposedprojectdesign. 6.0.1 Update Bridge Type and Roadway Geometrics CONSULTANTwillprepareGeneralPlanandcostestimateforuptoone(1)bridgeconfigurationandType. CONSULTANT will update roadway geometrics based upon the approved design speed from the City and City’sProjectManager. Assumptions: A formal updated Type Selection Report is not needed,nor is Caltrans review and approval of any new bridge type anticipated. 6.0 Constructability Workshop with the City CONSULTANT will conduct a constructability workshop with the City and City’s Project Manager to seek consensusonthedesignmovingforward. 6.1.3a Roadway Removals CONSULTANTshall removeone lane of theexisting TemescalRoadfromthetie‐in point upto the existing bridgeasmitigation. Noplantingisnecessaryoutsidetherevegetationplan. Assumptions: No planting is necessary outside the revegetation plan for roadway removals.Remove A/C and base material.Limits are from the tie‐in point to the existing bridge.Refer to figure below. 10 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project Deliverables:Street Cross Sections;65%,95%,100%Street Improvement Plans,Drainage Plans,Erosion Control Plans,Drainage Report,Water Pollution Control Drawings,Traffic Control Plans,Sign and Striping Plans,Bridge Esthetic plan,Bridge Lighting Plans.95%& 100%Technical Specifications,Construction Cost Estimate,and Contracting Bid Documents. Assumptions: Road Design from Station 65+38 to Station 78+93. TASK 7 –TEMESCAL WASH IMPROVEMENT PLANS 7.1 Hydraulic Report (Draft &Final) CONSULTANT shall provide final bridge hydraulic analysis and prepare supporting floodplain/scour analysis report.This scope shall include preparation of quantity and cost estimates in support of the channel design.The plan is subject to review and approval of Resource Agencies,RCFCD,EVMWD,and the City. TASK 7 –Additional Scope Added 7.1a Sediment Transport Study The sediment transport study will be prepared between Bernard Street and Lake Street.The sediment transport task will include evaluation of historical channel trends,contrast of local channel slopes to regional slope variation,evaluation of anticipated changes to sediment loading to the project reach due 11 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project to upstream activities (i.e., sensitivity analysis), hydraulic capacity calculations using normal depth procedures, and sediment transport potential evaluation using qualitative hydraulic indicators. Steady‐ state methodologies will be used to contrast the sediment transport capacity of the channel reach local totheproposedbridgewithanticipatedsupplyrates,overarangeofdischargeconditions. Localsediment sizeinformationwill be used with the hydraulic information and sedimenttransportrelationsto estimate bed material sediment transport volumes passing through the upstream, local and downstream channel reach. Sediment continuity will be applied to estimate potential erosion/sedimentation depths to be expected along the proposed channel for the design event. Local scour components, due to drop structures or other features incorporated into the proposed plan will be computed, if applicable. The potentialhydraulicand/orchanneldeformationeffectsofbedformdevelopmentwillbeassessedaswell. 7.2 Channel Improvement Plans (65%) CONSULTANT shall prepare Final Temescal Wash improvement plans at a scale of 1”=40’, or otherwise approved by the City. Plans shall be based on the preliminary channel improvement plans. The plan set shallconsistoflayoutgrading plansheets,channelprofilesheets,andchannelcrosssectionevery100’. 7.3 Channel Improvement Plans (95%) This submittal will include comments, reviews, coordination efforts, and updated information. CONSULTANTwillupdateallChannelImprovementPlans. 7.4 Channel Improvement Plans (100%) CONSULTANTwillsubmittheFinalChannelImprovementPlanstotheCityforfinalapproval.Thesubmittal willonlyincorporateallapplicablepreviouscomments,andnofurtheragencyreviewisanticipated. Deliverables:Final Temescal Wash Improvement Plans &Final Hydraulic Reports,including a Sediment Transport Study. Assumptions: 1.The was improvement plan consists of grading plans and details for rip‐rap protection 2.No check dams or concrete structures will be required. 3.Realign 480’of streambed TASK 8 –UNCHECKED STRUCTURE PLANS (65%) 8.1 65%Bridge Plans Engineering conclusions for the preferred alternative identified in the final bridge type selection report approved by Caltrans Structures Local Assistance shall be carried into the final design phase. The final bridge design shall be based on Caltrans‐amended AASHTO LRFD Bridge Design Specifications, various CaltransBridgeDesignandDetailManuals,andtheSeismicDesignCriteria(SDC). 8.2 65%Bridge Aesthetic Plans CONSULTANT will provide the Bridge Aesthetic Plans as part of the 65% Bridge Plan set and will incorporatetheaestheticsset forthundertheRFPandas approvedundertheapproved35%. 8.3 65%Bridge Lighting Plans 12 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project CONSULTANTwill provide the Bridge Lighting Plans as part of the 65% BridgePlan set consistentwith the aestheticplans. 8.4 65%Log of Test Borings (LOTB) CONSULTANTrecommendsasoilboringateachbridgesupportlocationswheresubstructurewidthisless than100feet;minimumoftwoboringsarerequiredperlocationwheresubstructurewidthisgreaterthan 100feet,perCaltrans’guidelines(AASHTOrecommendations). Proposed number of Borings: o 4 at Temescal Canyon Bridge and Wingwalls (100 ft) o 2 for Roadway Improvements (20 ft and 40 ft) 8.5 Prepare Draft Engineer’s Estimate Quantity calculation and construction cost estimates in Microsoft Excel format with a contingency directedbytheCityshallbeprepared.CONSULTANTshallconductaninternalQA/QCreviewoftheproject deliverablespriortosubmittal. Final estimate of Quantities and Costs must be broken down between the HBP eligible and non‐eligible items of work. CONSULTANT shall provide a construction quantity and cost estimate with each submittal of plans. The unit costs shall be based upon the most current cost information for recent similar projects in the areacompiledbytheCONSULTANTandapprovedby the City. Deliverables:65%Unchecked Structure Plans. Assumptions: Assumed to be a 375’Long,98’wide 3‐span cast in place structure. As is typical of a Local Assistance Project,Caltrans will only review the final bridge plans. TASK 9 –BRIDGE DESIGN INDEPENDENT CHECK 9.1 Independent Check The65%uncheckedbridgeplansshallbeindependentlycheckedseparatelybyalicensedbridgeengineer, who has not been involved in the 65% design of the project. A separate set of structural calculations including quantity calculations shall be prepared in accordance with Caltrans bridge design practice. The checker shall review the plans for completeness, consistency, correctness of references. The bridge designer shall revise the design and plans to mitigate checker’s review comments. The checker shall perform back check to concur that the comments have been adequately addressed. All comments and responsesshallbedocumentedintheprojectfiles. 9.2 Update Engineer’s Estimate All bridge quantities shall be independently checked and all issues raised by independent quantity checker(s)willberesolvedprior tothesubmittal. 9.3 Draft Specifications CONSULTANT shall prepare the Draft Specifications. 13 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project Deliverables:Independent Check Review Comments and Check Calculations,Comment and Response Matrix. Assumptions: Refer to Task 8 Assumptions. TASK 10 –95%STRUCTURES PS&E 10.1 Bridge Plans (95%) Responsesto all agencies’reviewcommentsforthe65%submittal shall bepreparedandincludedin this submittal. 10.2 Engineer’s Estimate CONSULTANT shall prepare a list of Caltrans standard structure pay items for bridge construction. Design quantity calculations shall be performed using standard Caltrans and City forms and marginal cost estimate summary sheets. Item unit prices shall be adjusted using Contract Cost Data Book published by Caltrans.Thestructureplansandquantitiesshallbeupdatedperchecker’scomments. 10.3 Update Specifications CONSULTANTshallupdatethe65%commentsanduseMicrosoftWordtoprepareandeditCaltrans2016 StandardSpecialProvisions(SSP)forstructuralworkat95%PS&E. 10.4 RE Pending Files CONSULTANTshallpreparethenecessarydocumentationrequiredfortheREPendingFilespriorto bid. 10.5 Final PS&E Submittals CONSULTANT will submit the Final PS&E package to the City for final approval. The submittal will only incorporate all applicable previous comments, and no further agency review is anticipated. All required forms in theRTLGuidewillbe provided.Electronic copieswill beincludedwiththe100%submittal. Deliverables:95%Bridge Plans,Technical Specifications and Cost Estimate. Assumptions: Refer to Task 8 Assumptions. TASK 11 –CONDITIONAL LETTER OF MAP REVISION (CLOMR) 11.1 Prepare CLOMR CONSULTANT shall prepare a Conditional Letter of Map Revision (CLOMR) in support of the Temescal Wash& Bridgeimprovements forsubmittalto theCity,RCFCD, andFEMAforreviewandapproval. 11.2 Regulatory Coordination CONSULTANT will coordinate with regulatory agencies, as needed, in preparation and support of the CLOMR. 14 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project Deliverables:Conditional Letter of Map Revision (CLOMR). Assumptions: A period of one (1)year monitoring after construction will be provided. TASK 12 –RIGHT‐OF‐WAY SERVICE 12.1 Prepare ROW Requirements Map CONSULTANTshallupdatetheROWConstraintsMap. 12.2 Prepare Legal Descriptions &Plats CONSULTANT shall prepare the Legal descriptions and Plats. The current ROW lists a total of nine (9) assessorparcelsaffectedbytheproject footprint.Thelegal descriptionandplatneededareasfollows: four(4)temporaryconstructioneasements, seven(7)permanenteasements, six(6)roadwayeasements, eight(8)conservationeasements. CONSULTANT shall provide legal descriptions and plats utilizing the updated preliminary title, CONSULTANT’ssurveyorshallreviewandverifyparcelandright‐of‐waydatafortheaffectedparcels.The LegalDescriptionsandPlatsshallbe modifiedtoreflectthe finaldesignplans. 12.3 Right‐of‐Way Appraisals CONSULTANTshall be familiarwith the project and shall have a completeunderstanding of the project’s requirements to ultimately obtain a project certification from Caltrans. The project is comprised of Nine (9)assessorparcelswithvariousrightsneededfromthedifferentparcels. 12.4 Right‐of‐Way Appraisal Reviews AppraisalandAppraisalReview Services:AmaximumofTwenty‐five(25)AppraisalsandTwentyfive(25) AppraisalReviews. CONSULTANTshallberesponsibleforthefollowing: CONSULTANT shall mail a notification letter and acquisition policies brochure to the property owner requesting permission to conduct an on‐site inspection of the property, advising them of their right to accompany the appraiser at the time of the inspection, and requesting information regardingthepropertyappraisedwhichcouldinfluencetheappraisedvalue. Appraiser shall review title information pertaining to respective ownerships and shall review drawingsandotherpertinentinformationrelativetotheparcel. Appraiser shall inspect each property personally with the owner (if possible) and document the inspectionwithphotographsforuseinthereport. Appraisershallinventoryallimprovementsaffectedbytheproposedtaking, Appraiser shall perform market research to support the selected appraisal methodologies and shalldocumentandconfirmcomparablesalesinformation. Appraiser shall prepare a narrative appraisal report that conforms to the Uniform Standards of Professional Appraisal Practice (USPAP). The appraisal study and report are intended to serve as an acquisition appraisal and shall be prepared in a summary format consistent with the specificationsfornarrativeappraisalreports. 15 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project Upon completion of the fee appraisal, CONSULTANT shall conduct a formal review by an independentappraiserinaccordancewithfederalregulationsandCaltransproceduresmanual. CONSULTANTshallreceiveandanalyzethecompletedappraisalreportsaccordingly. 12.5 Right‐of‐Way Settlement/Prepare Acquisition Documents CONSULTANT shall establish and maintain a complete and current record file of all ownerships in aform acceptableto theCity. CONSULTANT shall receive and analyze title information, approved appraisal reports, and legal descriptionsinsufficientdetailto negotiatewithpropertyownersandotherparties. CONSULTANTshall prepare all offer letters, summary statements,and lists of compensable items offixturesandequipment,inaccordancewithstateorfederalregulationsandtheapprovalofthe City. CONSULTANT shall present written purchase offers to owners or their representatives in person, whenpossible. CONSULTANTshallfollow‐upandnegotiatewitheachpropertyowners,asnecessary;prepareand submit recommended settlement justifications to City for review and approval; review any independentappraisalsecuredbypropertyowner CONSULTANT shall prepare and assemble acquisition contracts, deeds, and related acquisition documentsrequiredfortheacquisitionofnecessarypropertyinterests. CONSULTANTshalltransmitexecutedacquisitiondocumentstotheCity.Eachtransmittalpackage shall include a fully executed and properly notarized deed(s), fully executed acquisition contract with attachments, and a brief settlement memorandum which summarizes the pertinent data relativetothetransaction. 12.6 Title Escrow Coordination CONSULTANT shall open escrow and coordinate execution of closing instructions providing for titleinsurancecoverageatthesettlementamount. CONSULTANT work in conjunction with escrow officer to facilitate the clearance of title matters assetforthinthesettlementmemorandumandescrowinstructions. CONSULTANT shall coordinate deposit of acquisition price and estimated closing costs with escrow. After the closing, CONSULTANT shall review the title insurance policy for accuracy. CONSULTANT shall also prepare and mail a letter to County Assessor requesting cancellation of taxes if appropriate. 12.7 Caltrans Right‐of‐Way Certification Oversight Coordination CONSULTANTshallattendcertificationplanningmeetingwithCity’sprojectteam,asnecessary. CONSULTANT shall prepare real estate components of Right‐of‐Way data sheet and provide current and escalated costs for acquisition and relocation, incorporate engineers’ construction andutility informationasprovidedtotheR/WCONSULTANT. CONSULTANT shall verify appraisal maps/Right‐of‐Way maps and legal descriptions are all properlyidentifiedandpreparedinconformancewithapprovedright‐of‐waynumberingsystem. If applicable, CONSULTANTshall oversee utility relocation activities as requiredfor completion of certification form including compiling utility notices and submittal of hi‐low risk utility sheet preparedbyengineersforRight‐of‐WayLocalAssistanceCoordinatorreview. 16 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project CONSULTANT shall verify that all interests necessary for the project have been secured in compliancewithallapplicablelawandregulations. CONSULTANTshall prepare certification forms, in coordination with the engineerand the City, to include the compilation of all necessary back‐up documents required including deed, final order ofcondemnation,accesseasements,cooperativeagreements,permits,rightofentries,etc. CONSULTANTshallattendandcoordinatepreandpost‐auditsubmittalmeetings. Deliverables:Monthly Status Reports,Preliminary Title Reports,Notices of Decision to Appraise,Appraisal Reports,Appraisal Review Reports,Acquisition documents and case files,Caltrans Right‐of‐Way Certification Form,Request for Authorization to proceed with R/W acquisition and Utility Relocation. Assumptions: 1. Nine (9)Parcels are assumed to be acquired. Parcel No.Riverside County APN 1 390‐130‐015 2 390‐130‐016 3 390‐200‐003 4 390‐200‐004 5 390‐200‐007 6 390‐200‐010 7 390‐200‐012 8 390‐200‐017 9 390‐200‐018 TASK 13 –HABITAT MITIGATION AND MONITORING PLAN 13.1 Habitat Mitigation and Monitoring Plan (HMMP) CONSULTANT shall develop, through coordination with the PDT team, the California Department of Transportation (Caltrans), the California Department of Fish and Wildlife (CDFW), and a third‐party management entity (if necessary), a Habitat Mitigation and Monitoring Plan (HMMP) that details the creation/restoration/enhancement, as appropriate based on the project impacts and based on the approved DBESP report. The HMMP shall detail the vegetative conditions, including plant palettes, percent coverage, and other pertinent success criteria that must be met along with a 5‐year mitigation monitoring program that will measure progress of the site in meeting the 5‐year success criteria. The HMMPshallbea singledocumentthatprovidesallthenecessaryinformationto documentwhatandhow themitigationwillbeimplemented. 17 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project 13.2 Planting Plans CONSULTANTshalldevelopPlantingPlansforupto6.8acresbasedupon,andthroughcoordinationwith, 8.1above. TASK 13 –Additional Scope Added 13.3 Temporary Irrigation Plans CONSULTANTshalladdtemporaryirrigationforthemitigationplantingareaupto6.8acresofvegetation. Deliverables:HMMP document,Permit Applications,Planting Plans. TASK 14 –PERMITS 14.1‐14.3 CDFW 1602 Streambed Alteration Agreement,USACE Section 404 Nationwide Permit,and RWQCB Section 401 Water Quality Certification TASK 14 –Additional Scope Added 14.4 DBESP Revisions &Recirculation The DBESP has been revised by LSA and is currently being reviewed by the California Department of Fish and Wildlife (CDFW) and US Fish and Wildlife Service (FWS). It is assumed there will up to two (2) additional revisions to the DBESP that will require the DBESP to be recirculated to the resource agencies through the Riverside Conservation Authority who administer the Riverside County Multiple Species Habitat Conservation Plan (MSHCP). The comments on the DBESP by CDFW and FWS Service will be responded to by LSA in tabular format and also within the DBESP document. LSA assumes there will be two (2) rounds of review and comments by the resource agencies. Additional rounds of review and commentsbytheresourceagencieswillrequireabudgetaugment.LSAwillprovidethereviseddocument byelectronicformateitherbyCD‐ROMorflashdriveinPDFandWordformatforresourceagenciesreview and comment. LSA has assumed 10 electronic versions and two hard copies of the revised DBESP to be submitted to the Riverside Conservation Authority for distribution. Additional copies will be billed as a directcostitem. Deliverables:Required Permits (1602,404,&401),Update,Revise and Recirculate the DBESP. Assumptions: The following permits will be needed from Regulatory Agencies 1.ACOE Section 404 Nationwide Permit 2.RWQCB Section 401 Water Quality Certification 3.CDFW 1600 Streambed Alteration Agreement. TASK 15 –ENVIRONMENTAL REVALIDATIONS 18 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project 15.1 Environmental Revalidation CONSULTANT shall prepare the Caltrans Environmental Revalidation form (LAPM Exhibit 6‐G) up to three times when the project moves to a new phase. It is assumed that the project and setting/circumstances willnothavechangedandthatnoanalysisorevaluationswill needtobeconducted.Theform shallsimply document that nothing regarding the project or setting/circumstances has changed. If anything changes related to the project that require that analysesor evaluations be conductedto support the Revalidation, then ascope andcost shallbeprovided forreview/approval priorto conductingthatwork. Deliverables:LAPM Exhibit 6‐G. TASK 16 –WQMP &SWPPP 16.1‐16.2 Water Quality Management Plan, Storm Water Pollution Prevention Plan CONSULTANTshallpreparetheFinalWQMPandSWPPPinaccordancewiththeSantaAnaRegionalWater Quality Control Board and Caltrans Design Guidelines. The CONSULTANT shall submit/file the final reviewed/approvedSWPPPonbehalfoftheCitytoRegionalWaterQualityControlBoard. Deliverables:Final WQMP,SWPPP,and NOI. TASK 17 –CONSTRUCTION SUPPORT 17.1 Pre‐Construction Support 17.1‐1 Attend Pre‐Bid Meeting CONSULTANT shall remain available to attend a pre‐bid meeting to be scheduled in advance of the bid opening date.CONSULTANT shall answer bidders’questions regarding the contract bid documents and prepare bid addenda,if required.CONSULTANT shall perform bid review and analysis,if required. 17.1‐1 Respond to Request for Information (RFI) CONSULTANT shall answer questions (Request for Information [RFI])regarding the Technical Provisions,the design drawings or conflicts in the design during the bidding process.The CONSULTANT shall assist the City in preparation of Addenda regarding omissions or conflicts in the design. Assumptions: Attendance at a pre‐bid meeting by the CONSULTANT including CONSULTANT biologist. 17.2 Construction Support 17.2.1 Review Submittals CONSULTANT shall attend a pre‐construction meeting as directed by the City. CONSULTANT shall reviewshopdrawingsandsubmittalsforconformancewiththecontractplansandspecifications, 19 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project and make recommendations for acceptance, denial or re‐submittal within reasonable time of receipt. 17.2.2 Respond to RFI CONSULTANT shall provide response to contractor’s requests for information (RFI’s) about the contract plans and specifications forwarded to CONSULTANT by the City within reasonable time of receipt. Upon written authorization from the City, CONSULTANT shall provide engineering designservicesforrevisionstoconstructiondocumentsresultingfromchangedfieldorunforeseen conditions or other change order work required due to actions of the City. Subsequent change orderdocumentationandprocessingshallbepreparedbytheCity’sResidentEngineer. CONSULTANT shall perform up to twelve (12) site visits during the construction as requested by theCity. 17.3 Environmental Support 17.3.1:Pre‐Construction Nesting Bird Surveys Requirements.One pre‐construction nesting bird survey is required prior to any ground disturbance,vegetationgrubbing, andconstruction. Ifactive nests arefound, thenthe contractor will installa 500‐footbufferduringbreedingseason. Anyadditionalservices formonitoring active nests are not part of this scope of work. The LSA biologist can prepare a change order for additionalrequiredsurveysandmonitoringuponCityrequest. Deliverables.A pre‐construction nesting bird survey reportincluding any required avoidance and minimizationmeasures,agencyconsultations,andmitigationinstructionswillbesubmittedtothe City. Schedule.The pre‐construction nesting bird survey will beconducted three (3) days prior to any ground disturbance, vegetation grubbing, and construction. The pre‐construction nesting bird survey reportwill be submitted tothe Citywithin3 daysof completion ofthesitevisit/survey. The CONSULTANT Biologist shall monitor construction for the duration of the construction to ensurethatvegetationremoval,BMPs,andallavoidanceandminimizationmeasuresareproperly followed. 17.3.2 : Attend a Pre‐construction Site Meeting The CONSULTANT biologist will attend a pre‐constructionsite meeting with the contractor and the engineer to discuss environmental regulations and mitigations. The CONSULTANT biologist will alsoexplainwhatisexpectedofthe contractorandthelimitationtogradingandconstruction. 17.3.3 : Biological Monitoring During Construction CONSULTANT biologists to monitor to observe, document, and report the status of vegetation removal and the implementation of best managementpractices and avoidanceandminimization measures. Biological monitoring will also be required during vegetation removal. Biological monitorsarerequiredtoinspectconstructionlimitfencing,activenestandburrowbuffers,check 20 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project equipment and staging areas for hazardous materials on the ground, monitor site weed control, andbe awareof potentialorexistingerosion. Deliverables.Weekly construction monitoring reportsand site visit reports to be provided to the contractorandtheCity. Schedule.The grubbing stage of construction is typically two weeks offull‐time daily monitoring. Twelve sitevisits byone biologistwill be providedduringthe 20‐month construction phaseof the project(June2020throughOctober2022). CONSULTANT shall perform up to twelve (12) site visits duringthe construction as requested by theCity. TASK 17 –Additional Scope Added 17.4 Develop As‐built Plans Following the completion and acceptance of the project, CONSULTANT shall furnish the City with a complete set of revised contract drawings showing as‐built conditions. Revisions shall be solely based on as‐built redlined information provided by the City. The as‐built plans shall be delivered to the City within twomonthsofreceiptofredlinedplans. 17.5 One (1)‐Year Monitoring of Planting after Construction LSA field biologist will monitor the 6.8‐acre revegetated area every day for the first two (2) weeks after the planting is complete to ensure the plants are surviving and receiving enough water. This will be followed by six (6) months of monitoring at a bi‐weekly basis. After 6 months the site will be monitored quarterly up to one year. After the end of the one (1) year monitoring period a brief report will be prepared outlining the rate of success of the plants. It is assumed this report will be submitted to the CDFWforfiling. 17.6 Pre‐Construction Burrowing Owl Surveys A qualified LSA biologist will survey the construction area prior to vegetation removal or ground disturbance activities for burrowing owls in accordance to MSHCP requirements. The clearance surveys will be conducted 14 days and also 24 hours prior to ground disturbance (2 surveys). If burrowing owls are found onsite during the surveys, CDFW will be contacted. If no burrowing owls are found, no additionalactionisrequired. 17.7 Letter of Map Revision (LOMR) Following the completion of the project, CONSULTANT shall prepare a Letter of Map Revision (LOMR) in support of the Bridge & Wash improvements for submittal to the City, RCFCD and FEMA. This scope includes revision to the submitted LOMR based on FEMA’s review comments necessary to obtain final approvalfromFEMA. Deliverables:Letter of Map Revision (LOMR). Assumptions: A period of one (1)year monitoring after construction will be provided. 17.6 Pre‐Construction Bat Surveys 21 |P a g e Scope of Work for Temescal Cyn Bridge over Temescal Wash Replacement Project LSA'sbatspecialistwill perform apreconstructionbathabitat surveytodeterminewhetheranystructures or any trees within the project area and a 500‐foot buffer are occupied by roosting bats. This preconstruction bat habitat survey will include an afternoon inspection of any structures and trees followed by a nighttime emergence survey in which the area will be monitored for bat activity by observers (LSA’s bat specialist and another biologist with experience performing bat surveys) using acoustic equipment to record bat echolocation calls for later identification. Following the completion of the habitat assessment and nighttime survey, LSA will analyze any acoustic data collected during the survey and prepare a brief memorandum summarizing the survey results; this plan will include recommendedmeasurestoaddressexistingmitigationandminimizationmeasuresas wellasto minimize impactsto batsto thegreatestextentfeasible. Assumptions: The scope of work assumes there will be one series of surveys prior to construction. EXHIBIT A-1 WKE TEAM SUMMARY Final PS&E Temescal Canyon Bridge over Temescal Wash Replacement City of Lake Elsinore TASK DESCRIPTION WKE LSA West EMI (DBE)Guida LIN(DBE)TAT(DBE)EPIC TOTALS Task 1 -Project Management 347 80,405 143 26,188 14 2,610 20 3,158 13 2,621 7 1,338 78 9,631 91 11,929 713 137,879 1.1 Administration and Management 92 21,216 70 13,390 0 0 0 0 0 0 0 0 0 0 0 0 162 34,606 1.2 Project Team Meetings 192 45,744 73 12,798 14 2,610 20 3,158 13 2,621 7 1,338 78 9,631 91 11,929 488 89,828 1.3 Schedule 18 5,332 0 0 0 0 0 0 0 0 0 0 0 0 0 0 18 5,332 1.4 Establish QC Program 20 3,938 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 3,938 1.5 HBP Request For Authorization 25 4,174 0 0 0 0 0 0 0 0 0 0 0 0 0 0 25 4,174 TASK 2 -Surveying and Topographic Mapping 55 7,224 0 0 0 0 0 0 412 59,081 0 0 0 0 0 0 467 66,306 2.1 Topographic Surveys and Mapping (Wash and Temescal Cyn R 0 0 0 0 0 0 0 0 104 15,768 0 0 0 0 0 0 104 15,768 2.2 HEC-RAS Model Survey and Mapping 55 7,224 0 0 0 0 0 0 34 5,065 0 0 0 0 0 0 89 12,289 2.3 As Needed Miscellaneous Survey and Mapping 0 0 0 0 0 0 0 0 34 5,065 0 0 0 0 0 0 34 5,065 2.4 Prepare Landnet Base Map (22 Legal Descriptions &Plats)0 0 0 0 0 0 0 0 119 17,303 0 0 0 0 0 0 119 17,303 2.5 Corner Record / Record of Survey 0 0 0 0 0 0 0 0 92 11,517 0 0 0 0 0 0 92 11,517 2.6 Tree Survey 0 0 0 0 0 0 0 0 29 4,364 0 0 0 0 0 0 29 4,364 TASK 3 -Geotechnical Investigations and Design Reports 30 4,408 232 33,552 0 0 582 79,238 31 4,778 0 0 0 0 0 0 875 121,976 3.1 Preliminary Foundation Report 0 0 0 0 0 0 32 5,215 31 4,778 0 0 0 0 0 0 63 9,993 3.2 Foundation Report (FR) (Draft and Final)14 1,975 0 0 0 0 164 23,529 0 0 0 0 0 0 0 0 178 25,504 3.3 Geotechnical Design report (GDR)14 1,975 0 0 0 0 90 13,090 0 0 0 0 0 0 0 0 104 15,065 3.4 Ground Water Monitoring Wells & Permitting 2 458 232 33,552 0 0 296 37,404 0 0 0 0 0 0 0 0 530 71,414 TASK 4 -Utilities Coordination 248 33,148 0 0 0 0 0 0 0 0 0 0 0 0 225 24,187 473 57,335 4.1 Reports of Investigation 18 2,504 0 0 0 0 0 0 0 0 0 0 0 0 0 0 18 2,504 4.2 Notice to Owner 26 3,527 0 0 0 0 0 0 0 0 0 0 0 0 0 0 26 3,527 4.3 Utility Relocation Plan & Protection Plan 204 27,118 0 0 0 0 0 0 0 0 0 0 0 0 225 24,187 429 51,305 4.4 Utility Agreements 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 TASK 5 -Utility Potholing 26 4,472 0 0 0 0 0 0 35 5,302 0 0 0 0 30 3,434 91 13,207 5.1 Pot Hole Workplan 2 458 0 0 0 0 0 0 0 0 0 0 0 0 30 3,434 32 3,891 5.2 Field Work 0 0 0 0 0 0 0 0 35 5,302 0 0 0 0 0 0 35 5,302 5.3 Test Hole Mapping & Report 24 4,014 0 0 0 0 0 0 0 0 0 0 0 0 0 0 24 4,014 Task 6 -Civil Roadway PS&E 1,815 229,630 0 0 0 0 0 0 0 0 46 6,085 350 38,692 0 0 2,211 274,407 6.0 Constructability Workshop 6.0.1 Update Bridge Type,and Roadway Geometry 202 32,556 0 0 0 0 0 0 0 0 0 0 0 0 0 0 202 32,556 6.0.2 Constructability Workshop with City 28 6,154 0 0 0 0 0 0 0 0 0 0 0 0 0 0 28 6,154 6.1 Draft Roadway Plans (65%) 6.1.1 Layout & Profile, Typicals 186 22,451 0 0 0 0 0 0 0 0 0 0 0 0 0 0 186 22,451 6.1.2 Signing & Striping 162 19,165 0 0 0 0 0 0 0 0 0 0 0 0 0 0 162 19,165 6.1.3 Construction Details 121 14,326 0 0 0 0 0 0 0 0 0 0 0 0 0 0 121 14,326 6.1.3a Roadway Removals 76 9,452 0 0 0 0 0 0 0 0 0 0 0 0 0 0 76 9,452 6.1.4 Grading 82 9,468 0 0 0 0 0 0 0 0 0 0 0 0 0 0 82 9,468 6.1.4 Water Pollution Control Plans 38 4,500 0 0 0 0 0 0 0 0 0 0 0 0 0 0 38 4,500 6.1.5 Erosion Control 43 5,214 0 0 0 0 0 0 0 0 0 0 0 0 0 0 43 5,214 6.1.6 Grading Plans 42 5,114 0 0 0 0 0 0 0 0 0 0 0 0 0 0 42 5,114 6.1.7 Drainage Plans 132 16,751 0 0 0 0 0 0 0 0 0 0 0 0 0 0 132 16,751 6.1.8 Electrical Plans 0 0 0 0 0 0 0 0 0 0 25 3,276 0 0 0 0 25 3,276 6.1.9 Landscaping Plans 0 0 0 0 0 0 0 0 0 0 0 0 187 20,798 0 0 187 20,798 6.1.10 Traffic Control Plans / TMP 93 11,679 0 0 0 0 0 0 0 0 0 0 0 0 0 0 93 11,679 6.1.11 Draft Special Provisions 151 18,096 0 0 0 0 0 0 0 0 0 0 12 1,432 0 0 163 19,527 6.1.12 UpdateQuantity and Cost Estimates 23 2,925 0 0 0 0 0 0 0 0 4 481 45 4,958 0 0 72 8,365 6.2 95% Plans 303 36,508 0 0 0 0 0 0 0 0 13 1,740 74 7,910 0 0 390 46,157 6.3 100 % Plans 133 15,271 0 0 0 0 0 0 0 0 4 588 32 3,594 0 0 169 19,452 Task 7 -Temescal Wash Improvement Plans 200 24,383 0 0 326 44,703 16 1,956 0 0 0 0 0 0 0 0 542 71,041 7.1 Hydraulic Report (Draft &Final)0 0 0 0 196 24,043 0 0 0 0 0 0 0 0 0 0 196 24,043 7.1a Sediment Transport Study 6 1,310 0 130 20,660 16 1,956 0 0 0 0 0 0 0 0 152 23,926 7.2 65%Channel Improvement Plans 118 13,130 0 0 0 0 0 0 0 0 0 0 0 0 0 0 118 13,130 7.3 95%Channel Improvement Plans 47 6,102 0 0 0 0 0 0 0 0 0 0 0 0 0 0 47 6,102 7.4 100% Channel Improvement Plans 29 3,839 0 0 0 0 0 0 0 0 0 0 0 0 0 0 29 3,839 Task 8 -65%Unchecked Structure Plans 1,410 181,678 0 0 0 0 32 4,358 0 0 30 4,038 121 13,466 0 0 1,593 203,539 8.1 65%Bridge Plans 1,320 170,108 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,320 170,108 8.2 65% Bridge Aesthetic Plans 0 0 0 0 0 0 0 0 0 0 0 0 121 13,466 0 0 121 13,466 8.3 65% Bridge Lighting Plans 0 0 0 0 0 0 0 0 0 0 26 3,556 0 0 0 0 26 3,556 8.4 65% Log of Test Borings 0 0 0 0 0 0 32 4,358 0 0 0 0 0 0 0 0 32 4,358 8.5 Prepare Draft Engineers Estimate 90 11,570 0 0 0 0 0 0 0 0 4 481 0 0 0 0 94 12,051 Task 9 -Bridge Design Independent Check 449 57,846 0 0 0 0 0 0 0 0 6 951 0 0 0 0 455 58,797 9.1 Independent Check 270 34,798 0 0 0 0 0 0 0 0 0 0 0 0 0 0 270 34,798 9.2 Update Engineers Estimate 67 8,571 0 0 0 0 0 0 0 0 3 384 0 0 0 0 70 8,955 9.3 Draft Specifications 112 14,478 0 0 0 0 0 0 0 0 3 567 0 0 0 0 115 15,045 Task 10 -95%Structure PS&E 379 48,828 0 0 0 0 13 1,696 0 0 19 2,706 86 9,844 0 0 497 63,073 10.1 95%Bridge Plans 179 23,049 0 0 0 0 13 1,696 0 0 11 1,453 54 6,250 0 0 257 32,448 10.2 Engineers Estimate 33 4,215 0 0 0 0 0 0 0 0 1 189 0 0 0 0 34 4,404 10.3 Update Specifications 45 5,870 0 0 0 0 0 0 0 0 1 189 0 0 0 0 46 6,059 10.4 RE Pending Files 10 1,216 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 1,216 10.5 Final PS&E Submittals 112 14,478 0 0 0 0 0 0 0 0 6 874 32 3,594 0 0 150 18,946 Task 11 -Conditional Letter of Map Revision 10 1,618 0 0 142 18,729 0 0 0 0 0 0 0 0 0 0 152 20,347 11.1 Prepare CLOMR 10 1,618 0 0 130 16,480 0 0 0 0 0 0 0 0 0 0 140 18,099 EXHIBIT A-1 WKE TEAM SUMMARY Final PS&E Temescal Canyon Bridge over Temescal Wash Replacement City of Lake Elsinore TASK DESCRIPTION WKE LSA West EMI (DBE)Guida LIN(DBE)TAT(DBE)EPIC TOTALS 11.2 Regulatory Coordination 0 0 0 0 12 2,249 0 0 0 0 0 0 0 0 0 0 12 2,249 Task 12 -Right of Way Service 66 9,170 0 0 0 0 0 0 200 30,427 0 0 0 0 252 29,408 518 69,004 12.1 Prepare ROW Requirements Map 58 6,787 0 0 0 0 0 0 0 0 0 0 0 0 0 0 58 6,787 12.2 Prepare Legal Descriptions &Plats 2 596 0 0 0 0 0 0 200 30,427 0 0 0 0 0 0 202 31,022 12.3 Right-of-Way Appraisals 4 1,191 0 0 0 0 0 0 0 0 0 0 0 0 16 3,170 20 4,361 12.4 Right-of-Way Appraisal Reviews 0 0 0 0 0 0 0 0 0 0 0 0 0 0 44 6,021 44 6,021 12.5 Right of Way Settlement/Prepare Acquisition Documents 0 0 0 0 0 0 0 0 0 0 0 0 0 0 132 14,023 132 14,023 12.6 Title Escrow Coordination 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15 1,298 15 1,298 12.7 Caltrans Right-of- Way Certification Oversight Coordination 2 596 0 0 0 0 0 0 0 0 0 0 0 0 45 4,896 47 5,491 Task 13 -Habitat Mitigation and Monitoring Plan 20 5,955 340 48,746 0 0 0 0 0 0 0 0 280 30,942 0 0 640 85,643 13.1 Habitat Mitigation and Monitoring Plan (HMMP)16 4,764 340 48,746 0 0 0 0 0 0 0 0 0 0 0 0 356 53,510 13.2 Planting Plans 4 1,191 0 0 0 0 0 0 0 0 0 0 123 13,531 0 0 127 14,722 13.3 Temporary Irrigation Plans 0 0 0 0 0 0 0 0 0 0 0 0 157 17,412 0 0 157 17,412 Task 14 -Permits 60 9,711 348 53,447 0 0 0 0 0 0 0 0 0 0 0 0 408 63,158 14.1 CDFW 1600 Streambed Alteration Agreement 16 2,725 72 10,501 0 0 0 0 0 0 0 0 0 0 0 0 88 13,227 14.2 ACOE Section 404 Nationwide Permit 20 3,237 44 6,542 0 0 0 0 0 0 0 0 0 0 0 0 64 9,779 14.3 RWQCB Section 401 Water Quality Certification 24 3,748 44 6,542 0 0 0 0 0 0 0 0 0 0 0 0 68 10,291 14.4 DBESP Revisions & Recirculation 0 0 188 29,861 0 0 0 0 0 0 0 0 0 0 0 0 188 29,861 Task 15 -Environmental Revalidations 90 13,207 47 5,836 0 0 0 0 0 0 0 0 0 0 0 0 137 19,043 15.1 Environmental Revalidation 90 13,207 47 5,836 0 0 0 0 0 0 0 0 0 0 0 0 137 19,043 Task 16 -WQMP &SWPP 264 29,417 0 0 0 0 0 0 0 0 0 0 0 0 0 0 264 29,417 16.1 Water Quality Management Plan 156 17,461 0 0 0 0 0 0 0 0 0 0 0 0 0 0 156 17,461 16.2 Storm Water Pollution Prevention Plan 108 11,956 0 0 0 0 0 0 0 0 0 0 0 0 0 0 108 11,956 Task 17-Construction Support 182 31,125 547 75,886 63 8,651 34 5,240 0 0 45 5,774 64 7,679 0 0 935 134,354 17.1 Pre-Construction Support 17.1.1 Attend Pre-Bid Meeting 4 1,191 12 2,082 0 0 0 0 0 0 4 756 4 521 0 0 24 4,550 17.1.2 Respond to RFI 18 3,449 0 0 0 0 0 0 0 0 0 0 18 2,147 0 0 36 5,597 17.2 Construction Support 17.2.1 Review Submittals 36 6,292 0 0 0 0 0 0 0 0 41 5,018 20 2,408 0 0 97 13,719 17.2.2 Respond to RFI 72 13,540 0 0 0 0 34 5,240 0 0 0 0 22 2,603 0 0 128 21,383 17.3 Environmental Support 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 17.3.1 On-Site Pre-construction Meeting 0 0 24 3,426 0 0 0 0 0 0 0 0 0 0 0 0 24 3,426 17.3.2 Nesting Bird Surveys 0 0 66 9,176 0 0 0 0 0 0 0 0 0 0 0 0 66 9,176 17.3.3 Construction Monitoring (12-weeks)0 0 292 41,190 0 0 0 0 0 0 0 0 0 0 0 0 292 41,190 17.4 Develop As-Built Plans 46 5,546 0 0 0 0 0 0 0 0 0 0 0 0 0 0 46 5,546 17.5 1 Year Monitoring of Planting After Construction 0 0 68 9,084 0 0 0 0 0 0 0 0 0 0 0 0 68 9,084 17.6 Pre-Construction Burrowing Owl Surveys 1 298 48 6,976 0 0 0 0 0 0 0 0 0 0 0 0 49 7,274 17.7 LOMR 5 809 0 0 63 8,651 0 0 0 0 0 0 0 0 0 0 68 9,460 17.8 Pre-Construction Bat Survey 0 0 37 3,952 0 0 0 0 0 0 0 0 0 0 0 0 37 3,952 OTHER DIRECT COST 4,826 50,410 15,038 37,656 1,500 434 295 42,550 152,709 Travel 1,768 3,500 64 3,379 0 214 295 1,001 10,220 Reproductions 2,234 1,000 66 0 0 60 0 0 3,360 Mail 825 300 108 0 0 160 0 400 1,793 Drilling Rig Rental 0 0 0 16,781 0 0 0 0 16,781 Drums, Soil Disposal, Lift-gate Truck 0 0 0 4,890 0 0 0 0 4,890 County of Riverside DEH Well Permit 0 0 0 866 0 0 0 0 866 Drill Rig Rental and Supplies, Groundwater Monitoring Wells 0 0 0 9,240 0 0 0 0 9,240 Water Quality Testing (Group Delta)0 16,905 0 0 0 0 0 0 16,905 Appraisal Reports 0 0 0 0 0 0 0 17,499 17,499 Records Search 0 0 300 0 0 0 0 250 550 Title Reports 0 0 0 0 0 0 0 5,400 5,400 Permit Fees 0 27,930 14,500 2,500 0 0 0 0 44,930 Drone 0 400 0 0 1,500 0 0 0 1,900 GPS 0 375 0 0 0 0 0 0 375 Potholing 0 0 0 0 0 0 0 18,000 18,000 Exhibit 10-H Rounding Adjustment 6 2 1 1 -1 0 1 0 10 TOTAL 5,651 777,058 1,657 294,067 545 89,731 697 133,302 691 103,707 153 21,326 979 110,550 598 111,507 10,971 1,641,248 Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-844 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: MapIn Control: City Council / Successor Agency Agenda Number: 10) Page 1 City of Lake Elsinore Printed on 10/4/2018 Final Map No 31920-10 October 25, 2016 Page 2 of 2 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Prepared by: Dina Purvis, Senior Engineering Technician Date:October 9, 2018 Subject:Final Map 31920-19, DR Horton, Summerly Recommendations 1. Approve Final Map No. 31920-19 subject to the City Engineer’s acceptance as being true and correct. 2. That the City Council authorize the City Clerk to sign the map and arrange for the recordation of Final Map No. 31920-19. Background This is a part of the Summerly community. The proposed Final Map No. 31920-19 consists of 10.170 acres. Included are 58 residential lots, 3 lots for public right of way, and 4 landscaping/wall lots. The average lot size in this neighborhood is 6,100 square feet. The proposed streets will be public and the landscaping/wall maintenance will be provided by the HOA. All future public improvements have been secured. Discussion Staff has reviewed the Final Map and determined that it is in substantial conformance to Tentative Tract Map No. 31920-19 and that all Conditions of Approval relative to the Final Map approval have been completed. Fiscal Impact Public improvements are to be constructed by the developer. The surety is sufficient for the City to complete the construction if needed. Staff time was utilized to prepare the documents. Exhibits A.Vicinity Map B.Final Map Index CEREAL ST DI AMOND DRMI SSI ON TRLMALAGA RD SYLVESTER ST VILLAGE PKWYSUMMERLY PL STONEMAN STH I D D E N T R L LINE DRBASEBALLM A S C O T G R A N D S L A M S L I D E R MEADOWOUTFIELD HOMERUN CEREAL ST DI AMOND DRMI SSI ON TRLMALAGA RD SYLVESTER ST VILLAGE PKWYSUMMERLY PL STONEMAN STH I D D E N T R L LINE DRBASEBALLM A S C O T G R A N D S L A M S L I D E R MEADOWOUTFIELD HOMERUN VICINITY MAP Tract 31920-19 Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-845 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: ReportIn Control: City Council / Successor Agency Agenda Number: 11) Page 1 City of Lake Elsinore Printed on 10/4/2018 Page 1 of 1 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Through:Johnathan O. Skinner, Community Service Director Prepared by: Beau Davis, Recreation Supervisor Date:October 9, 2018 Subject:Halloween Spooktacular – Street Closures Recommendation 1. Approve Temporary Street Closures for the Halloween Spooktacular Event on October 19, 2018. Background This is the Inaugural attempt to expand the Halloween Spooktacular event to our Historic Downtown providing a unique opportunity to enjoy its charm and history. This very popular event is typically held in in the Lake Community Center, however years of successful attendance has expanded the event to this new and exciting location. Games, crafts, vendors, and more for the whole family to enjoy. Discussion This year, the Halloween Spooktacular is planned to take place on Main Street as a “Trunk or Treat” style event in Downtown Lake Elsinore from 5:00 p.m. to 8:00 p.m. The Community Services Department, Public Works Department and Sheriff’s Department will coordinate resources to ensure public safety. As this event continues to grow, staff anticipate approximately 1,000 attendees. As a result, staff is recommending street closures at Limited Street and Main Street and east on Main Street to Peck Street, as detailed in Exhibit A. It is recommended that these street closures remain in place from 4:00 p.m. to 8:00 p.m. The street closures will be enforced by Law Enforcement personnel. Fiscal Impact Costs for City personnel staffing will be accommodated via the Community Services fiscal budget. Exhibits A – Halloween Spooktacular Street Closures Map City Park Friday, October 19, 2018 5:00 pm to 8:00 pm Event Booths Legend Road Closure Points 4 pm - 9pm Suggested Detour Roads Vehicle or K-Rail Placement Trunk or Treat Vehicles, Booths, and Vendor Booths Place CMS on Lakeshore & Main in advance of event notifying of Main St. closed, detour ahead 4:00 pm to 9:00 pm Event Site Map & Traffic Control Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ORD 2018- Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: OrdinanceIn Control: City Council / Successor Agency Agenda Number: 12) Page 1 City of Lake Elsinore Printed on 10/4/2018 ORDINANCE NO. 2018- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADOPTING THE DOWNTOWN ELSINORE SPECIFIC PLAN (SP 2018-02) Whereas,on December 13, 2011, the City Council (Council) of the City of Lake Elsinore (City) adopted Ordinance No. 2011-1295 approving the Downtown Master Plan, Key to Downtown Implementation Plan and Downtown Code, which were a vision and strategic framework to guide the future development of the City’s downtown core; and, Whereas, the City initiated the Downtown Elsinore Specific Plan (SP 2018-02) to create a more flexible development plan that will replace the previously approved 2011 Downtown Master Plan and related documents (2011 DMP); and, Whereas,the SP 2018-02 establishes a vision, land use plan and development standards that are intended to enhance Downtown vitality by creating a safe, vibrant and walkable downtown centered along Main Street, make Downtown a centralized destination for community activities and for 18-hour a day activities for families and individuals, and create a “park-once-and-walk” district; and, Whereas,the 178-acre SP 2018-02 covers an approximately mile-long area centered on Main Street along the historic U.S. Route 395, extending from Flint Street along its northern edge, southwesterly to the edge of the Lake and generally bounded by Riley Street and the Lake Elsinore Outlet Channel on the west and Ellis Street and Chestnut Street on the east; and, Whereas,pursuant to Lake Elsinore Municipal Code Chapter 17.204 (SPD Specific Plan District) the Planning Commission (Commission) has been delegated with the responsibility of making recommendations to the Council for approval of specific plans; and, Whereas,on September 4, 2018, at a duly noticed public hearing the Commission has considered evidence presented by the Community Development Department and other interested parties with respect to this item, and adopted Commission Resolution No. 2018-69 recommending that the Council approve the SP 2018-02 by Ordinance; and, Whereas,pursuant to Section 17.204.130 of the LEMC, the Council has the authority to approve, approve with modifications or conditions, or deny specific plans; and, Whereas,on September 25, 2018, at a duly noticed public hearing, the Council has considered the recommendation of the Commission as well as evidence presented by the Community Development Department and other interested parties with respect to this item. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY ORDAIN: Section 1.The Council has reviewed and analyzed the proposed SP 2018-02, pursuant to the California Planning and Zoning Laws (Cal. Gov. Code Sec 65000 et. seq.), the Lake Elsinore General Plan (General Plan) and the LEMC and finds that the proposed SP 2018-02 is consistent with the requirements of California Planning and Zoning Law and with the goals and policies of the General Plan and the LEMC. Ord. No. 2018-___ Page 2 of 4 Section 2.That in accordance with the California Government Code, Title 7, Division 1, Article 8, Sections 65450 through 65457, California Planning and Zoning Law, and the LEMC, the Council makes the following findings for the approval of SP 2018-02: 1. The location and design of the proposed development are consistent with the goals and policies of the City’s General Plan and with any other applicable plan or policies adopted by the City. a. The SP 2018-02 meets the City's Specific Plan criteria for content and required implementation of the General Plan established by Section 65450 et seq. of the California Government Code and Section 17.204 of the LEMC. Appendix A of the SP 2018-02 document describes the SP 2018-02’s consistency with each applicable General Plan goal and policy. Therefore, the proposed DESP complies with the objectives of the General Plan and the purpose of the planning district in which the plan is located. 2. The proposed location allows development to be well integrated with or adequately buffered from its surroundings, whichever may be the case. a. The 2011 Downtown Master Plan was originally adopted on December 13, 2011, and the location remains relatively unchanged by the proposed SP 2018-02. b. The SP 2018-02 does not include the area located between Spring Street and Ellis Street, and between Flint Street and the Interstate 15 Freeway, although it had been included in the 2011 Downtown Master Plan, in order to recognize existing industrial and commercial land uses that do not reflect the vision of the SP 2018-02. Rather than create non- conforming uses with the adoption of the SP 2018-02, this area will be given Business Professional and General Commercial land use designations. c. The SP 2018-02 encourages mixed-use land uses, which combine commercial with more dense residential development that supports commercial businesses. d. The SP 2018-02 capitalizes on the nearby Diamond Stadium and sports facility, as well as the existing Links at Summerly Golf Course, Skydive Elsinore, and the Lake Elsinore Motorsports Park by providing a downtown destination for visitors to the City. 3. All vehicular traffic generated by the development, either in phased increments or at full build- out, is to be accommodated safely and without causing undue congestion upon adjoining streets. a. A Traffic Impact Analysis was prepared by Urban Crossroads in August 2011 for the 2011 DMP, which provided mitigation measures for development. The SP 2018-02 retained the overall development potential within the parameters that were evaluated by the Analysis, and those applicable mitigation measures will apply to SP 2018-02 development. 4. The Specific Plan’s land uses will be adequately served by existing or proposed public facilities and services. a.SP 2018-02 identifies methodologies to assure that land uses will be adequately served by existing or proposed public facilities and services. Suitable areas are suggested for parks, pedestrian ways, and public open spaces. It also identifies necessary streets and Ord. No. 2018-___ Page 3 of 4 circulation to support the proposed land use allocations, as well as all necessary wet and dry utilities for proper and adequate infrastructure services. 5. The overall design of the specific plan will produce an attractive, efficient and stable development. a.Design standards and guidelines are incorporated into the Plan to ensure an attractive, efficient and vibrant project. Visual graphics and photos accompany the design guidelines that capture the atmosphere and cohesiveness that the Plan seeks to emulate. 6. In accordance with the requirements of the California Environmental Quality Act (CEQA), impacts have been reduced to a less than significant level, or in the case where impacts remain, a statement of overriding considerations must be adopted to justify the merits of project implementation. a. The SP 2018-02 retains the overall development potential or recommends less intense uses as the existing 2011 DMP. In 2011, the Council of the City of Lake Elsinore certified the Program Environmental Impact Report (PEIR) (SCH No. 2005121019) and adopted the City’s 2011 General Plan Update, 2008-2014 Housing Element, Climate Action Plan, and the 2011 Downtown Master Plan (DMP). The PEIR analyzed the scope and nature of development proposed to meet the goals of downtown development as set out in the DMP along with identifying measures to mitigate, to the extent feasible, the significant adverse project and cumulative impacts associated with downtown development under the DMP. b. In addition to serving as the environmental document for the approval of the 2011 General Plan Update, Housing Element, Climate Action Plan, and DMP, the PEIR was intended by the City to be the basis for compliance with CEQA for future discretionary actions. Under CEQA guidelines for using program EIRs with later activities, if a proposed later activity involves no new or substantially more severe significant effects and no new mitigation measures would be required, a program EIR is deemed to have adequately analyzed the later activity for CEQA purposes and no further review under CEQA is required. c. The Downtown Elsinore Specific Plan (DESP) represents a reimagining of the DMP rather than a substantial revision. The PEIR included an analysis of the environmental effects and sets out mitigation measures needed to minimize or eliminate any identified impacts related to downtown development under the DMP. The overall development potential within the boundaries of the original DMP remains substantially unchanged under the DESP such that there are no new or substantially more severe significant effects and no new mitigation measures are necessary. Accordingly, PEIR serves as the required environmental documentation for the DESP, the General Plan Amendment and Zone Change. 7. The proposed DESP will not be a) detrimental to the health, safety, comfort or general welfare of the persons residing or working within the neighborhood of the proposed Plan or within the City, or b) injurious to the property or improvements in the neighborhood or within the City. a. The focus of proposed land uses within the specific plan offers development opportunities that respond to the marketplace and are feasible within the constraints in the area. Ord. No. 2018-___ Page 4 of 4 Section 3.Based upon the evidence presented, both written and testimonial, and the above findings, the Council hereby adopts SP 2018-02. Section 4. Severability.If any provision of this Ordinance or its application is held invalid by a court of competent jurisdiction, such invalidity shall not affect other provisions, sections, or applications of the Ordinance which can be given effect without the invalid provision or application, and to this end each phrase, section, sentence, or word is declared to be severable. Section 5. Effective Date.This Ordinance shall become effective at 12:01 a.m. on the 31 st day after the date of adoption. Section 6. Certification. The City Clerk shall certify to the passage of this Ordinance and shall cause a synopsis of the same to be published according to law. Passed and Adopted on this 9th day of October 2018. Natasha Johnson Mayor Attest: Susan M. Domen, MMC, City Clerk STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Susan M. Domen, MMC, City Clerk of the City of Lake Elsinore, do hereby certify that the foregoing Ordinance No. 2018-_____ was introduced at the Regular meeting of September 25, 2018, and adopted by the City Council of the City of Lake Elsinore at its Regular meeting of October 9, 2018, by the following vote: AYES: NOES: ABSENT: ABSTAIN: I further certify that said Synopsis was published as required by law in a newspaper of general circulation in the City of Lake Elsinore, California on the _____day of __________, 2018, and on the ______day of _________, 2018. ____________________________ Susan M. Domen, MMC City Clerk ORDINANCE NO. 2018- ANORDINANCEOFCITYCOUNCILOFTHECITYOFLAKEELSINORE,CALIFORNIA, ADOPTING ZONE CHANGE NO. 2018-02 Whereas, the City of Lake Elsinore (City) initiated Zone Change No. 2018-02 to amend the zoning on certain properties identified as Assessor’s Parcel Nos. 377-242-003 through -007, -012, -013, -023, -028 and -029 from Gateway Commercial (GC) to Limited Manufacturing (M-1); properties identified as Assessor’s Parcel Nos. 377-242-014 through -016, -018, -020 through -022, and - 030; and 377-243-001 through -011, -013, -015 through -019 from Gateway Commercial (GC) to General Commercial (C-2); and properties located from Flint Street along its northern edge, southwesterly to the edge of the Lake and generally bounded by Riley Street and the Lake Elsinore Outlet Channel on the west and Ellis Street and Chestnut Street on the east from Business Professional (BP), Commercial Mixed Use (CMU), Downtown Recreation (DR), Floodway (F), General Commercial (C-2), High Density Residential (R-3), Medium Density Residential (MD), Open Space (OS), Public Institutional (PI), and Residential Mixed Use (RMU) to the Specific Plan Zone (SP); and, Whereas,pursuant to Lake Elsinore Municipal Code (LEMC) Chapter 17.188 (Amendments) the Planning Commission (Commission) has been delegated with the responsibility of reviewing and making recommendations to the City Council regarding zone changes, and, Whereas,on September 4, 2018, at a duly noticed public hearing the Planning Commission considered evidence presented by the Community Development Department and other interested parties with respect to this item, and adopted Planning Commission Resolution No. 2018-71 recommending that the City Council (Council) approve Zone Change (ZC) No. 2018-02; and, Whereas,on September 25, 2018, at a duly noticed public hearing, the Council has considered the recommendation of the Commission as well as evidence presented by the Community Development Department and other interested parties with respect to this item. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1.The Council has reviewed and analyzed proposed ZC No. 2018-02, pursuant to the California Planning and Zoning Laws (Cal. Gov. Code Sec 65000 et. seq.), the Lake Elsinore General Plan (General Plan) and the LEMC and finds that the proposed ZC is consistent with the requirements of California Planning and Zoning Law and with the goals and policies of the General Plan and the LEMC. Section 2.That in accordance with the California Government Code, Title 7, Division 1, Article 8, Sections 65450 through 65457, California Planning and Zoning Law, and the LEMC, the Council makes the following findings for the approval of ZC No. 2018-02: 1. The proposed ZC will not be a) detrimental to the health, safety, comfort or general welfare of the persons residing or working within the neighborhood of the proposed amendment or within the City, or b) injurious to the property or improvements in the neighborhood or within the City. a. The proposed ZC has been analyzed relative to its potential to have detrimental effects, and land use designations and regulations have been imposed to ensure that the health, safety and welfare of affected residents will be protected. Ord. No. 2018- Page 2 of 5 b. The rezoning of the existing business professional uses along Spring Street from the 2011 Downtown Master Plan’s Gateway Commercial zone to Limited Manufacturing (M-1) will ensure that all Limited Manufacturing uses along Spring Street will be treated fairly and equitably. c. The rezoning of commercial properties along Main Street between Interstate 15 and Flint Street from 2011 Downtown Master Plan’s Gateway Commercial zone to General Commercial (C-2) will ensure adequate buffering and screening of any residential uses within the area. 2. The proposed ZC is consistent with the General Plan. a. Zone Change No. 2018-02 is consistent with the General Plan as amended by General Plan Amendment No. 2018-02. b. General Plan Amendment No. 2018-02 changes the land use designation of parcels along Spring Street that have existing business professional uses from Gateway Commercial (GWC) to Business Professional (BP). c. General Plan Amendment No. 2018-02 changes the land use designation of parcels along Main Street between Interstate 15 and Flint Street from Gateway Commercial (GWC) to General Commercial (GC). 3. The proposed ZC will permit reasonable development of the area consistent with its constraints and will make the area more compatible with adjacent properties. a. Adjacent properties along Spring Street have been developed under the M1-Limited Manufacturing Zone development standards. The proposed ZC will make the parcels subject to this proposed zone change to the M1-Limited Manufacturing Zone more consistent with adjacent properties. 4. The proposed ZC would establish a land use density, intensity and usage more in character with the subject property’s location, access and constraints. a. Properties along Spring Street have developed as an enclave of manufacturing uses, which the City encourages in order to provide jobs and a balance of land uses for the community. b. The subject properties along Main Street are adjacent to Interstate 15 and its southbound off-ramp and southbound on-ramp. As such, businesses and services that attract freeway motorists, such as those allowed by the General Commercial (C-2) zone, are the highest and best use of properties with quick access from the freeway. c. The Specific Plan (SP) zoning designation identifies that area that will be governed by the Downtown Elsinore Specific Plan (DESP) that is responsive to the unique location and development potential of the downtown area. 5.In accordance with the requirements of the California Environmental Quality Act (CEQA), impacts have been reduced to a less than significant level, or in the case where impacts remain, a statement of overriding considerations must be adopted to justify the merits of project implementation. Ord. No. 2018- Page 3 of 5 a. The DESP retains the overall development potential or recommends less intense uses as the existing 2011 DMP. In 2011, the Council of the City certified the Program Environmental Impact Report (PEIR) (SCH No. 2005121019) and adopted the City’s 2011 General Plan Update, 2008-2014 Housing Element, Climate Action Plan, and the 2011 Downtown Master Plan (DMP). The PEIR analyzed the scope and nature of development proposed to meet the goals of downtown development as set out in the DMP along with identifying measures to mitigate, to the extent feasible, the significant adverse project and cumulative impacts associated with downtown development under the DMP. b. In addition to serving as the environmental document for the approval of the 2011 General Plan Update, Housing Element, Climate Action Plan, and DMP, the PEIR was intended by the City to be the basis for compliance with CEQA for future discretionary actions. Under CEQA guidelines for using program EIRs with later activities, if a proposed later activity involves no new or substantially more severe significant effects and no new mitigation measures would be required, a program EIR is deemed to have adequately analyzed the later activity for CEQA purposes and no further review under CEQA is required. c. The DESP represents a reimagining of the DMP rather than a substantial revision. The PEIR included an analysis of the environmental effects and sets out mitigation measures needed to minimize or eliminate any identified impacts related to downtown development under the DMP. The overall development potential within the boundaries of the original DMP remains substantially unchanged under the DESP such that there are no new or substantially more severe significant effects and no new mitigation measures are necessary. Accordingly, PEIR serves as the required environmental documentation for the DESP, the General Plan Amendment and ZC. Section 3. Based upon the evidence presented, both written and testimonial, and the above findings, the Council hereby approves ZC No. 2018-02, making the following zone changes to the City of Lake Elsinore Official Zoning Map (Zoning Map), as shown in attached Exhibit 1. a. In accordance with Exhibit 1; change the Zoning Map designation from Gateway Commercial (GWC) to Limited Manufacturing (M-1) for Assessor’s Parcel Nos. 377-242- 003 through -007, -012, -013, -023, 028 and -029; and , b. In accordance with Exhibit 1; change the change the Zoning Map designation from Gateway Commercial (GWC) to General Commercial (C-2) for Assessor’s Parcel Nos. 377-242-014 through -016, -018, -020 through -022, and -030; and 377-243-001 through -011, -013, -015 through -019; and, c. In accordance with Exhibit 1; change the change the Zoning Map designation from Business Professional (BP), Commercial Mixed Use (CMU), Downtown Recreation (DR), Floodway (F), General Commercial (C-2), High Density Residential (R-3), Medium Density Residential (MD), Open Space (OS), Public Institutional (PI), and Residential Mixed Use (RMU) to the Specific Plan Zone (SP) for properties located from Flint Street along its northern edge, southwesterly to the edge of the Lake and generally bounded by Riley Street and the Lake Elsinore Outlet Channel on the west and Ellis Street and Chestnut Street on the east. Ord. No. 2018- Page 4 of 5 Section 4. Severability.If any provision of this Ordinance or its application is held invalid by a court of competent jurisdiction, such invalidity shall not affect other provisions, sections, or applications of the Ordinance which can be given effect without the invalid provision or application, and to this end each phrase, section, sentence, or word is declared to be severable. Section 5. Effective Date.This Ordinance shall become effective at 12:01 a.m. on the 31 st day after the date of adoption. Section 6. Certification. The City Clerk shall certify to the passage of this Ordinance and shall cause a synopsis of the same to be published according to law. Passed and Adopted on this 9th day of October 2018. ____________________________ Natasha Johnson Mayor Attest: Susan M. Domen, MMC City Clerk STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Susan M. Domen, MMC, City Clerk of the City of Lake Elsinore, do hereby certify that the foregoing Ordinance No. 2018- was introduced at the Regular meeting of September 25, 2018, and adopted by the City Council of the City of Lake Elsinore at its Regular meeting of October, 9th by the following vote: AYES: NOES: ABSENT: ABSTAIN: I further certify that said Synopsis was published as required by law in a newspaper of general circulation in the City of Lake Elsinore, California on the _____day of __________, 2018, and on the ______day of _________, 2018. ____________________________ Susan M. Domen, MMC City Clerk Ord. No. 2018- Page 5 of 5 Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-846 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: ReportIn Control: City Council / Successor Agency Agenda Number: 13) Page 1 City of Lake Elsinore Printed on 10/4/2018 REPORT TO CITY COUNCIL TO:Honorable Mayor and Members of the City Council FROM:Grant Yates, City Manager PREPARED BY:Jim Jensen, IT Manager DATE:October 9th, 2018 SUBJECT:Procurement of Products and Services for the Deployment of Audio and Camera Surveillance Systems at the Historic Downtown Parking Lot with Millennium Alarm Systems, Inc. Recommendation 1.) Approve the purchase of audio products and services from Millennium Alarm Systems, Inc. in the amount of $17,990.00. 2.) Approve the purchase of Camera Surveillance products and services from Millennium Alarm Systems, Inc. in the amount of $48,448.76. 3.) Waive the formal bidding process per Municipal Code Section 3.08.070(G) for purchases Millennium Alarm Systems, Inc. since it was the vendor that the City selected to implement the camera surveillance system and access control infrastructure. The City will realize a significant savings in integration of the hardware, and related upgrades because they are already aware of the system needs. The City has also established government pricing from this vendor. Background Over the past few years, as the City of Lake Elsinore has grown, and the increase for surveillance systems have become a necessity. The City has implemented a new access control system which allows us to integrate our camera systems. Discussion Surveillance camera systems can be a cost-effective way to deter, document, and reduce crime. Research has shown that surveillance cameras result in reduced crime, even beyond the areas with camera coverage. The cost savings associated with crimes averted through camera systems are significant. Video footage documenting criminal activity and identifying perpetrators and witnesses may also aid in investigations and prosecutions, increasing police and prosecutorial efficiency, benefiting crime victims whose cases are able to be closed using video evidence, and incapacitating a greater number of offenders from committing future crimes. While surveillance cameras alone are not a silver bullet to preventing all crime, they are a beneficial tool whose value should not be underestimated. Furthermore, with respect to the new Main Street Parking Lot, they are an important means of protecting the City’s investment in this much needed community improvement and ensuring that it continues to be an amenity that is safe and welcoming for patrons of the local businesses and services. Fiscal Impact The upfront cost for the proposed solution is $66,438.76 for the Hardware upgrades and new audio system; $17,990.00 for the audio equipment and wireless capabilities; and $48,448.76 for camera surveillance system. Exhibits A) Millennium Alarm Systems, Inc – Audio Requirements B) Millennium Alarm Systems, Inc – Camera Surveillance Requirements     SHORT FORM PURCHASE OF SERVICE CONTRACT The parties to this Short Form Purchase of Goods and/or Services Contract (Contract) do mutually agree and promise as follows: 1.Parties:The parties to this Contract are the CITY OF LAKE ELSINORE, a municipal corporation (City) and the following named Contractor: Name: Millennium Alarm Systems Street Address:5777 W. Century Blvd. # 1755 City/State/Zip: Los Angeles, CA 90045 Telephone:(310) 337-1108 Fax: Email: Niels@masinc2000.com Taxpayer ID #:95-4711700 City Business License #:023176 2.Term: The effective date of this contractis 9/19/2018 and it terminates unless sooner terminated as providedherein. 3.Contractor’s Obligations: (a)To the satisfaction of the City’s Project Manager, Contractor shall provide the following goods and/or services: (Attach extra sheet/s if necessary) Parking Lot Audio System Compensation:Contractor’stotalcompensation for the goods and/or services performed under this Contract is $17,990.00 , to be paid as (check one): (1) X lump sum upon completion of all Contractor’s Obligations; (2) lump sum per-task in the amounts indicated below, payable upon completion of each task; (3) lump sum per-task in the amounts indicated below, payable in monthly installments not to exceed the percentage completion of each task; (4) per attached written quote, up to a guaranteed not-to-exceed amountof $17,990.00 . Task Amount Install Audio Equipment required for the CC parking Lot to provide Sound and Wireless capabilities. $17,990.00 5.Signatures:These signatures attest theparties’ agreement hereto: CONTRACTOR: By: (b)Contractor shall perform the above- referenced services or delivery the required goods at or to the following specified location/s: (Attach extra sheet/s if necessary) Cultural Center 183 N. Main St., Lake Elsinore 4.Supplemental Conditions:This Contract is subject to the Supplemental Conditions attached hereto, which are incorporated herein by reference. CITY OF LAKE ELSINORE: By: City Manager By: City Project Manager By: ___________________________________ City Clerk Approved as to content/Insurance: By: City Purchasing Agent/Risk Manager Service Contract 2 City of Lake Elsinore SUPPLEMENTAL CONDITIONS 1.Independent Contractor. It is expressly agreed that Contractor is to perform or deliver the goods and/or services described herein as an independent contractor pursuant to California Labor Code Section 3353, under the control of the City as to the result of his work only but not as to the means by which such result is accomplished. Nothing contained herein shall in any way be construed to make Contractor or any of itsagents or employees, an agent, employee or representative of the City. Contractor shall be entirely responsible for the compensation of any assistants, employees, and subcontractors used by Contractor in providing said goods and/or services. 2.Cancellation. Either the City or Contractor may cancel this Contract at any time upon giving the other party five (5) calendar days' written notice of such cancellation. In the event of cancellation, the City shall be liable only to pay to the Contractor compensation for services rendered up to the date of the Contract's cancellation. Under no circumstances shall City be responsible for payment of lost profits, or damages beyond the total amount of compensation set in thisContract. 3.Assignment. Contractor shall not assign this Contract, or any part thereof, or any right of the Contractor hereunder without the prior written consent of theCity. 4.Indemnity. Contractor shall indemnify, defend and hold the City harmless from and against all claims, demands and causes of action for injury, death or damage to any person or property that may arise or result from Contractor's performance of this Contract or from acts or omissions of any person(s) employed byContractor. 5.Anti-Discrimination. Contractor shall not discriminate against any employee or applicant for employment because of race, color, religious creed, age, sex, actual or perceived sexual orientation, national origin, disability as defined by the American with Disabilities Act (42 U.S.C. § 12010, et seq.) or veteran’s status. To the extent applicable, Contractor shall comply with all federal, state, and local laws regarding non-discrimination, equal employment opportunity, affirmative action and occupational-safety-health concerns, shall comply with all applicable rules and regulations thereunder, and shall comply with same as each may be amended from time to time. 6.Legal Responsibilities. The Contractor shall keep itself informed of State, and Federal laws and regulations and the Lake Elsinore Municipal Code which in any manner affect those employed by it or in any way affect the performance of its service pursuant to this Agreement. The Contractor shall at all times observe and comply with all such laws and regulations. The City, and its officers and employees, shall not be liable at law or in equity occasioned by failure of the Contractor to comply with this section. 7.Insurance. During the entire term of this Contract and any extension or modification thereof, the Contractor shall keep in effect insurance policies meeting the following insurance requirements: 7.1 Commercial General and Automobile LiabilityInsurance. Service Contract 3 City of Lake Elsinore Contractor, at its own cost and expense, shall maintain commercial general insurance in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence, coverage and automobile liability insurance in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence for the term of this Agreement in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence, combined single limit coverage for risks associated with the work contemplated by this Agreement. If a Commercial General Liability Insurance or an Automobile Liability form or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement or the general aggregate limit shall be at least twice the required occurrence limit. Such coverage shall include but shall not be limited to, protection against claims arising from bodily and personal injury, including death resulting therefore, and damage to property resulting from activities contemplated under this Agreement, including the use of owned and non-owned automobiles. The following endorsements shall be attached to thepolicy: 7.1.1 Policy shall cover on an "occurrence basis." 7.1.2 Policy must cover personal injuries as well as bodily injuries. Exclusion of contractual liability must be eliminated from personal injury endorsement. 7.1.3 Broad form property damage endorsement must beattached. 7.1.4 Policy must cover contractual liability by amending the definition of "incidental contract" to include any writtencontract. 7.1.5 The City, its officers and employees shall be named by endorsement as an additional insured, and the policy shall stipulate that this insurance will operate as primary insurance and that no other insurance effected by the City will be called upon to contribute to any loss suffered by Contractor hereunder. 7.2 Worker's Compensation. The Contractor, at its own cost and expense shall carry and maintain statutory Worker's Compensation Insurance and Employer's Liability with limits of not less than One Million Dollars ($1,000,000) with an insurance carrier satisfactory to the City. In the event Contractor is self-insured, it shall furnish the City with a Certificate of Permission to Self-Insure signed by the Department of Industrial Relations Administration of Self-Insurance in Sacramento, California. If any injury occurs to any employee of Contractor for which the employee, or his dependents in the event of his death, is entitled to compensation from the City, the City mayretain out of sums due the Contractor under this Contract an amount sufficient to cover such compensation as fixed by said Act, until such compensation is paid or until it is determined that no compensation is due and if the City is compelled to Service Contract 4 City of Lake Elsinore pay such compensation, it will deduct and retain from the sums due the Contractor the amount so paid. 7.3 Additional Insurance Provisions. Said policies shall constitute primary insurance as to the City, and its officers, agents, and employees, so that other insurance policies held by or for them or the City’s self-insurance program shall not be required to contribute to any loss covered under the Contractor's insurance policy or policies. 7.4 Coverage Verification. 8.4.1 Upon notification of receipt by the City of a notice of cancellation, major change in coverage or expiration, Contractor shall file with the City a certified copy of the required new or renewalpolicy. 8.4.1 If, at any time during the life of the Contract or any extension thereof, Contractor fails to maintain the required insurance in full force and effect, all work under the Contract shall be discontinued immediately and all payments due or that become due to the Contractor will be withheld until notice is received by the City that the required insurance has been restored to full force and effect and that the premiums therefore have been paid for a period satisfactory to the City. Any failure to maintain the required insurance will be sufficient cause for City to immediately terminate the Contract. 8.Payment of Prevailing Wages. Contractor is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 1600, et seq., (“Prevailing Wage Laws”), which require the payment of prevailing wage rates and the performance of other requirements on “Public Works” and “Maintenance” projects. If the services are being performed as part of an applicable “Public Works” or “Maintenance” project, as defined by the PrevailingWage Laws, and if the total compensation is $1,000 or more, Contractor agrees to fully comply with such Prevailing Wage Laws. Contractor shall determine the applicable prevailing rates and make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the services available to interested parties upon request, and shall post copies at the Contractor’s principal place of business and at the project site. Contractor shall defend, indemnify and hold the City, its elected officials, officers, employees and agents free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. The provisions of this Section may be waived in if inapplicable to the services provided hereunder.     SHORT FORM PURCHASE OF SERVICE CONTRACT The parties to this Short Form Purchase of Goods and/or Services Contract (Contract) do mutually agree and promise as follows: 1.Parties:The parties to this Contract are the CITY OF LAKE ELSINORE, a municipal corporation (City) and the following named Contractor: Name: Millennium Alarm Systems Street Address:5777 W. Century Blvd. # 1755 City/State/Zip: Los Angeles, CA 90045 Telephone:(310) 337-1108 Fax: Email: Niels@masinc2000.com Taxpayer ID #:95-4711700 City Business License #:023176 2.Term: The effective date of this contractis 9/19/2018 and it terminates unless sooner terminated as providedherein. 3.Contractor’s Obligations: (a)To the satisfaction of the City’s Project Manager, Contractor shall provide the following goods and/or services: (Attach extra sheet/s if necessary) Parking Lot Camera Surveillance System Compensation:Contractor’stotalcompensation for the goods and/or services performed under this Contract is $48,448.76 , to be paid as (check one): (1) X lump sum upon completion of all Contractor’s Obligations; (2) lump sum per-task in the amounts indicated below, payable upon completion of each task; (3) lump sum per-task in the amounts indicated below, payable in monthly installments not to exceed the percentage completion of each task; (4) per attached written quote, up to a guaranteed not-to-exceed amountof $48,448.76 . Task Amount Install Camera Surveillance System required for the CC parking Lot to provide Video and Surveillance capabilities. $48,448.76 5.Signatures:These signatures attest theparties’ agreement hereto: CONTRACTOR: By: (b)Contractor shall perform the above- referenced services or delivery the required goods at or to the following specified location/s: (Attach extra sheet/s if necessary) Cultural Center 183 N. Main St., Lake Elsinore 4.Supplemental Conditions:This Contract is subject to the Supplemental Conditions attached hereto, which are incorporated herein by reference. CITY OF LAKE ELSINORE: By: City Manager By: City Project Manager By: ___________________________________ City Clerk Approved as to content/Insurance: By: City Purchasing Agent/Risk Manager Service Contract 2 City of Lake Elsinore SUPPLEMENTAL CONDITIONS 1.Independent Contractor. It is expressly agreed that Contractor is to perform or deliver the goods and/or services described herein as an independent contractor pursuant to California Labor Code Section 3353, under the control of the City as to the result of his work only but not as to the means by which such result is accomplished. Nothing contained herein shall in any way be construed to make Contractor or any of itsagents or employees, an agent, employee or representative of the City. Contractor shall be entirely responsible for the compensation of any assistants, employees, and subcontractors used by Contractor in providing said goods and/or services. 2.Cancellation. Either the City or Contractor may cancel this Contract at any time upon giving the other party five (5) calendar days' written notice of such cancellation. In the event of cancellation, the City shall be liable only to pay to the Contractor compensation for services rendered up to the date of the Contract's cancellation. Under no circumstances shall City be responsible for payment of lost profits, or damages beyond the total amount of compensation set in thisContract. 3.Assignment. Contractor shall not assign this Contract, or any part thereof, or any right of the Contractor hereunder without the prior written consent of theCity. 4.Indemnity. Contractor shall indemnify, defend and hold the City harmless from and against all claims, demands and causes of action for injury, death or damage to any person or property that may arise or result from Contractor's performance of this Contract or from acts or omissions of any person(s) employed byContractor. 5.Anti-Discrimination. Contractor shall not discriminate against any employee or applicant for employment because of race, color, religious creed, age, sex, actual or perceived sexual orientation, national origin, disability as defined by the American with Disabilities Act (42 U.S.C. § 12010, et seq.) or veteran’s status. To the extent applicable, Contractor shall comply with all federal, state, and local laws regarding non-discrimination, equal employment opportunity, affirmative action and occupational-safety-health concerns, shall comply with all applicable rules and regulations thereunder, and shall comply with same as each may be amended from time to time. 6.Legal Responsibilities. The Contractor shall keep itself informed of State, and Federal laws and regulations and the Lake Elsinore Municipal Code which in any manner affect those employed by it or in any way affect the performance of its service pursuant to this Agreement. The Contractor shall at all times observe and comply with all such laws and regulations. The City, and its officers and employees, shall not be liable at law or in equity occasioned by failure of the Contractor to comply with this section. 7.Insurance. During the entire term of this Contract and any extension or modification thereof, the Contractor shall keep in effect insurance policies meeting the following insurance requirements: 7.1 Commercial General and Automobile LiabilityInsurance. Service Contract 3 City of Lake Elsinore Contractor, at its own cost and expense, shall maintain commercial general insurance in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence, coverage and automobile liability insurance in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence for the term of this Agreement in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence, combined single limit coverage for risks associated with the work contemplated by this Agreement. If a Commercial General Liability Insurance or an Automobile Liability form or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement or the general aggregate limit shall be at least twice the required occurrence limit. Such coverage shall include but shall not be limited to, protection against claims arising from bodily and personal injury, including death resulting therefore, and damage to property resulting from activities contemplated under this Agreement, including the use of owned and non-owned automobiles. The following endorsements shall be attached to thepolicy: 7.1.1 Policy shall cover on an "occurrence basis." 7.1.2 Policy must cover personal injuries as well as bodily injuries. Exclusion of contractual liability must be eliminated from personal injury endorsement. 7.1.3 Broad form property damage endorsement must beattached. 7.1.4 Policy must cover contractual liability by amending the definition of "incidental contract" to include any writtencontract. 7.1.5 The City, its officers and employees shall be named by endorsement as an additional insured, and the policy shall stipulate that this insurance will operate as primary insurance and that no other insurance effected by the City will be called upon to contribute to any loss suffered by Contractor hereunder. 7.2 Worker's Compensation. The Contractor, at its own cost and expense shall carry and maintain statutory Worker's Compensation Insurance and Employer's Liability with limits of not less than One Million Dollars ($1,000,000) with an insurance carrier satisfactory to the City. In the event Contractor is self-insured, it shall furnish the City with a Certificate of Permission to Self-Insure signed by the Department of Industrial Relations Administration of Self-Insurance in Sacramento, California. If any injury occurs to any employee of Contractor for which the employee, or his dependents in the event of his death, is entitled to compensation from the City, the City mayretain out of sums due the Contractor under this Contract an amount sufficient to cover such compensation as fixed by said Act, until such compensation is paid or until it is determined that no compensation is due and if the City is compelled to Service Contract 4 City of Lake Elsinore pay such compensation, it will deduct and retain from the sums due the Contractor the amount so paid. 7.3 Additional Insurance Provisions. Said policies shall constitute primary insurance as to the City, and its officers, agents, and employees, so that other insurance policies held by or for them or the City’s self-insurance program shall not be required to contribute to any loss covered under the Contractor's insurance policy or policies. 7.4 Coverage Verification. 8.4.1 Upon notification of receipt by the City of a notice of cancellation, major change in coverage or expiration, Contractor shall file with the City a certified copy of the required new or renewalpolicy. 8.4.1 If, at any time during the life of the Contract or any extension thereof, Contractor fails to maintain the required insurance in full force and effect, all work under the Contract shall be discontinued immediately and all payments due or that become due to the Contractor will be withheld until notice is received by the City that the required insurance has been restored to full force and effect and that the premiums therefore have been paid for a period satisfactory to the City. Any failure to maintain the required insurance will be sufficient cause for City to immediately terminate the Contract. 8.Payment of Prevailing Wages. Contractor is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 1600, et seq., (“Prevailing Wage Laws”), which require the payment of prevailing wage rates and the performance of other requirements on “Public Works” and “Maintenance” projects. If the services are being performed as part of an applicable “Public Works” or “Maintenance” project, as defined by the PrevailingWage Laws, and if the total compensation is $1,000 or more, Contractor agrees to fully comply with such Prevailing Wage Laws. Contractor shall determine the applicable prevailing rates and make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the services available to interested parties upon request, and shall post copies at the Contractor’s principal place of business and at the project site. Contractor shall defend, indemnify and hold the City, its elected officials, officers, employees and agents free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. The provisions of this Section may be waived in if inapplicable to the services provided hereunder. Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-847 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: MinutesIn Control: City Council / Successor Agency Agenda Number: 14) Page 1 City of Lake Elsinore Printed on 10/4/2018 City of Lake Elsinore Successor Agency Regular Meeting Minutes Tuesday, September 25, 2018 Call to order A Regular meeting of the Successor Agency of the City of Lake Elsinore was held in the Cultural Center, 183 North Main Street, on the above date. The meeting was called to order at 7:00 p.m. by Chair Johnson. Roll call Present: Members Hickman, Magee and Tisdale; Vice-Chair Manos and Chair Johnson. Absent: None Consent calendar It was moved by Vice-Chair Manos, seconded by Member Hickman, and unanimously carried to, approve the Consent Calendar. 1) SA Minutes of the Regular Meeting of September 11, 2018 – approved the minutes. 2) SA Warrant List Dated September 13, 2018 – received and filed. 3) SA Investment Report for August 2018 – received and filed. Adjournment The meeting adjourned at 8:05 p.m. to the Regular meeting of Tuesday, October 9, 2018, at 7:00 p.m. in the Cultural Center located at 183 N. Main Street, Lake Elsinore. Natasha Johnson Susan M. Domen, MMC Mayor City Clerk Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-848 Agenda Date: 10/9/2018 Status: Consent AgendaVersion: 1 File Type: WarrantsIn Control: City Council / Successor Agency Agenda Number: 15) Page 1 City of Lake Elsinore Printed on 10/4/2018 REPORT TO SUCCESSOR AGENCY BOARD OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE To:Honorable Agency Chairman and Members of the Successor Agency From:Grant Yates, Executive Director Prepared by:Frances Ramirez, Account Specialist II Approved by:Jason Simpson, Assistant Executive Director Date:October 16, 2018 Subject:Warrant List Dated September 27, 2018 Recommendation Receive and file. Background and Discussion The Warrant List is a listing of all general checks issued since the prior Warrant List. Exhibits: A -Warrant Summary B -Warrant List SEPTEMBER 27, 2018 SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE WARRANT SUMMARY FUND#FUND DESCRIPTION TOTAL 510 SUCCESSOR TO RDA AREA I, II & III 22,665.21$ 540 SUCCESSOR STADIUM CAPITAL 59,710.42 GRAND TOTAL 82,375.63$ Exhibit A 1 of 1 SEPTEMBER 27, 2018 SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE WARRANT LIST WARRANT#Vendor Name Amount 1387 LEIBOLD, MCCLENDON & MANN, PC 10,460.60$ 1417 LEIBOLD, MCCLENDON & MANN, PC 8,004.61 135027 LAKE ELSINORE STORM, LP 59,338.25 135041 SOUTHERN CALIFORNIA EDISON 44.67 135056 WILMINGTON TRUST, NATONAL ASSOCIATION 4,200.00 135059 XTREME HEATING & AIR CONDITIONING 327.50 GRAND TOTAL 82,375.63$ Exhibit B 1 of 1 Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: RES 2018-8 Agenda Date: 10/9/2018 Status: BusinessVersion: 1 File Type: ResolutionIn Control: City Council / Successor Agency Agenda Number: 16) Page 1 City of Lake Elsinore Printed on 10/4/2018 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Date:October 9, 2018 Subject: Community Facilities District No. 2007-4 (Makenna Court), Issuance of its Special Tax Bonds, Series 2018 Recommendations adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX BONDS, SERIES 2018 IN A PRINCIPAL AMOUNT NOT TO EXCEED $4,000,000 AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH Background On August 28, 2007, the City Council of the City of Lake Elsinore (City) adopted Resolution No. 2007-156 stating its intention to form Community Facilities District No. 2007-4 (District) pursuant to the Mello-Roos Community Facilities Act of 1982. The District is approximately 21 gross acres and is located in the northwestern portion of the City, northwest of Machado Street and southwest of Lakeshore Drive. The property within the District is being developed by D.R. Horton into a neighborhood being marketed as “McKenna Pointe.” The property within the District is planned for 81 single-family detached residential units. As of August 15, 2018, (the date of value of the Appraisal), D.R. Horton had completed and conveyed 46 homes to individual homeowners. As of such date, D.R. Horton owned 2 model homes, 22 homes under construction (16 of which were 95 percent complete and 15 of which were in escrow), and 11 finished lots. Between August 15, 2018, and October 1, 2018, D.R. Horton conveyed an additional 14 homes to individual homeowners. The following chart illustrates the ownership status of the District as of October 1, 2018. Ownership Status Total Developed Property Individually Owned 60 D.R. Horton Owned 21 Subtotal Developed 81 Total Units 81 D.R. Horton is required to provide an irrevocable letter of credit or cash deposit to secure payment of the special taxes levied on property within the District owned by D.R. Horton until it is responsible for less than 20% of the special tax levy within the District, as required by the City. The amount of the irrevocable letter of credit or cash deposit will be equal to two years of the special tax levy attributable to parcels owned by D.R. Horton as of the issuance date of the special tax bonds and will be released once D.R. Horton is responsible for 20% or less of the special tax levy. D.R. Horton expects to complete development and convey all remaining homes to be sold in the District to individual homeowners by March 2019. The Resolution before City Council authorizes the issuance of special tax bonds (the “2018 Special Tax Bonds”) to finance impact fees related to City capital improvements and Elsinore Valley Municipal Water District capacity charges and hardware fees in connection with the development of the District. The Resolution also authorizes the approval and execution of certain documents further described on the following pages. Discussion The proposed 2018 Special Tax Bonds are estimated to be approximately $2.6 million in par value with a final maturity of September 1, 2048 (30-year financing term). As previously mentioned, proceeds from the 2018 Special Tax Bonds will be used to finance impact fees related to City capital improvements and capacity charges and hardware fees of the Elsinore Valley Municipal Water District in connection with the development of the District. The final structure and payment schedule will be determined when the 2018 Special Tax Bonds are priced and sold, which is expected to be in late October or early November. The bond closing is expected to occur approximately two weeks after the pricing of the 2018 Special Tax Bonds. The following table highlights financing statistics of the 2018 Special Tax Bonds based on current market conditions. Summary of Financing Statistics¹ 2018 Special Tax Bonds Par Amount $2,620,000 Average Bond Yield 4.35% Estimated Cost to Home Owners FY 2019-20 Assessment²$1,526 Average Annual Assessment³$2,086 ¹Preliminary and subject to change; based on current market conditions ²First full year of the assessment; based on 81 individual homeowners. ³Annual assigned special tax increases at approximately 2% per year. As required under Section 5852.1 of the California Government Code (Code), below are the good faith estimates as provided by the Municipal Advisor and Underwriter: 1) As illustrated above, the true interest cost of the bonds is estimated at 4.35%, calculated as provided in Section 5852.1(a)(1)(A) of the Code. 2) The finance charge of the 2018 Special Tax Bonds, including original issue discount, underwriter’s discount, bond insurance, debt service reserve fund, and all other fees and charges paid to third parties, is estimated at $469,559. 3) Proceeds of the 2018 Bonds received by the District for the sale of the 2018 Special Tax Bonds, including the estimated principal amount of the proposed 2018 Bonds of $2,620,000 less the finance charges set forth in (2) above is equal to $2,150,461, which will be available to finance the project. 4) The total payment amount calculated as provided in Section 5852.1(a)(1)(D) of the Code is estimated at $4,998,679. The foregoing are estimates and the final costs will depend on market conditions and can be expected to vary from the estimated amounts set forth above. Documents to be Approved Approval of the Resolution will authorize the execution of the following documents which are included in the Agenda as Exhibits to this Report and which are available on file at the City Clerk’s Office. Preliminary Official Statement: The Preliminary Official Statement (POS) is the “offering document” for the 2018 Special Tax Bonds. It provides a description of the District, the 2018 Special Tax Bonds, the proposed development, and any other information that would be material to a prospective investor’s decision on whether to purchase the 2018 Special Tax Bonds. While the City’s counsel, consultants, and the underwriter have participated in preparing the POS, City Council and staff are ultimately responsibility for ensuring that the POS is accurate, contains no misleading information and does not omit any information necessary to make the POS not misleading to investors. Bond Indenture: The Bond Indenture is a contract entered into between the District and Wilmington Trust, National Association, as the appointed Trustee of the 2018 Special Tax Bonds. This document contains terms of the 2018 Special Tax Bonds including, but not limited to, the payment and redemption provisions, definition and pledge of revenues to pay the 2018 Special Tax Bonds, rights and duties of the Trustee, remedies upon a default in the payment of the 2018 Special Tax Bonds, and other related matters. Continuing Disclosure Certificate: Executed for the benefit of bondholders, the Continuing Disclosure Certificate obligates the District to file an annual report which includes, among other things, the most recent audited financial statements of the City and financial data of the District. The District is also required to report certain events which are significant to bondholders if and when they occur. Bond Purchase Agreement: Pursuant to the Bond Purchase Agreement, the District agrees to sell the 2018 Special Tax Bonds to the underwriter and the underwriter agrees to purchase the 2018 Special Tax Bonds, subject to typical closing conditions. City staff, the financial advisor, and bond counsel will sign off on the final pricing prior to the execution of the Bond Purchase Agreement. Form of Funding Agreement: Entered into by and between the City (on behalf of the District) and D.R. Horton, the Form of Funding Agreement constitutes a formal understanding of the financial obligations and responsibilities related to the improvements to be financed by the District. Form of Joint Community Facilities Agreement: Entered into by the District, D.R. Horton, and the Elsinore Valley Municipal Water District (the “Water District”), the Joint Community Facilities Agreement constitutes a formal understanding of the facilities proposed to be financed by the District and owned and operated by the Water District. Bond Counsel and the City Attorney have reviewed the attached financing documents on behalf of the District. If this resolution is approved, City staff will continue to work with the financing team to finalize all of the aforementioned documents. As previously mentioned, the pricing date would be targeted for some time in October or November. Fiscal Impact There is no cost to the City; however, the property owners are expected to pay approximately $1,526 per parcel starting in FY 2019-20 (first full year of the assessment), increasing at 2% per year through 2048, as illustrated in the table on the previous page. The average assessment over the life of the 2018 Special Tax Bonds is expected to be approximately $2,086. However, these figures will ultimately depend upon market conditions at the time of sale. Recommendation Adopt a Resolution of the City Council approving the issuance of the 2018 Special Tax Bonds in the principal amount not-to-exceed $4 million and the execution and delivery of bond financing documents. Exhibits A. Resolution B. Preliminary Official Statement C. Bond Indenture D. Continuing Disclosure Certificate E. Bond Purchase Agreement F. Form of Funding Agreement G. Form of Joint Community Facilities Agreement H. Appraisal Report I.Good Faith Estimate RESOLUTION NO. 2018-___ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX BONDS, SERIES 2018 IN A PRINCIPAL AMOUNT NOT TO EXCEED $4,000,000 AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH Whereas,on August 28, 2007, the City Council (Council) of the City of Lake Elsinore (City) adopted Resolution No. 2007-156 stating its intention to form City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) (CFD or District) pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (Act); and, Whereas, on August 28, 2007, the Council also adopted Resolution No. 2007-157 stating its intention to incur bonded indebtedness within the District in the amount not to exceed $4,000,000 to finance the facilities and improvements identified in Resolution No. 2007-156 (Improvements); and the incidental expenses to be incurred in financing the Improvements and forming and administering the District (Incidental Expenses); and, Whereas,after a noticed Public Hearing, on October 9, 2007, the Council adopted Resolution Nos. 2007-177 and 2007-178 which formed the District and called a special election on October 9, 2007, within the District on three propositions relating to the levying of the special taxes, the incurring of bonded indebtedness and the establishment of an appropriations limit for the District, which were approved by more than two-thirds vote by the qualified electors on October 9, 2007; and, Whereas,subsequent to the formation of the District, the District received a petition signed by the owner of property within the District, requesting that the District (i) approve a new Rate and Method of apportionment for CFD No. 2007-4, (ii) increase the amount of bonded indebtedness authorized to be incurred by the District from $4,000,000 to $6,000,000, to finance the Improvements and the Incidental Expenses and (iii) to include the services set forth in the definition of Services in the First Amended and Restated Rate and Method of Apportionment for the District as services authorized to be provided by the District (Prior Changes); and, Whereas,after a duly noticed Public Hearing, on December 13, 2016, the Council adopted Resolution No. 2016-146 which approved the Prior Changes and called a Special Election on December 13, 2016, within the District on three propositions relating to the Prior Changes, which were approved by more than two-thirds vote by the qualified electors on December 13, 2016; and, Whereas,subsequent to the Prior Changes, the District received a petition signed by Western Pacific Housing, Inc., a Delaware corporation (Developer), requesting that the District approve a new Rate and Method of Apportionment for CFD No. 2007-4; and, Whereas,on July 25, 2017, following the close of a noticed public hearing, the Council adopted Resolution No. 2017-093, which called a Special Election on July 25, 2017, within CFD No. 2007- 4 on the approval of the Second Amended and Restated Rate and Method (Second Amended Rate and Method); and, CC Reso. No. 2018- Page 2 of 5 Whereas,on July 25, 2017, a Special Election was held within CFD No. 2007-4 at which the qualified electors approved by more than a two-thirds vote, the Second Amended Rate and Method for CFD No. 2007-4; and, Whereas,the legislative body of the District desires to issue a first series of bonds for the District at this time under the Act to finance certain public facilities which the District is authorized to finance; and, Whereas,the District desires to accomplish the financing of certain public facilities through the issuance of bonds in an aggregate principal amount not to exceed $4,000,000.00 designated as the “City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Special Tax Bonds, Series 2018” (Bonds); and, Whereas, in order to affect the issuance of the Bonds, the District desires to enter into various agreements and approve certain documents in substantially the forms presented herein; and, Whereas,based on the appraisal of real property prepared by Kitty Siino & Associates, Inc. (Appraisal) of property within the District, the value of the real property in the District subject to the special tax to pay debt service on the Bonds is more than three times the sum of the principal amount of the Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special assessment levied on property within the District as calculated in the manner set forth in Section 53345.8(a) of the Act; and, Whereas,the Council has determined in accordance with Section 53360.4 of the Act that a negotiated sale of the Bonds to Stifel, Nicolaus & Company, Incorporated (Underwriter) in accordance with the terms of the Bond Purchase Agreement for the Bonds to be entered into by the District and the Underwriter (Bond Purchase Agreement) approved as to form by this City Council herein will result in a lower overall cost to the District than a public sale; and, Whereas,in order to facilitate the funding of the Improvements, the legislative body of the District desires to enter into a Funding Agreement (Funding Agreement) with the Developer, and the form of the Funding Agreement is on file with the City Clerk; and, Whereas,the District, the Developer and the Elsinore Valley Municipal Water District (Water District) propose to enter into a Joint Community Facilities Agreement (JCFA) with the Elsinore Valley Municipal Water District (Water District) relating to certain facilities proposed to be financed by the District and owned and operated by the Water District, and the form of the JCFA is on file with the City Clerk; and, Whereas,pursuant to Government Code Section 8855, the District is required to adopt a debt management policy; and, Whereas,the District has determined to adopt the City’s Debt Management Policy adopted by the Council on July 11, 2017, as the Debt Management Policy of the District. NOW, THEREFORE, THE CITY COUNCIL, ACTING AS THE LEGISLATIVE BODY OF CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT), DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOW: Section 1. Each of the above recitals is true and correct. CC Reso. No. 2018- Page 3 of 5 Section 2. The issuance of the Bonds is hereby authorized in an aggregate principal amount not to exceed $4,000,000.00, with the exact principal amount to be determined by the official signing the Bond Purchase Agreement in accordance with Section 5 below. The Council hereby determines that it is prudent in the management of the District’s fiscal affairs to issue the Bonds. The Bonds shall mature on the dates and pay interest at the rates set forth in the Bond Purchase Agreement to be executed on behalf of the District in accordance with Section 5 hereof. All other provisions of the Bonds shall be governed by the terms and conditions of the Bond Indenture (Indenture), which Indenture shall be substantially in the form on file with the City Clerk, with such additions thereto and changes therein as the officer or officers executing the same deem necessary to enhance the security for the Bonds, to cure any ambiguity or defect therein, to insert the offering price(s), interest rate(s), selling compensation, principal amount per maturity, redemption dates and prices and such other related terms and provisions as limited by Section 5 hereof or to conform any provisions therein to the Bond Purchase Agreement or the Official Statement delivered to the Underwriter of the Bonds. Approval of such changes shall be conclusively evidenced by the execution and delivery of the Indenture by one of the following: the Mayor, the City Manager, the Assistant City Manager, or their written designees (each, an Authorized Officer and collectively, the Authorized Officers), each of whom is authorized to execute the Indenture. Capitalized terms used in this Resolution which are not defined herein have the meanings ascribed to them in the Indenture. Section 3. The Bonds shall be executed on behalf of the District by the manual or facsimile signature of the Mayor of the City or his or her written designee and be attested by the manual or facsimile signature of the City Clerk. Wilmington Trust, National Association is hereby appointed to act as trustee, registrar and transfer agent for the Bonds. Section 4. The covenants set forth in the Indenture to be executed in accordance with Section 2 above are hereby approved, shall be deemed to be covenants of the Council and shall be complied with by the District and its officers. The Indenture shall constitute a contract between the District and the Owners of the Bonds. Section 5.The form of the Bond Purchase Agreement presented at this meeting is hereby approved and each of the Authorized Officers is hereby authorized to execute the Bond Purchase Agreement, with such additions thereto and changes therein relating to dates and numbers as are necessary to conform the Bond Purchase Agreement to the dates, amounts and interest rates applicable to the Bonds as of the sale date. Approval of such additions and changes shall be conclusively evidenced by the execution and delivery of the Bond Purchase Agreement by one or more of such Authorized Officers; provided, however, that the Bond Purchase Agreement shall be signed only if the Underwriter’s discount does not exceed $45,000.00 and only if the true interest cost on the Bonds does not exceed 5.25 percent. Each of the Authorized Officers is authorized to determine the day on which the Bonds are to be priced in order to attempt to produce the lowest borrowing cost for the District and may reject any terms presented by the Underwriter if determined not to be in the best interest of the District. Section 6. The form of the Continuing Disclosure Certificate presented at this meeting is hereby approved and each of the Authorized Officers is hereby authorized and directed to execute the Continuing Disclosure Certificate in the form hereby approved, with such additions therein and changes thereto as the officer or officers executing the same deem necessary to cure any defect or ambiguity therein, with such approval to be conclusively evidenced by the execution and delivery of such certificate. CC Reso. No. 2018- Page 4 of 5 Section 7. The form of the Preliminary Official Statement presented at this meeting is hereby approved and the Underwriter is hereby authorized to distribute the Preliminary Official Statement to prospective purchasers of the Bonds in the form hereby approved, together with such additions thereto and changes therein as are determined necessary by the Authorized Officers to make such Preliminary Official Statement final as of its date for purposes of Rule 15c2-12 of the Securities and Exchange Commission. Each of the Authorized Officers is hereby authorized to execute a final Official Statement in the form of the Preliminary Official Statement, together with such changes as are determined necessary by the Authorized Officers, to make such Official Statement complete and accurate as of its date. The Underwriter is further authorized to distribute the final Official Statement for the Bonds and any supplement thereto to the purchasers of the Bonds upon the execution of the final Official Statement as described above. Section 8. In accordance with the requirements of Section 53345.8 of the Act, based on the Appraisal, the legislative body of the District hereby determines that the value of the real property in the District subject to the special tax to pay debt service on the Bonds is more than three times the principal amount of the Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special assessment levied on property within the District, all as calculated in the manner provided in Section 53345.8(a) of the Act. Section 9.Each Authorized Officer is authorized to provide for all services necessary to affect the issuance of the Bonds. Such services shall include, but not be limited to, printing the Bonds, obtaining legal services, trustee and paying agent services and any other services deemed appropriate as set forth in a certificate of such Authorized Officer. Each Authorized Officer is authorized to pay for the cost of such services, together with other costs of issuance, from Bond proceeds deposited pursuant to the Indenture. Section 10. The forms of the Funding Agreement and the JCFA on file with the City Clerk are each approved as to form, and each of the City Manager, Assistant City Manager, and their written designees, is authorized to execute the Funding Agreement and the JCFA in substantially the forms on file with the City Clerk, together with such changes as are approved by the officer executing the same, with the approval of such changes to be conclusively evidenced by the execution and delivery thereof. Section 11. The Authorized Officers, the Clerk of the City and the other officers and staff of the City and the District responsible for the fiscal affairs of the District are hereby authorized and directed to take any actions and execute and deliver any and all documents as are necessary to accomplish the issuance, sale and delivery of the Bonds in accordance with the provisions of this Resolution and the fulfillment of the purposes of the Bonds as described in the Indenture, including, in the discretion of any of the Authorized Officers, the execution of a letter of credit or cash depository agreement with the Developer and Wilmington Trust, National Association relating to any security provided by the Developer with respect to the special taxes to be levied within the District, and providing certificates to the Underwriter as to the accuracy of any information relating to the District which is included within the Official Statement. Any document authorized herein to be signed by the Clerk of the City may be signed by a duly appointed deputy clerk. Section 12.The District hereby adopts the City’s Debt Management Policy, as amended, supplemented and restated from time to time, as the debt management policy of the District pursuant to California Government Code Section 8855. Section 13. This Resolution shall be effective upon its adoption. CC Reso. No. 2018- Page 5 of 5 Section 14. The City Clerk shall certify to the adoption of this Resolution and enter it into the book of original Resolutions. Passed and Adopted on this 9th day of October 2018. _____________________________ Natasha Johnson Mayor Attest: _____________________________ Susan M. Domen, MMC City Clerk STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Susan M. Domen, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify that Resolution No. 2018-______ was adopted by the City Council of the City of Lake Elsinore, California, at the Regular meeting of October 9, 2018, and that the same was adopted by the following vote: AYES: NOES: ABSENT: ABSTAIN: ___________________________ Susan M. Domen, MMC City Clerk Stradling Yocca Carlson & Rauth Draft of 9/25/18 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would beunlawful.PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER __, 2018 NEW ISSUE—BOOK-ENTRY ONLY NO RATING In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds described herein is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See the caption “TAX EXEMPTION” with respect to tax consequences relating to the Bonds. $2,620,000* CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BONDS, SERIES 2018 Dated: Delivery Date Due: September 1, as shown on inside cover page The City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Special Tax Bonds, Series 2018 (the “Bonds”) are being issued by City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) (the “District”) to: (i) finance certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City and water and sewer facilities to be owned and operated by the Elsinore Valley Municipal Water District; (ii) fund a reserve account for the Bonds; and (iii) pay costs of issuance for the Bonds. The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Act”), and pursuant to that certain Bond Indenture, dated as of November 1, 2018 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”). The Bonds are payable from Net Taxes (as defined herein) derived from a certain annual Special Tax (as defined herein) to be levied on taxable parcels within the District and from certain other funds pledged under the Indenture, all as further described herein. The Special Tax is to be levied according to the rate and method of apportionment approved by the City Council of the City and the qualified electors within the District. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The Bonds will be issued in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Individual purchases of the Bonds may be made in principal amounts of $5,000 and integral multiples thereof and will be in book-entry form only. Purchasers of the Bonds will not receive certificates representing their beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable except for transfer to another nominee of DTC or as otherwise described herein. Interest on the Bonds will be payable on each March 1 and September 1, commencing March 1, 2019. Principal of and interest on the Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants, who will remit such payments to the Beneficial Owners of the Bonds. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY OR GENERAL OBLIGATIONS OF THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET TAXES AND OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN. The Bonds are subject to optional redemption, special mandatory redemption and mandatory sinking fund redemption prior to maturity as set forth herein. See the caption “THE BONDS — Redemption.” Investment in the Bonds involves risks that are not appropriate for certain investors. Certain events could affect the ability of the District to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS” for a discussion of certain risk factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the Bonds. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY. IT IS NOT INTENDED TO BE A SUMMARY OF THE SECURITY OR TERMS OF THIS ISSUE. INVESTORS ARE ADVISED TO READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. MATURITY SCHEDULE (See Inside Cover Page) The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the City and the District by Leibold McClendon, & Mann, Irvine, California, City Attorney, and for the District by Stradling Yocca Carlson & Rauth, a Professional Corporation, Disclosure Counsel, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. It is anticipated that the Bonds in book-entry form will be available for delivery on or about November __, 2018. [STIFEL LOGO] Dated: October __, 2018 *Preliminary, subject to change. $2,620,000* CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BONDS, SERIES 2018 MATURITY SCHEDULE BASE CUSIP®†*50963N $__________ Serial Bonds Maturity Date (September 1) Principal Amount Interest Rate Yield Price CUSIP No.† $ %% $_________ _____% Term Bonds due September 1, 20__ Yield: _____% Price: _______ CUSIP No. †___ $_________ _____% Term Bonds due September 1, 20__ Yield: _____% Price: _______ CUSIP No. †___ *Preliminary, subject to change. *†CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Global Market Intelligence on behalf of The American Bankers Association. This information is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services Bureau. CUSIP numbers have been assigned by an independent company not affiliated with the City, the District or the Underwriter and are included solely for the convenience of the registered owners of the applicable Bonds. None of the City, the District or the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the applicable Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. CITY OF LAKE ELSINORE COUNTY OF RIVERSIDE, CALIFORNIA CITY COUNCIL Natasha Johnson, Mayor Steve Manos, Mayor Pro Tem Daryl Hickman, Councilmember Robert E. Magee, Councilmember Brian Tisdale, Councilmember CITY ADMINISTRATORS Grant Yates, City Manager Jason Simpson, Assistant City Manager CITY ATTORNEY Leibold McClendon, & Mann Irvine, California BOND AND DISCLOSURE COUNSEL Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California MUNICIPAL ADVISOR Urban Futures Incorporated Tustin, California SPECIAL TAX CONSULTANT Spicer Consulting Group, LLC Temecula, California APPRAISER Kitty Siino & Associates, Inc. Tustin, California TRUSTEE Wilmington Trust, National Association Costa Mesa, California Except where otherwise indicated, all information contained in this Official Statement has been provided by the City and the District. No dealer, broker, salesperson or other person has been authorized by the City, the District, the Trustee or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City, the District, the Trustee or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the District or any other parties described herein since the date hereof. All summaries of the Indenture or other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as a “plan,” “expect,” “estimate,” “project,” “budget,” or similar words. Such forward-looking statements include, but are not limited to certain statements contained in the information under the captions “THE DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN EVALUATING SUCH STATEMENTS, POTENTIAL INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS WHICH COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS. The City maintains a website. However, the information presented on such website is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds. i TABLE OF CONTENTS Page INTRODUCTION................................................................................................................................................1 The District.......................................................................................................................................................1 Sources of Payment for the Bonds....................................................................................................................3 Appraisal Report...............................................................................................................................................3 Description of the Bonds..................................................................................................................................4 Tax Exemption..................................................................................................................................................4 Professionals Involved in the Offering.............................................................................................................4 Continuing Disclosure......................................................................................................................................5 Parity Bonds for Refunding Purposes Only......................................................................................................5 Bond Owners’ Risks.........................................................................................................................................5 Other Information.............................................................................................................................................5 FINANCING PLAN.............................................................................................................................................6 Estimated Sources and Uses of Funds..............................................................................................................6 THE BONDS........................................................................................................................................................6 General Provisions............................................................................................................................................6 Debt Service Schedule......................................................................................................................................8 Redemption.......................................................................................................................................................9 Registration, Transfer and Exchange..............................................................................................................12 SOURCES OF PAYMENT FOR THE BONDS................................................................................................12 Limited Obligations........................................................................................................................................12 Special Taxes..................................................................................................................................................13 Reserve Account of the Special Tax Fund......................................................................................................18 No Teeter Plan................................................................................................................................................19 Parity Bonds for Refunding Purposes Only....................................................................................................19 THE DISTRICT..................................................................................................................................................19 General Description of the District.................................................................................................................19 Authorized Uses of Bond Proceeds................................................................................................................20 Appraisal Report.............................................................................................................................................20 Estimated Appraised Value-to-Lien Ratios....................................................................................................21 Direct and Overlapping Debt..........................................................................................................................24 Delinquency History.......................................................................................................................................28 PROPERTY OWNERSHIP AND THE DEVELOPMENT...............................................................................28 General............................................................................................................................................................28 Planned Development Within the District......................................................................................................29 D.R. Horton ....................................................................................................................................................29 SPECIAL RISK FACTORS...............................................................................................................................30 Risks of Real Estate Secured Investments Generally.....................................................................................31 Tax Cuts and Jobs Act....................................................................................................................................31 Insufficiency of Special Tax Revenues...........................................................................................................31 Concentration of Ownership...........................................................................................................................33 Property Values...............................................................................................................................................33 Natural Disasters.............................................................................................................................................34 Hazardous Substances.....................................................................................................................................34 Enforcement Delays – Bankruptcy.................................................................................................................35 FDIC/Federal Government Interests in Parcels..............................................................................................35 Direct and Overlapping Indebtedness.............................................................................................................36 Payment of Special Taxes is not a Personal Obligation of the Property Owners ...........................................36 ii No Acceleration Provision..............................................................................................................................36 Limited Obligations........................................................................................................................................36 Ballot Initiatives..............................................................................................................................................37 Proposition 218...............................................................................................................................................37 Shapiro Case...................................................................................................................................................38 Loss of Tax Exemption...................................................................................................................................38 No Ratings – Limited Secondary Market .......................................................................................................39 Limitations on Remedies................................................................................................................................39 Potential Early Redemption of Bonds from Prepayments or Assessment Bond Proceeds.............................39 CONTINUING DISCLOSURE..........................................................................................................................39 District Continuing Disclosure .......................................................................................................................39 Developer Continuing Disclosure...................................................................................................................40 TAX EXEMPTION............................................................................................................................................41 LEGAL OPINION..............................................................................................................................................42 ABSENCE OF LITIGATION............................................................................................................................42 NO RATING ......................................................................................................................................................43 UNDERWRITING .............................................................................................................................................43 FINANCIAL INTERESTS.................................................................................................................................43 MUNICIPAL ADVISOR ...................................................................................................................................43 MISCELLANEOUS...........................................................................................................................................43 APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.........................A-1 APPENDIX B CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION............................B-1 APPENDIX C FORM OF OPINION OF BOND COUNSEL................................................................C-1 APPENDIX D APPRAISAL REPORT..................................................................................................D-1 APPENDIX E SUMMARY OF THE INDENTURE............................................................................. E-1 APPENDIX F FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE.......................F-1 APPENDIX G FORM OF DEVELOPER CONTINUING DISCLOSURE AGREEMENT..................G-1 APPENDIX H BOOK-ENTRY ONLY SYSTEM..................................................................................H-1 [INSERT VICINITY MAP] [INSERT AERIAL PHOTOGRAPH] 1 $2,620,000* CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BONDS, SERIES 2018 INTRODUCTION The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices (collectively, the “Official Statement”), is to provide certain information concerning the issuance by City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) (the “District”) of its Special Tax Bonds, Series 2018 in the aggregate principal amount of $2,620,000*(the “Bonds”). The proceeds of the Bonds will be used to: (i) finance certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City and water and sewer facilities to be owned and operated by the Elsinore Valley Municipal Water District; (ii) fund a reserve account for the Bonds; and (iii) pay costs of issuance for the Bonds. The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Act”), and a Bond Indenture, dated as of November 1, 2018 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”). The Bonds are secured under the Indenture by a pledge of and lien upon Net Taxes (as such term is defined herein) and all moneys in the Special Tax Fund (other than the Administrative Expense Account therein) as described in the Indenture. This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement. The sale and delivery of Bonds to potential investors is made only by means of the entire Official Statement. All capitalized terms used in this Official Statement and not defined have the meanings set forth in Appendix E. The District General. The City of Lake Elsinore (the “City”) is located in the western portion of the County of Riverside (the “County”), California (the “State”). The District contains approximately 20.63 gross acres and approximately 15.82 net taxable acres, and is located within a developed area in the northwestern part of the City. Specifically, the District is located on the northwest of Machado Street, southwest of Lakeshore Drive is bordered by Herburn Street. The property within the District is being developed by Western Pacific Housing, Inc., a Delaware corporation (dba D.R. Horton America’s Builder) (“D.R. Horton”) into a neighborhood being marketed by D.R. Horton as “McKenna Pointe.” The property within the District is planned for 81 single-family detached residential units. As of the August 15, 2018 date of value of the Appraisal (as defined below), D.R. Horton had completed and conveyed 46 homes within the District to individual homeowners. As of such date, D.R. Horton owned 2 model homes, 22 homes under construction (16 of which were over 95% complete and 15 of which were in escrow), and 11 finished lots. Between August 15, 2018, and October 1, 2018, D.R. Horton conveyed an additional __ homes to individual homeowners. As part of a developed area in the City, major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District has been completed. D.R. Horton completed the construction of roadway improvements, water and wastewater improvements and connections to existing mains to serve the property within the District. The substantial majority of the in-tract infrastructure within the District, which primarily consists of streets for individual lot access and associated gutters and landscape *Preliminary, subject to change. 2 improvements, is complete. D.R Horton expects to commence construction of the in-tract improvements associated with the remaining lots that it owns within the District as home construction on such lots is completed. See the captions “THE DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT” for further information with respect to the District, D.R. Horton and development within the District. Formation Proceedings. The District was formed on October 9, 2007 pursuant to the Act. The Act was enacted to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness. Pursuant to the Act, on August 28, 2007, the City Council adopted Resolution No. 2007-156 (the “Resolution of Intention”), stating its intention to form the District and to authorize the levy of a special tax on the taxable property within the District, and Resolution No. 2007-157, stating its intention to incur bonded indebtedness in an aggregate principal amount not to exceed $4,000,000 for the purpose of financing the purchase, construction, expansion or rehabilitation of certain public facilities to serve the area within the District. Subsequent to a noticed public hearing on October 9, 2007, the City Council adopted Resolution Nos. 2007-177 and 2007-178 on October 9, 2007 (collectively the “Resolution of Formation”). The Resolution of Formation: (i) established the District; (ii) authorized the levy of a special tax (the “Special Tax”) within the District; (iii) determined the necessity to incur bonded indebtedness in an amount not to exceed $4,000,000 within the District; and (iv) called an election within the District on the propositions of incurring bonded indebtedness, levying the Special Tax and setting an appropriations limit. Subsequent to the formation of the District, the District received a petition signed by the owner of property within the District, requesting that the District (i) approve a new rate and method of apportionment, (ii) increase the amount of bonded indebtedness authorized to be incurred by the District from $4,000,000 to $6,000,000, and (iii) to include the services set forth in the definition of Services in the First Amended and Restated Rate and Method of Apportionment for the District as services authorized to be provided by the District (collectively, the “Prior Changes”). On December 13, 2016, the City Council adopted Resolution No. 2016-146 which approved the Prior Changes and called a special election on December 13, 2016, within the District on three propositions relating to the Prior Changes, which were approved by more than two-thirds vote by the qualified electors on December 13, 2016. Subsequent to the Prior Changes, the District received a petition signed by D.R. Horton, who purchased all of the property within the District on April 13, 2017, requesting that the District approve a new rate and method of apportionment for the District. On July 25, 2017, following the close of a noticed public hearing, the City Council adopted Resolution No. 2017-093, which called a special election on July 25, 2017. On July 25, 2017, a special election was held within the Districtat which the qualified electors approved by more than a two- thirds vote, the Second Amended Rate and Method for the District (the “Rate and Method”). A Notice of Second Amended and Restated Special Tax Lien for the District was recorded in the office of the County Recorder on August 7, 2017, as Document No 2017-0322957. On August 8, 2017, the City Council adopted Ordinance No. 2017-1379 (the “Ordinance”) which authorizes the levy of a special tax pursuant to the Rate and Method approved at the July 25, 2017election, a copy of which is attached hereto as Appendix A. 3 Sources of Payment for the Bonds Special Taxes. As used in this Official Statement, the term “Special Tax” means the annual Special Tax for Facilities (as defined in the Rate and Method) which has been authorized pursuant to the Act and the Rate and Method to be levied upon taxable property within the District. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” See the caption “THE DISTRICT.” Under the Indenture, the District has pledged to repay the Bonds and any Parity Bonds (as defined herein) from the Special Tax revenues remaining after the payment of certain annual Administrative Expenses of the District (the “Net Taxes”) and from other amounts in the Special Tax Fund (other than the Administrative Expense Account therein) established under the Indenture. The Special Taxes are the primary source of security for the repayment of the Bonds and any Parity Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds and any Parity Bonds are amounts held by the Trustee in the Special Tax Fund, including amounts held in the Reserve Account therein, to the limited extent described in the Indenture. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Reserve Account of the Special Tax Fund.” The Rate and Method authorizes the District to levy a Special Tax for Services (as defined in the Rate and Method). The Special Tax for Services is not pledged to and is not available to pay debt service on the Bonds. Foreclosure Proceeds. The District will covenant in the Indenture for the benefit of the owners of the Bonds and Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the Reserve Account is at least equal to the Reserve Requirement. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” There is no assurance that the property within the District can be sold for the appraised or assessed values described herein, or for a price sufficient to pay the principal of and interest on the Bonds in the event of a default in payment of Special Taxes by the current or future landowners within the District. See the caption “SPECIAL RISK FACTORS—Property Values.” EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY OR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET TAXES AND AMOUNTS HELD UNDER THE INDENTURE, AS MORE FULLY DESCRIBED HEREIN. Appraisal Report Kitty Siino & Associates, Inc. (the “Appraiser”) has conducted an Appraisal dated August 24, 2018 (the “Appraisal Report”) of certain land and existing improvements within the District to provide an estimate of the market value of the fee simple interest of such land and improvements. The Appraisal Report provides an estimate of the approximate market value of the “as-is” condition of the property in the District subject to the levy of Special Taxes, assuming that development of the property as currently planned will consist of 81 single- family detached residential units. Based on the assumptions and limiting conditions in the Appraisal Report, the Appraiser concluded that the minimum market value of all of the parcels within the District subject to the Special Tax was $24,829,781 as of August 15, 2018 (the “Date of Value”). 4 The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in Appendix D. The District makes no representation as to the accuracy of the Appraisal Report. See “THE DISTRICT — Appraisal Report” and “— Appraised Value-to-Lien Ratios.” There is no assurance that property within the District can be sold for the prices set forth in the Appraisal Report or that any parcel can be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by a property owner. See “THE DISTRICT,” “SPECIAL RISK FACTORS — Property Values” herein and Appendix D. Description of the Bonds The Bonds will be issued and delivered as fully registered Bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in the denominations of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. In the event that the book-entryonly system described herein is no longer used with respect to the Bonds, the Bonds will be registered and transferred in accordance with the Indenture. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.” Principal of, premium, if any, and interest on the Bonds is payable by the Trustee to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.” The Bonds are subject to optional redemption, special mandatory redemption and mandatory sinking fund redemption prior to maturity as described herein. See the caption “THE BONDS — Redemption.” For a more complete description of the Bonds and the basic documentation pursuant to which they are being sold and delivered, see the caption “THE BONDS” and Appendix E — “SUMMARY OF THE INDENTURE.” Tax Exemption In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See the caption “TAX EXEMPTION.” Set forth in Appendix C is the form of opinion of Bond Counsel expected to be delivered in connection with the issuance of the Bonds. For a more complete discussion of such opinion and certain tax consequences incident to the ownership of the Bonds, see the caption “TAX EXEMPTION.” Professionals Involved in the Offering Wilmington Trust, National Association, Costa Mesa, California, will act as Trustee under the Indenture. Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) is the Underwriter of the Bonds. Certain proceedings in connection with the issuance and delivery of the Bonds are subject to the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel and Disclosure Counsel to the District in connection with the issuance of the Bonds. Certain legal matters will be passed on for the City and the District by Leibold McClendon, & Mann, Irvine, California, City Attorney, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. Other professional 5 services have been performed by Spicer Consulting Group, LLC, Temecula, California, as Special Tax Consultant (the “Special Tax Consultant”) and by Kitty Siino & Associates, Tustin, California, as Appraiser. For information concerning circumstances in which certain of the above-mentioned professionals, advisors, counsel and consultants may have a financial or other interest in the offering of the Bonds, see the caption “FINANCIAL INTERESTS.” Continuing Disclosure Pursuant to a Continuing Disclosure Certificate to be executed by the District (the “District Continuing Disclosure Certificate”), the District will agree to provide, or cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (“EMMA”), maintained on the Internet at http://emma.msrb.org, certain annual financial information and operating data and notices of certain enumerated events. These covenants are being made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12 adopted by the Securities and Exchange Commission (“Rule 15c2-12”). The Underwriter does not consider D.R. Horton to be an “obligated person” with respect to the Bonds for purposes of the Rule. Notwithstanding the foregoing, to assist in the marketing of the Bonds, D.R. Horton will agree to provide, or cause to be provided to EMMA, certain updates with respect to the development within the District and notices of certain enumerated events. See Appendix G for a description of the specific nature of the annual reports and enumerated event notices to be filed by D.R. Horton. See “CONTINUING DISCLOSURE,” Appendix F — “FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE” and Appendix G — “FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE.” Parity Bonds for Refunding Purposes Only The District will covenant in the Indenture not to issue additional indebtedness secured by the Net Taxes on a parity with the Bonds (“Parity Bonds”) other than for refunding all or a portion of the Bonds or Parity Bonds. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Parity Bonds for Refunding Purposes Only.” Other taxes and/or special assessments with liens equal in priority to the continuing lien of the Special Taxes may also be levied in the future on the property within the District, which could adversely affect the willingness of the landowners to pay the Special Taxes when due. See the captions “THE DISTRICT — Direct and Overlapping Debt” and “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.” Bond Owners’ Risks Certain events could affect the ability of the District to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS” for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds. The purchase of the Bonds involves risks, and the Bonds may not be appropriate investments for some types of investors. Other Information This Official Statement speaks only as of its date, and the information contained herein is subject to change. Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Bonds and the Constitution and laws of the State, as well as the proceedings of the City Council, acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws 6 and proceedings, and with respect to the Bonds, by reference to the Indenture. Capitalized terms not otherwise defined in this Official Statement have the meanings set forth in Appendix E. Copies of the Indenture and other documents and information are available for inspection and copies may be obtained from the City, 130 S. Main Street, Lake Elsinore, California, 92530, Attention: City Clerk. FINANCING PLAN Estimated Sources and Uses of Funds The following table sets forth the expected sources and uses of Bond proceeds and certain other funds on hand. Sources of Funds Principal Amount of Bonds $ Plus Net Original Issue Premium Total Sources $ Uses of Funds: Acquisition and Construction Fund $ Costs of Issuance Account(1) Reserve Account of the Special Tax Fund [Administrative Expense Account] Total Uses $ (1)To pay costs of issuance of the Bonds, including legal fees, underwriter’s discount, printing costs, Appraiser, Special Tax Consultant and Trustee fees. THE BONDS General Provisions The Bonds will be dated their date of delivery and will bear interest at the rates per annum set forth on the inside cover page hereof, payable semiannually on each March 1 and September 1, commencing March 1, 2019 (each, an “Interest Payment Date”), and will mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. The Bonds will be issued in fully registered form in denominations of $5,000 or any integral multiple thereof. Interest will be calculated on the basis of a 360-day year comprised of twelve 30-day months. Interest on any Bond will be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless: (i) such date of authentication is an Interest Payment Date, in which event interest will be payable from such date of authentication; (ii) the date of authentication is after the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day (each, a “Record Date”) but prior to the immediately succeeding Interest Payment Date, in which event interest will be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on the first Record Date, in which event interest will be payable from the dated date of the Bonds; provided, however, that if at the time of authentication of a Bond, interest is in default, interest on such Bond will be payable from the last Interest Payment Date to which the interest has been paid or made available for payment, or, if no interest has been paid or made available for payment on such Bond, interest on such Bond will be payable from its dated date. Interest on any Bond will be paid to the person whose name appears as its owner in the registration books held by the Trustee on the close of business on the Record Date. Principal of, premium, if any, due upon 7 redemption is payable upon presentation and surrender of the Bonds at the principal corporate trust office of the Trustee in Costa Mesa, California. The Bonds will be issued as fully registered bonds and will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository of the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in denominations of $5,000 and any integral multiple thereof. So long as DTC is the securities depository all payments of principal and interest on the Bonds will be made to DTC and will be paid to the Beneficial Owners in accordance with DTC’s procedures and the procedures of DTC’s Participants. See APPENDIX H — “BOOK-ENTRY-ONLY SYSTEM.” In the event the Bonds are not held in book-entry form, interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, to the Bondowner at its address on the registration books kept by the Trustee. Pursuant to a written request prior to theRecord Date of a Bondowner of at least $1,000,000 in aggregate principal amount of Bonds, payment will be made by wire transfer in immediately available funds to a designated account in the United States. 8 Debt Service Schedule The following table presentsthe annual debt service on the Bonds (including sinking fund redemptions), assuming that there are no optional or special mandatory redemptions. See the caption “—Redemption” below. Year Ending September 1 Principal Interest Total Debt Service $ $ $ Total $$$ 9 Redemption Optional Redemption.* The Bonds may be redeemed at the option of the District from any source of funds on any Interest Payment Date on or after ________ 1, 20__, in whole or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: Redemption Date Redemption Price ________ 1, 20__ and ________ 1, 20__103% ________ 1, 20__ and ________ 1, 20__102 ________ 1, 20__ and ________ 1, 20__101 ________ 1, 20__ and any Interest Payment Date Thereafter 100 In the event that the District elects to redeem Bonds as provided above, the District will give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notice to the Trustee will be given at least 30 but no more than 60 days prior to the redemption date, or by such later date as is acceptable to the Trustee. Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established by the Indenture, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption will be selected by the Trustee by lot and will be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows: Term Bonds Maturing September 1, 20__ Sinking Fund Redemption Date (September 1)Sinking Payments $ † †Maturity. The Bonds maturing on September 1, 20__ (the “20__ Term Bonds” and together with the 20__ Term Bonds, the “Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established by the Indenture, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption will be selected by the Trustee by lot and will be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows: *Preliminary, subject to change. 10 Term Bonds Maturing September 1, 20__ Sinking Fund Redemption Date (September 1)Sinking Payments $ † †Maturity. If the District purchases Term Bonds during the Fiscal Year immediately preceding one of the sinking fund redemption dates specified above, the District will notify the Trustee at least 45 days prior to the redemption date as to the principal amount purchased, and the amount purchased will be credited at the time of purchase to the next Sinking Fund Payment for the Term Bond so purchased, to the extent of the full principal amount of the purchase. All Term Bonds purchased will be cancelled pursuant to the Indenture. In the event of a partial optional redemption or special mandatory redemption of the Term Bonds, each of the remaining Sinking Fund Payments for such Term Bonds will be reduced, as nearly as practicable, on a pro rata basis. Special Mandatory Redemption from Special Tax Prepayments. The Bonds are subject to special mandatory redemption as a whole or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date, and will be redeemed by the Trustee, from any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxesfor one or more parcels in the District made in accordance with the Rate and Method (the “Prepayments”) deposited to the Redemption Account pursuant to the Indenture, plus amounts transferred from the Reserve Account pursuant to the Indenture, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date: Redemption Date Redemption Price Any Interest Payment Date [from _____ 1, 20__] through March 1, 20__103% September 1, 20__ and March 1, 20__102 September 1, 20__ and March 1, 20__101 September 1, 20__ and any Interest Payment Date thereafter 100 Notice of Redemption. So long as the Bonds are held in book-entry form, notice of redemption will be sent by the Trustee to DTC and not to the Beneficial Owners of the Bonds under the DTC book-entry only system. Neither the District nor the Trustee is responsible for notifying the Beneficial Owners, who are to be notified in accordance with the procedures in effect for the DTC book-entry system. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.” The Trustee will give notice, in the name of the District, of the redemption of Bonds. Such notice of redemption will: (i) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds selected for redemption, except that where all of the Bonds are subject to redemption, or all of the Bonds of one maturity are to be redeemed, the bond numbers of such issue need not be specified; (ii) state the date fixed for redemption and surrender of the Bonds to be redeemed; (iii) state the redemption price; (iv) state the place or places where the Bonds are to be redeemed; (v) in the case of Bonds to be redeemed only in part, state the portion of such Bond which is to be redeemed; (vi) state the date of issue of the Bonds as originally issued; (vii) state the rate of interest borne by each Bond being redeemed; and (viii) state any other descriptive information needed to identify accurately the Bonds being redeemed as specified by the Trustee. Such notice 11 will further state that on the date fixed for redemption, there will become due and payable on each Bond, or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon will cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Trustee will mail a copy of such notice of redemption, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register, and to the original purchaser of any Bonds; provided, however, so long as the Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. The actual receipt by the Owner of any Bond of notice of such redemption is not a condition precedent to redemption, and neither the failure to receive nor any defect in such notice will affect the validity of the proceedings for the redemption of such Bonds, or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as provided in the Indenture will be conclusive as against all parties and the Owner is not entitled to show that he or she failed to receive notice of such redemption. In addition to the foregoing notice, further notice will be given by the Trustee as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice will in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption will be sent not later than the date that notice of redemption is given to the Owners pursuant to the Indenture by first class mail or facsimile to the Depository and to any other registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds as determined by the Trustee and to one or more of the national information services that the Trustee determines are in the business of disseminating notice of redemption of obligations such as the Bonds. Upon the payment of the redemption price of any Bonds being redeemed, each check or other transfer of funds issued for such purpose will to the extent practicable bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer. With respect to any notice of optional redemption of Bonds, such notice maystate that such redemption is conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds to be redeemed and that, if such moneys have not been so received, said notice will be of no force and effect and the Trustee will not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption will not be made, and the Trustee will within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. Selection of Bonds for Redemption. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or an integral multiple thereof. In selecting portions of such Bonds for redemption, the Trustee will treat such Bonds, as applicable, as representing that number of Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity Bonds. The Trustee will promptly notify the District in writing of the Bonds, or portions thereof, selected for redemption. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the District will execute and the Trustee will authenticate and deliver to the Owner, at the expense of the District, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity. Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in the Indenture, and the amount necessary for the redemption having been made available for that 12 purpose and being available therefor on the date fixed for such redemption: (i) the Bonds, or portions thereof, designated for redemption will, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in the Indenture, anything in the Indenture or in the Bonds to the contrary notwithstanding; (ii) upon presentation and surrender thereof at the office of the Trustee, the redemption price of such Bonds will be paid to the Owners thereof; (iii) as of the redemption date the Bonds, or portions thereof so designated for redemption will be deemed to be no longer Outstanding and such Bonds, or portions thereof, will cease to bear further interest; and (iv) as of the date fixed for redemption no Owner of any of the Bonds, or portions thereof so designated for redemption will be entitled to any of the benefits of the Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available. Registration, Transfer and Exchange Registration. The Trustee will keep sufficient books for the registration and transfer of the Bonds. The ownership of the Bonds will be established by the Bond registration books held by the Trustee. Transfer or Exchange. Subject to the limitations set forth in the following paragraph, the registration of any Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Owner or his or her duly authorized attorney. Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds for other authorized denominations of the same maturity and issue. The Trustee may not collect from the Owner any charge for any new Bond issued upon any exchange or transfer, but will require the Owner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds are surrendered for registration of transfer or exchange, the District will execute and the Trustee will authenticate and deliver a new Bond or Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee is not required to register transfers or make exchanges of: (i) Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed; or (ii) any Bonds chosen for redemption. SOURCES OF PAYMENT FOR THE BONDS Limited Obligations The Bonds are special, limited obligations of the District payable only from amounts pledged under the Indenture and from no other sources. The Special Taxes are the primary source of security for the repayment of the Bonds. Under the Indenture, the District has pledged to repay the Bonds from the Net Taxes (which are Special Tax revenues remaining after the payment of the annual Administrative Expenses in an amount not to exceed the Administrative Expenses Cap (as defined in the Indenture)) and from amounts held in the Special Tax Fund (other than amounts held in the Administrative Expense Account therein). Special Tax revenues include the proceeds of the annual Special Tax levy received by the District, including any scheduled payments and Prepayments thereof, and the net proceeds of the redemption of delinquent Special Taxes or sale of property sold as a result of foreclosure of the lien of delinquent Special Taxes to the amount of said lien, and penalties and interest thereon; provided that any delinquent Special Tax sold to an independent third-party or to the City for 100% of the delinquent amount shall no longer be pledged under the Indenture to the payment of the Bonds or Parity Bonds. In the event that the Special Tax revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Trustee in the Special Tax Fund (other than the 13 Administrative Expense Account therein), including amounts held in the Reserve Account therein, for the exclusive benefit of the Owners of the Bonds. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE NET TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN. Special Taxes Authorization and Pledge. In accordance with the provisions of the Act, the City established the District on October 9, 2007 for the purpose of financing of various public improvements required in connection with the proposed development within the District. At special elections held on October 8, 2007, December 13, 2016 and July 25, 2017, the qualified elector within the District at the time of each of such elections, authorized the District to incur indebtedness, which is currently authorized in an amount not to exceed $6,000,000, to the levy of the Special Taxes on property within the District to repay such bonds and to finance the Facilities (as defined below). The qualified electors within the District also voted to approve the Rate and Method which authorized the Special Tax to be levied to repay indebtedness of the District, including the Bonds. The Bonds will be repaid only from annual Net Taxes derived from the levy and collection of Special Taxes pursuant to the Rate and Method. The Rate and Method permits the prepayment of Special Taxes for an Assessor’s Parcel, and any such Prepayments will be applied to redeem Bonds and Parity Bonds, if any. The Net Taxes collected from the annual Special Tax levy and the proceeds of any Prepayment have been pledged under the Indenture to the repayment of the Bonds and Parity Bonds. The Special Taxes levied in any Fiscal Year may not exceed the maximum rates authorized pursuant to the Rate and Method. See “—Rate and Method of Apportionment of Special Tax” and Appendix A—”RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” There is no assurance that the Net Taxes will, in all circumstances, be adequate to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS—Insufficiency of Special Tax Revenues.” Rate and Method of Apportionment of Special Tax. The Rate and Method applicable to the District is contained in Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The meaning of the defined terms used in this section are as set forth in Appendix A. In general, the Rate and Method imposes a different Maximum Special Tax for Facilities on Taxable Property within the District depending upon whether such Taxable Property is classified as: (i) “Developed Property” (in general, Taxable Propertynot classified as Approved Property, Undeveloped Property, Provisional Undeveloped Property that are not Exempt Property pursuant to the provisions of the Rate and Method and which is included in a Final Map recorded prior to the January 1 preceding the Fiscal Year in which the Special Tax for Facilities is being levied and a building permit for new construction has been issued on or before May 1 preceding such Fiscal Year), (ii) “Approved Property” (in general, parcels of Taxable Property included in a Final Map recorded prior to the January 1 preceding the Fiscal Year in which the Special Tax for Facilities is being levied but for which no building permit was issued before May 1 preceding such Fiscal Year), (iii) “Undeveloped Property” (in general, Taxable Property that is not “Developed Property,” “Approved Property” or “Provisional Undeveloped Property”) or (iv) “Provisional Undeveloped Property” (in general, Taxable Property that would otherwise be classified as Exempt Property but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum Acreage set forth in the Rate and Method). 14 Pursuant to the Rate and Method the District is required to determine the “Special Tax for Facilities Requirement” for each Fiscal Year. The Special Tax for Facilities Requirement for the District is the amount required in any Fiscal Year to: (i) pay debt service on all Outstanding Bondsand Parity Bondsdue in the calendar year commencing in such Fiscal Year, (ii) pay period costs on the Bonds and Parity Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds and Parity Bonds due in the calendar year commencing in such Fiscal Year, (iii) pay a proportionate share of Administrative Expenses, (iv) pay any required to establish or replenish any reserve funds for all Outstanding Bonds and Parity Bonds, (v) pay for reasonably anticipated Special Tax for Facilities delinquencies, (vi) pay directly for acquisition or construction of the Facilities to the extent that the inclusion of such amount does not increase the levy of Special Tax for Facilities levy on Approved Property or Undeveloped Property, less (vii) a credit for fund available to reduce the annual Special Tax for Facilities levy, as determined by the CFD Administrator pursuant to the Indenture. The Special Tax for Facilities Requirement for the District is to be satisfied first by levying the Special Tax for Facilities Proportionately on all Assessor’s Parcels of Developed Property up to 100% of the applicable Assigned Special Tax for Facilities. If additional moneys are needed to satisfy the Special Tax for Facilities Requirement, the Special Tax for Facilities shall be levied Proportionately on each Assessor’s Parcel of Approved Property at up to 100% of the Maximum Special Tax for Facilities for Approved Property. If additional moneys are still needed to satisfy the Special Tax for Facilities Requirement, the Special Tax for Facilities shall be levied Proportionately on each Assessor’s Parcels of Undeveloped Property up to 100% of the Maximum Special Tax for Facilities for Undeveloped Property. If additional moneys are needed to satisfy the Special Tax for Facilities Requirement, the Special Tax for Facilities shall be levied on each Assessor’s Parcel of Developed Property whose Maximum Special Tax for Facilities is the Backup Special Tax for Facilities and such levy shall be increased Proportionately from the Assigned Special Tax for Facilities up to 100% of the Backup Special Tax for Facilities up to 100% of the Backup Special Tax. Finally, if additional moneys are needed to satisfy the Special Tax for Facilities Requirement, the Special Tax for Facilities shall be levied Proportionately on all Assessor’s Parcels of Provisional Undeveloped Property at up to 100% of the Maximum Special Tax for Facilities for Provisional Undeveloped Property. Notwithstanding the above, under no circumstances will the Special Tax for Facilities levied against any Assessor’s Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased as a consequence of delinquency or default by the owner of any other Assessor’s Parcel within the District by more than 10% per Fiscal Year. Within the District, based on development status as of May 1, 2018, 70 parcels were classified as Developed Propertyfor the Fiscal Year 2018-19 Special Tax levy. Since May1, 2018, D.R. Hortonhas obtained building permits for all of the remaining homeswithin the District. As a result, beginning with Fiscal Year 2019- 20, all lots within the District will be classified as Developed Property under the Rate and Method. For Fiscal Year 2019-20, the Assigned Special Tax for Developed Property within the District that is classified as Residential Property will range from $2,112.01 per taxable unit with a Residential Floor Area equal to or less than 2,200 square feet to $2,424.13 per taxable unit with a Building Square Footage equal to or greater than 2,601 square feet. On each July 1 the Assigned Special Tax for Facilitiesrate for Developed Property, Approved Property, Undeveloped Property and Provisional Undeveloped Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. Annual Debt Service for the Bonds has been structured so that Developed Property levied at the Assigned Special Tax for Facilities rate, based on the development status as of August 15, 2018, assuming no delinquencies, will generate in each Fiscal Year not less than the Administrative Expenses Cap plus 110% of debt service payable with respect to the Bonds in the calendar year that begins in that Fiscal Year, assuming that Special Taxes are levied and collected on such Developed Property pursuant to the Rate and Method. 15 Table 1 below sets forth the Assigned Special Tax for Facilities of Developed Property, the projected Fiscal Year 2019-20 Special Tax levy and the percent of such levy based on land use type. TABLE 1 CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) ASSIGNED SPECIAL TAX RATES FOR FISCAL YEAR 2019-20 Land Use Type Residential Floor Area (sq. ft.) Assigned Special Tax Rates Fiscal Year 2019-20 Estimated Fiscal Year 2019-20 Special Tax Levy No. of Taxable Units Aggregate Estimated Special Taxes Fiscal Year 2019-20(1) Percent of Total Estimated Fiscal Year 2019-20 Special Tax Levy Single Family Residential Property ≤2,200 $ 2,112.01 $1,713.52 20 $34,270 23.1% Single Family Residential Property 2,201 - 2,400 2,205.65 1,789.49 21 37,579 25.3 Single Family Residential Property 2,401 - 2,600 2,309.69 1,873.90 20 37,478 25.2 Single Family Residential Property ≥2,601 2,424.13 1,966.75 20 39,335 26.5 Total 81 $ 148,663 100.0% (1)Includes estimated Administrative Expenses of $25,000. Source: Spicer Consulting Group, LLC. Backup Special Tax Rates. At the time a Final Map is recorded, the Backup Special Tax for Facilities for all Assessor’s Parcels of Developed Property classified or reasonably expected to be classified as a Single Family Property within such Final Map area shall be determined by (i) multiplying (a) the Maximum Special Tax for Facilities rate for Undeveloped Property by (b) the total Acreage of Taxable Property in such Final Map area, excluding Acreage classified as Provisional Undeveloped Property, Acreage classified or reasonably expected to be classified as Multi-Family Residential Property, Acreage classified or reasonably expected to be classified as Non-Residential Property, and any Acreage reasonably expected to be classified as Exempt Property in such Final Map area, and (ii) dividing the results in (i) by the total number of Residential Units reasonably expected to be constructed within such Final Map area. The resulting quotient shall be the Backup Special Tax for Facilities for each Assessor’s Parcel of Single Family Residential Property within such Final Map area. The Backup Special Tax for Facilities shall not apply to Multi-Family Residential Property or Non-Residential Property. Notwithstanding the foregoing, if Assessor’s Parcels of Developed Property which are classified or to be classified as Single Family Residential Property are subsequently changed or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Tax for Facilities for the area that has been changed or modified shall be recalculated, based on the methodology above, to equal the amount of Backup Special Tax for Facilities that would have been generated if such change did not take place. On each July 1, commencing July 1, 2018, the Backup Special Tax for Facilities rate shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. Prepayment of Special Taxes. The Annual Special Tax obligation for an Assessor’s Parcel may be prepaid in full, or in part, provided that the terms set forth under the Rate and Method are satisfied. The Prepayment amount is calculated based on the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Cost, Administrative Fee and less a credit for the resulting reduction in the Reserve Requirement for the Bonds (if any) and less capitalized interest (if any), all as specified in Section G of the Rate and Method attached as Appendix A. Prepayments of Special Taxes will be applied to effect an extraordinary redemption of Bonds and Parity Bonds. See “THE BONDS — Redemption —Special Mandatory Redemption from Special Tax Prepayments.” 16 Estimated Debt Service Coverage. In connection with the issuance of the Bonds, the Special Tax Consultant will certify that the Maximum Special Tax for Facilities that may be levied in each Fiscal Year on Assessor’s Parcels within the Districtclassified as Taxable Property will be at least equal to the sum of: (i) 110% of Maximum Annual Debt Service on the Bonds; plus (ii) the Administrative Expenses Cap. Actual collections of the Special Tax will depend on the amount of Special Tax delinquencies. Limitation on Special Tax Levy and Potential Impact on Coverage. Pursuant to Section 53321(d) of the Government Code, the special tax levied against any Assessor’s parcel for which an occupancy permit for private residential use has been issued shall not be increased as a consequence of delinquency or default by the owner of any other Assessor’s parcel within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. As a result, it is possible that the District may not be able to increase the tax levy to the Assigned Special Tax rates in all years. Levy, Collection and Application of Special Taxes. The Special Taxes are levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes, although it is possible that the District could elect to provide handbills to property owners within the District. The District will covenant in the Indenture that each year it will levy Special Taxes up to the maximum rates permitted under the Rate and Method in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay the principal of and interest on any Outstanding Bonds and Parity Bonds, to replenish the Reserve Account to the Reserve Requirement and to pay Administrative Expenses. The District will make certain covenants in the Indenture which are intended to ensure that the current maximum Special Tax rates and method of collection of the Special Taxes are not altered in a manner that would impair the District’s ability to collect sufficient Special Taxes to pay debt service on the Bonds, Parity Bonds and Administrative Expenses when due. First, the District will covenant in the Indenture that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are Outstanding. Second, the District will covenant in the Indenture, to the maximum extent that the law permits it to do so, not to initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in connection therewith, the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that: (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expense Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds. Third, the District will covenant in the Indenture that, in the event that any initiative is adopted by the qualified electors within the District which purports to reduce the maximum Special Tax below the levels specified in the preceding paragraphor to limit the power of the District to levy the Special Taxes for the purposes set forth in the Indenture, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. The District can provide no assurance that any such legal action will be successful. See the caption “SPECIAL RISK FACTORS — Proposition 218.” Fourth, the District will covenant in the Indenture that it will not adopt any policy pursuant to the Act permitting the tender of Bonds or Parity Bonds in full payment or partial payment of any Special Taxes unless the District has first received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in the District having insufficient Net Taxes to pay the principal of and interest on the Bonds and Parity Bonds when due. 17 See Appendix E under the caption “COVENANTS AND WARRANTY.” Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners in the District. See the captions “THE DISTRICT—Direct and Overlapping Debt” and “SPECIAL RISK FACTORS—Direct and Overlapping Indebtedness.” There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so, all as more fully described under the caption “SPECIAL RISK FACTORS.” Proceeds of Foreclosure Sales. The net proceeds received following a judicial foreclosure sale of property within the District resulting from a property owner’s failure to pay the Special Taxes when due are included within the Net Taxes pledged to the payment of principal of and interest on the Bonds and any Parity Bonds under the Indenture. Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an amount which is less than the Special Taxes levied, the City Council, as the legislative body of the District, may order that Special Taxes be collected by a Superior Court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. However, the District will covenant in the Indenture for the benefit of the owners of the Bonds and any Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the Reserve Account is at least equal to the Reserve Requirement. The District will covenant in the Indenture that it will deposit the net proceeds of any foreclosure in the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to make current payments of principal and interest on the Bonds and any Parity Bonds, to bring the amount on deposit in the Reserve Account up to the Reserve Requirement and to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds. If foreclosure is necessary and other funds (including amounts in the Reserve Account) have been exhausted, debt service payments on the Bonds could be delayed unless the foreclosure proceedings produce sufficient net foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the City and the District. See the caption “SPECIAL RISK FACTORS — Enforcement Delays – Bankruptcy.” Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the net proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See the caption “SPECIAL RISK FACTORS — Property Values.” Although the Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the District or the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes. Collection of Special Taxes and Flow of Funds. The Special Taxes will be levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes, 18 although it is possible that the District could elect to provide handbills to property owners within the District. When the County apportions Special Taxes to the District, the District will transmit the Special Taxes to the Trustee for deposit in the Special Tax Fund established by the Indenture. Except for Prepayments, which shall be deposited to the Redemption Account of the Special Tax Fund, the Trustee shall, on each date on which the Special Taxes are received from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The Trustee shall transfer the Special Taxes on deposit in the Special Tax Fund on the dates, in the amounts and in the following order of priority, to: First:To the Administrative Expense Account in an amount up to the Administrative Expenses Cap. Second:To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date is equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account will be used for the payment of interest on the Bonds and any Parity Bonds as the same become due. Third:To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year, commencing September 1, 2019, isequal the principal payment due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity. Fourth:To the Redemption Account, the amount needed to make the balance in the Redemption Account one Business Day prior to each September 1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1 and thereafter, to pay the principal and premium, if any, due in connection with an optional redemption of Bonds or Parity Bonds. Fifth:To the Reserve Account of the Special Tax Fund to the extent necessary to replenish the Reserve Account to the Reserve Requirement. Sixth:To the Administrative Expense Account of the Special Tax Fund the amount of any Administrative Expenses for the current Bond Year in excess of the Administrative Expenses Cap as directed by the City. Seventh:To the Rebate Fund established by the Indenture to the extent directed by the City pursuant to the Indenture. Eighth:To the Surplus Fund established by the Indenture such remaining amounts in the Special Tax Fund after making the foregoing transfers on September 1. Reserve Account of the Special Tax Fund In order to secure further the payment of principal of and interest on the Bonds, the District is required, upon delivery of the Bonds, to deposit in the Reserve Account and thereafter to maintain in the Reserve Account an amount equal to the Reserve Requirement. The term “Reserve Requirement” is defined in the Indenture to mean, that amount as of any date of calculation, equal to the lesser of: (i) 10% of the initial principal amount of the Bonds and Parity Bonds, if any; (ii) Maximum Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any; and (iii) 125% of average Annual Debt Service on the then Outstanding Bonds and Parity 19 Bonds. The Reserve Requirement may be satisfied in whole or in part by cash, a Reserve Policy (as defined in the Indenture), or a combination thereof. Subject to the limits on the maximum annual Special Tax levy set forth in the Rate and Method and in the Indenture, the District will covenant in the Indenture to levy Special Taxes in an amount sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the Reserve Account at the Reserve Requirement. Amounts in the Reserve Account are to be applied: (i) to pay debt service on the Bonds, or any Parity Bonds, including Sinking Fund Payments, to the extent that other monies are not available therefor; (ii) to redeem Bonds or Parity Bonds in the event of prepayment of Special Taxes, to optionally redeem Bonds or Parity Bonds or in connection with a partial defeasance of Bonds or Parity Bonds, in accordance with the Indenture; and (iii) to pay any rebate requirements. See Appendix Eunder the caption “CREATION OF FUNDS AND APPLICATION OF PROCEEDS — Reserve Account of the Special Tax Fund.” No Teeter Plan Although the Riverside County Board of Supervisors has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) which allows each entity levying secured property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, the District is not included in the County Teeter Plan. Consequently, the District may not draw on the County Tax Loss Reserve Fund in the event of delinquencies in Special Tax payments within the District. Parity Bonds for Refunding Purposes Only The District will covenant in the Indenture not to issue Parity Bonds except as provided in the Indenture and only for the purposes of refunding all or a portion of the Bonds and any Parity Bonds. See Appendix E under the caption “DEFEASANCE AND PARITY BONDS.” THE DISTRICT General Description of the District The District contains approximately 20.63 gross acres and approximately 15.82 net taxable acres, and is located within a developed area in the northwestern part of the City. Specifically, the District is located on the northwest of Machado Street, southwest of Lakeshore Drive is bordered by Herburn Street. The property within the District is being developed by Western Pacific Housing, Inc., a Delaware corporation (dba D.R. Horton America’s Builder) (“D.R. Horton”) into a neighborhood being marketed by D.R. Horton as “McKenna Pointe.” The property within the District is planned for 81 single-family detached residential units. As of the August 15, 2018 date of value of the Appraisal (as defined below), D.R. Horton had completed and conveyed 46 homes within the District to individual homeowners. As of such date, D.R. Horton owned 2 model homes, 22 homes under construction (16 of which were over 95% complete and 15 of which were in escrow), and 11 finished lots. Between August 15, 2018, and October 1, 2018, D.R. Horton conveyed an additional __ homes to individual homeowners. As part of a developed area in the City, major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District has been completed. D.R. Horton completed the construction of roadway improvements, water and wastewater improvements and connections to existing mains to serve the property within the District. See the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” 20 Water and sewer service to the property within the District is currently supplied by the Elsinore Valley Municipal Water District. Electricity is currently supplied by Southern California Edison and gas by Southern California Gas Company. Public education instruction is provided by the Lake Elsinore Unified School District. Although, like all of Southern California, the land within the District is subject to seismic activity, it is not located within an Alquist-Priolo Earthquake Fault Zone. A map showing the location of the District and an aerial photograph thereof appear following the Table of Contents. Authorized Uses of Bond Proceeds Proceeds of the Bonds are authorized to be used to pay for the costs of construction of City facilities, including certain storm drain and street improvements, and the costs of certain water and sewer system improvements to be owned and operated by the Elsinore Valley Municipal Water District. Appraisal Report The estimated assessed value of the property within the District, as shown on the County’s assessment roll for Fiscal Year 2018-19, is approximately $9,218,737. However, as a result of the requirements of Article XIIIA of the California Constitution, a property’s assessed value is not necessarily indicative of its market value. In order to provide information with respect to the value of the taxable property within the District, the City engaged the Appraiser to prepare the Appraisal Report. The Appraiser has an “MAI” designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land-secured municipal bonds. The Appraiser was selected by the City and has no material relationships with the City or the owners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal Report. The City instructed the Appraiser to prepare its analysis and report in conformity with City-approved guidelines and the Appraisal Standards for Land SecuredFinancings published in 1994 and revised in 2004 by the California Debt and Investment Advisory Commission. A copy of the Appraisal Report is included as Appendix D — “APPRAISAL REPORT” to this Official Statement. The purpose of the Appraisal Report was to estimate the minimum market value of the property within the District subject to the lien of the Special Taxes. The estimate of market value assumes that all improvements and benefits to the subject properties, which are to be funded with the proceeds of the Bonds are completed and in place. Subject to the assumptions and limiting conditions set forth in the Appraisal Report, the Appraiser concluded that, as of the Date of Value (August 15, 2018), the minimum market value of the Taxable Property within the District was $24,829,781. In valuing the residential property within the District, the Appraiser used a sales comparison approach for the property to be developed and, with respect to the D.R. Horton-owned models and production units more than 95% complete, a discounted cash flow analysis was applied. The discounted cash flow analysis accounts for remaining development costs, marketing and carrying costs and a discount rate through the estimated absorption period for the models, production units and finished lots. Homes under construction which were less than 95% complete as the of the Date of Value were valued by the Appraiser as finished lots. The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in Appendix D. The City and the District make no representation as to the accuracy of the Appraisal Report. There is no assurance that the property within the District can be sold for the prices set forth in the Appraisal Report or that any parcel can be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by the landowner. See “SPECIAL RISK FACTORS — PropertyValues” and Appendix D — “APPRAISAL REPORT.” 21 Estimated Appraised Value-to-Lien Ratios The aggregate appraised value of property within the District is $24,829,781. Dividing the aggregate estimate of value by the principal amount of the Bonds results in value to lien ratio of 9.48-to-1 *for the District. See “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.” The assessed value of the property within the District is $9,218,737 for Fiscal Year 2018-19. Dividing the assessed value by the principal amount of the Bonds results in an estimated assessed value-to-lien ratio of 3.51-to-1*for the District. Based on ownership status as of the Date of Value, individual homeowners and D.R. Horton are expected to be responsible for approximately 56.80% and 43.20%, respectively, of the projected Fiscal Year 2019-20 Special Tax levy. Between the Date of Value and October 1, 2018, D.R. Horton had conveyed an additional __homes within the District to individual homeowners. Based on such additional transfer of property, individual homeowners and D.R. Hortonare expected to be responsible for approximately _____% and _____%, respectively, of the projected Fiscal Year 2019-20 Special Tax levy. As of the Date of Value, D.R. Horton had obtained building permits for all of the remaining planned residential homes within the District. As a result, beginning with Fiscal Year 2019-20, all lots will be classified as Developed Property under the Rate and Method. Table 2 below sets forth the appraised value-to-lien ratio of the Taxable Property within the District based on the appraised values set forth in the Appraisal Report and the principal amount of the Bonds. Table 3 below sets forth the estimated appraised value-to-lien ratios for Taxable Property within the District by various ranges based upon the principal amount of the Bonds. *Preliminary, subject to change. 22 TABLE 2 CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) ESTIMATED VALUE-TO-LIEN RATIOS ALLOCATED BY PROPERTY OWNER AS OF AUGUST 15, 2018 Property Owner No. of Parcels Appraised Property Value(2) Percentage of Appraised Value Maximum Fiscal Year 2019-20 Special Tax Percentage of Maximum Fiscal Year 2019-20 Special Tax Estimated Fiscal Year 2019-20 Special Tax Levy(3)* Percentage of Estimated Fiscal Year 2019-20 Special Tax Levy* CFD 2007-4 Proposed Bonds(4)* Appraised Value-to- Lien Ratio* Developed Individually Owned 46 $ 17,766,450 71.55%$114,217 56.79%$84,444 56.80%$ 1,488,217 11.94:1 Developed Developer Owned(1)35 7,063,331 28.45 86,904 43.21 64,219 43.20 1,131,783 6.24:1 Total 81 $ 24,829,781 100.00%$201,121 100.00%$148,663 100.00%$ 2,620,000 9.48:1 *Preliminary, subject to change. (1)Reflects appraised value for 2 model homes, 16 production homes over 95% complete, 6 homes under construction and 11 finished lots. All of the Taxable Property within the District will be classified as Developed Property for the Fiscal Year 2019-20 Special Tax levy. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” (2)Based on the appraised value set forth in the Appraisal Report as of August 15, 2018, the Date of Value. (3)Estimated Fiscal Year 2019-20 Special Tax Levy based upon development status as of August 15, 2018 and an administrative expenses cap for Fiscal Year 2019-20 of $25,000. (4)Allocated based on the estimated Fiscal Year 2019-20 Special Tax levy. Source: Spicer Consulting Group, LLC. 23 TABLE 3 CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) VALUE-TO-LIEN STRATIFICATION* Value-to-Lien Category No. of Parcels Percentage of Parcels Appraised Value(1) Percentage of Appraised Value Estimated Fiscal Year 2019-20 Special Tax Levy Percentage Share of Estimated Fiscal Year 2019-20 Special Tax Levy CFD 2007-4 Proposed Bonds(2) Percent Share of Proposed CFD 2007-4 Bonds Aggregate Value-to- Lien Less than 4.00:1(3)17 20.99%$2,036,574 8.20%$ 31,249 21.02%$550,718 21.02%3.70:1 Between 4.01:1 to 8.00:1 0 0.00 0 0.00 0 0.00 0 0.00 N/A Between 8.01:1 to 12.00:1 49 60.49 16,879,757 67.98 90,572 60.92 1,596,218 60.92 10.57:1 Greater than 12.01:1(3) 15 18.52 5,913,450 23.82 26,842 18.06 473,064 18.06 12.50:1 Totals 81 100.00%$ 24,829,781 100.00%$ 148,663 100.00%$ 2,620,000 100.00%9.48:1 *Preliminary, subject to change. (1)Based on the appraised value set forth in the Appraisal Report as of August 15, 2018, the Date of Value. (2)Allocated based on the estimated Fiscal Year 2019-20 Special Tax levy. (3)The minimum value to lien in the less than 4.00:1 category is 3.46:1*. The maximum value to lien in the greater than 12.01:1 category is 12.50:1*. Source: Spicer Consulting Group, LLC. 24 Direct and Overlapping Debt The District is included within the boundaries of overlapping local agencies providing governmental services. Some of these local agencies have outstanding bonds, and/or the authority to issue bonds, payable from taxes or assessments. The existing and authorized indebtedness payable from taxes and assessments that may be levied upon the property within the District is shown in Table 4 below. In addition to current debt, new community facilities districts and/or special assessment districts could be formed in the future encompassing all or a portion of the property within the District; and such districts or the agencies that formed them could issue more bonds and levy additional special taxes or assessments. 25 TABLE 4 CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) DIRECT AND OVERLAPPING DEBT AS OF AUGUST 15, 2018 I.Appraisal Value(1)$ 24,829,781 II.Land Secured Bond Indebtedness Outstanding Direct and Overlapping Land-Secured Bonded Debt Type Issued Outstanding % Applicable Parcels in CFD No. 2007-4(3) Amount Applicable CITY OF LAKE ELSINORE CFD NO. 2007-4 CFD $2,620,000*$2,620,000*100.000%81 2,620,000* TOTAL LAND SECURED BONDED DEBT (2)$2,620,000* III.General Obligation Bond Indebtedness Outstanding Direct and Overlapping Bonded Debt Type Issued Outstanding % Applicable Parcels in CFD No. 2007-4(3) Amount Applicable METROPOLITAN WATER DEBT SERVICE GO $ 850,000,000 $ 110,420,000 0.009%81 $9,685 MT. SAN JACINTO JR COLLEGE DEBT SERVICE GO 70,000,000 70,000,000 0.010 81 7,144 LAKE ELSINORE UNIFIED SCHOOL DISTRICT DEBT SERVICE GO 32,415,000 32,415,000 0.073 81 23,607 TOTAL OUTSTANDING GENERAL OBLIGATION BONDED DEBT (2)$40,435 Authorized but Unissued Direct and Overlapping Indebtedness Type Authorized Unissued % Applicable Parcels in CFD No. 2007-4(3) Amount Applicable METROPOLITAN WATER DEBT SERVICE GO $ 850,000,000 $0 0.009%81 $0 MT. SAN JACINTO JR COLLEGE DEBT SERVICE GO 295,000,000 225,000,000 0.010 81 22,961 LAKE ELSINORE UNIFIED SCHOOL DISTRICT DEBT SERVICE GO 105,000,000 72,585,000 0.073 81 52,861 TOTAL UNISSUED GENERAL OBLIGATION INDEBTEDNESS (2)$75,823 TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION INDEBTEDNESS $116,258 TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $2,660,435* TOTAL OF ALL OUTSTANDING DIRECT AND UNISSUED DIRECT OVERLAPPING INDEBTEDNESS $2,816,258* IV.Ratios to Appraisal Value Outstanding Land Secured Bonded Debt 9.48:1* Total Outstanding Bonded Debt 9.33:1* *Preliminary, subject to change. (1)Based on the appraised value set forth in the Appraisal Report as of August 15, 2018, the Date of Value. (2)The Special Tax Consultant is not aware of any additional bonded debt for parcels in the District for Fiscal Year 2018-19. (3)As of August 15, 2018, building permits had been issued for all 81 lots in the District and such lots will be classified as Developed Property beginning with the Fiscal Year 2019-20 Special Tax levy in accordance with the Rate and Method. Source: County of Riverside Assessor's Office; Spicer Consulting Group, LLC. 26 Based on the appraised value of the property within the District set forth in the Appraisal Report, the projected debt service on the Bonds, and Administrative Expenses Cap of $25,000, the District expects that, in Fiscal Year 2019-20, the projected effective tax rates levied on taxable property in the District, will range from approximately 1.82% to 1.88% of average appraised value of homes within each Land Use Category(as defined in the Rate and Method). Table 5 below describes the estimated Fiscal Year 2019-20 effective tax burden for the residential developments within the District based on the estimated Fiscal Year 2019-20 Special Tax levy and Fiscal Year 2018-19 actual levies for all other overlapping taxing jurisdictions. 27 TABLE 5 CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) ESTIMATED FISCAL YEAR 2019-20 TAX OBLIGATION Tract 33486 (Makenna Court) Plan Type 1 2 3 4 CFD Tax Category Less than 2,201 to 2,401 to Greater than 2,200 S.F.2,400 S.F.2,600 S.F.2,601 S.F. Home Size 2,052 2,319 2,508 2,709 Appraised Value(1)$359,100 $394,230 $376,200 $406,350 Ad Valorem Property Taxes: General Purpose $3,591 $3,942 $3,762 $4,064 Metro Water West (0.00350%)13 14 13 14 Mt. San Jacinto Jr College (0.01320%)47 52 50 54 Lake Elsinore Unified School District (0.0190%)68 75 71 77 Total General Property Taxes $3,719 $4,083 $3,896 $4,209 Assessment, Special Taxes & Parcel Charges: Flood Control Stormwater / Cleanwater / Santa Ana $4 $4 $4 $4 MWD Standby charge 10 10 10 10 CSA #152 City of Lake Elsinore Stormwater 14 14 14 14 City of Lake Elsinore Citywide LLMD 25 25 25 25 City of Lake Elsinore LMD 1, Zone 21 185 185 185 185 City of Lake Elsinore CFD 2007-4 Facilities(2)1,714 1,789 1,874 1,967 City of Lake Elsinore CFD 2007-4 Services(3)325 325 325 325 City of Lake Elsinore CFD 2015-1 Public Safety 755 755 755 755 Total Assessments & Taxes $3,032 $3,108 $3,192 $3,285 Projected Total Property Tax $6,751 $7,191 $7,088 $7,493 Projected Effective Tax Rate 1.88%1.82%1.88 1.84 (1)Based on the average appraised value for homes in each Land Use Class (as defined in the Rate and Method) set forth in the Appraisal Report as of August 15, 2018, the Date of Value. (2)Reflects estimated Fiscal Year 2019-20 Special Tax levy based on development as of August 15, 2018, and includes priority Administrative Expenses in the amount of $25,000. (3)The special tax levied by the District for services are not available and are not pledged to the repayment of the Bonds. Source: County of Riverside Assessor’s Office; Spicer Consulting Group, LLC. 28 Delinquency History The District levied Special Taxes on 70 parcels of Developed Property in Fiscal Year 2017-18 (which was the first year of the Special Tax levy) in the amount of $155,182.80. Table 6 below sets forth the Special Tax levy, collections and delinquency rates in the District for Fiscal Year 2017-18. TABLE 6 CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES Delinquencies as of June 30 of Fiscal Year Fiscal Year Amount of Special Taxes Levied Parcels Levied Parcels Delinquent Amount Delinquent Percent Delinquent 2017-18 $155,182.80 70 N/A N/A N/A Source: Spicer Consulting Group, LLC. PROPERTY OWNERSHIP AND THE DEVELOPMENT The information about the property in the District contained in this Official Statement has been provided by representatives of D.R. Horton and others, and has not been independently confirmed or verified by the Underwriter, the City or the District. The Underwriter, the City, and the District make no representation as to the accuracy or adequacy of the information contained in this caption. There may be material adverse changes in this information after the date of this Official Statement. Neither the Bonds nor the Net Taxes securing the Bonds and any Parity Bonds are personal obligations of either of D.R. Horton or any affiliate thereof or any other property owner and, in the event that any property owner defaults in the payment of its Special Taxes, the District may proceed with judicial foreclosure but has no direct recourse to the assets of any property owner or any affiliate thereof. See the caption “SPECIAL RISK FACTORS.” General Background. The District contains approximately 20.63 gross acres and approximately 15.82 net taxable acres, and is located within a developed area in the northwestern part of the City. Specifically, the District is located on the northwest of Machado Street, southwest of Lakeshore Drive is bordered by Herburn Street. The property within the District is being developed by D.R. Horton into a neighborhood being marketed by D.R. Horton as “McKenna Pointe.” Infrastructure and Entitlement Status. As part of a developed area in the City, major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District has been completed. D.R. Horton completed the construction of roadway improvements, water and wastewater improvements and connections to existing mains to serve the property within the District. The substantial majority of the in-tract infrastructure within the District, which primarily consists of streets for individual lot access and associated gutters and landscape improvements, is complete. D.R Horton expects to commence construction of the in-tract improvements associated with the remaining lots that it owns within the District as home construction on such lots is completed. The final tract map has been recorded for the planned residential project within the District. 29 Planned Development Within the District The property within the District is planned for 81 single-family detached residential units. As of the Date of Value, D.R. Horton had completed and conveyed 46 homes within the District to individual homeowners. As of such date, D.R. Horton owned 2 model homes, 22 homes under construction (16 of which were over 95% complete and 15 of which were in escrow), and 11 finished lots. Between August 15, 2018, and October 1, 2018, D.R. Horton conveyed an additional __ homes to individual homeowners. D.R. Horton expects to complete development and convey all remaining homes to be sold in the District to individual homeowners by March 2019. A summary of the product mix of the homes within the McKenna Pointe project that were completed by D.R. Horton, including square footage and average sales prices for each floor plan is set forth below: Plan Total Number of Homes Number of Homes Conveyed to Individual Homeowners Square Footage(1) Number of Bedrooms/ Bathrooms Base Sales Price(2) 1 20 10 2,052 3/2 $367,490 2 21 15 2,508 4/3 404,490 3 20 9 2,319 4/3 385,990 4 20 12 2,709 3/3.5 420,990 TOTAL:81 46 (1)Actual square footage may vary based on options selected. (2)Sales prices for individual homes varied based on premiums, upgrades, options and incentives. Source: D.R. Horton. D.R. Horton As previously defined in this Official Statement, “D.R. Horton” is Western Pacific Housing, Inc., a Delaware corporation. D.R. Horton is marketing the homes that it is constructing in the District under the tradename “D.R. Horton, America’s Builder.” D.R. Horton is a subsidiary of D.R. Horton, Inc., a Delaware corporation (“D.R. Horton, Inc.”), a public company whose common stock is traded on the New York Stock Exchange under the symbol “DHI.” Founded in 1978 and headquartered in Fort Worth, Texas, D.R. Horton, Inc. constructs and sells homes in 27 states and 79 metropolitan markets of the United States under the names of D.R. Horton, America’s Builder, Express Homes, Emerald Homes, Breland Homes, Regent Homes, and Crown Communities. D.R. Horton, Inc. is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance therewith files reports, proxy statements and other information, including financial statements, with the SEC. Such filings, particularly, D.R. Horton, Inc.’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017, as filed with the SEC on November 15, 2017 and Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2018, as filed with the SEC on July 27, 2018, set forth certain data relative to the consolidated results of operations and financial position of D.R. Horton, Inc. and its subsidiaries, including D.R. Horton, as of such dates. D.R. Horton, Inc./Forestar Merger. On October 5, 2017, D.R. Horton, Inc. announced the acquisition of approximately 75% of the then outstanding shares of Forestar Group, Inc. (NYSE: FOR) (“Forestar”). The transaction establishes a strategic relationship between Forestar and D.R. Horton, Inc. for the supply of developed lots, as an extension of D.R. Horton’s strategy of increasing its optioned land and lot position to enhance operational efficiency and returns. 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 D.R. Horton, Inc. The 30 address of such Internet website is www.sec.gov. In addition, the aforementioned material may also be inspected at the offices of the NYSE at 20 Broad Street, New York, NY 10005. All documents subsequently filed by D.R. Horton, Inc. 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 D.R. Horton, Inc.’s Annual Report and each of its other quarterly and current reports, including any amendments, are available from D.R. Horton, Inc.’s website at www.drhorton.com. The foregoing Internet addresses and references to filings with the SEC are included for reference only, and the information on these Internet sites and on file with the SEC 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. Financing Plan. D.R. Horton’s total site improvement, home construction, marketing and other carrying and soft costs for the McKenna Pointe development in the District are estimated to be approximately $16,443,490.92. As of September 1, 2018, D.R. Horton expects its remaining home construction costs and other development, marketing and sales costs within McKenna Pointe, to be approximately $3,505,130.09. D.R. Horton is financing its development activities in the District through internal sources and home sales revenue and intends to use these sources of funds to finance remaining home construction costs and carrying costs for its property in the District (including property taxes and the Special Taxes while it owns the property) until full sell-out of its proposed single-family residential homes in the District. However, home sales revenues from D.R. Horton’s projects within the Districtare not segregated and set aside for completing its projects within the District. Home sales revenues are swept daily from D.R. Horton, Inc.’s divisions for use in operations, to pay down debt and for other corporate purposes and might get diverted to other D.R. Horton, Inc. needs at the discretion of D.R. Horton, Inc.’s management. Notwithstanding the foregoing, D.R. Horton believes that it will have sufficient funds available to complete its proposed development within the District commensurate with the development timing described in this Official Statement. Notwithstanding the belief of D.R. Horton that it will have sufficient funds to complete its planned development in the District, no assurance can be given that sources of financing available to D.R. Horton will be sufficient to complete the property development and home construction as currently anticipated. While D.R. Horton has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither D.R. Horton nor any of its affiliates has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of D.R. Horton to provide internal financing in the past, D.R. Horton has not represented in any way that it will do so in the future. If and to the extent that internal financing and home sales revenues are inadequate to pay the costs to complete D.R. Horton’s planned development in the Districtand other financing by D.R. Horton is not put into place, there could be a shortfall in the funds required to complete the proposed development by D.R. Horton and portions of the project may not be developed. SPECIAL RISK FACTORS The Bonds have not been rated by any rating agency, and the purchase of the Bonds involves significant risks that are not appropriate for certain investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. See “— Property Values” below. 31 Risks of Real Estate Secured Investments Generally The Bond Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation: (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; (iii) natural disasters (including, without limitation, earthquakes, wildfires and floods), which may result in uninsured losses; (iv) adverse changes in local market conditions; and (v) increased delinquencies due to rising mortgage costs and other factors. No assurance can be given that the property owners within the District will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See the caption “— Enforcement Delays — Bankruptcy” for a discussion of certain limitations on the District’s ability to pursue judicial proceedings with respect to delinquent parcels. Tax Cuts and Jobs Act H.R. 1 of the 115th U.S. Congress, known as the “Tax Cuts and Jobs Act,” was enacted into law on December 22, 2017 (the “Tax Act”). The Tax Act makes significant changes to many aspects of the Internal Revenue Code of 1986, as amended (the “Code”). For example, the Tax Act reduces the amount of mortgage interest expense and state and local income tax and property tax expense that individuals may deduct from their gross income for federal income tax purposes, which could increase the cost of home ownership within the District. However, neither the City nor the District can predict the effect that the Tax Act may have on the cost of home ownership or the price of homes in the District, the pace at which homes in the District are sold to individual homeowners by D.R. Horton, or the ability or willingness of homeowners to pay Special Taxes or property taxes. Insufficiency of Special Tax Revenues As discussed below, the Special Taxes may not produce revenues sufficient to pay the debt service on the Bonds either due to nonpayment ofthe amounts levied or because acreage within the Districtbecomes exempt from taxation due to the transfer of title to a public agency. In order to pay debt service on the Bonds, it is generally necessary that the Special Taxes be paid in a timely manner. Should the Special Taxes not be paid on time, the District has established a Reserve Account under the Indenture to be maintained in an amount equal to the Reserve Requirement to pay debt service on the Bonds to the extent other funds are not available. See “SOURCES OF PAYMENT FOR THE BONDS — Reserve Accountof the Special Tax Fund.” The District will covenant in the Indenture to maintain in the Reserve Account an amount equal to the Reserve Requirement, subject, however, to the availability of Net Taxes in amounts sufficient to do so and to the limitation that the District may not levy the Special Tax in any Fiscal Year at a rate in excess of the maximum amounts permitted under the Rate and Method. See Appendix E hereto. As a result, if a significant number of Special Tax delinquencies occurs within the District, the District could be unable to replenish the Reserve Account to the Reserve Requirement due to the limitations on the amount of the Special Tax that may be levied. If such defaults were to continue in successive years, the Reserve Account could be depleted and a default on the Bonds could occur. The Act provides that, if any property within the District not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. In addition, the Act provides that, if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment 32 and be paid from the eminent domain award. The constitutionality and operation of these provisions of the Act have not been tested in the courts, but it is doubtful that they would be upheld as to, for example, property owned by the federal government. If for any reason property within the District becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government or another public agency, subject to the limitation of the Maximum Special Tax, the Special Tax will be reallocated to the remaining taxable parcels within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon their willingness and/or ability to pay the Special Tax. Moreover, if a substantial portion of additional land within the District became exempt from the Special Tax because of public ownership, or otherwise, the Maximum Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due and a default will occur with respect to the payment of such principal and interest. The District will covenant in the Indenture that, under certain circumstances, it will institute foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the Bonds. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of the delinquent Special Tax to protect its security interest. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes —Proceeds of Foreclosure Sales” for provisions which apply in the event of such foreclosure and which the District is required to follow in the event of delinquencies in the payment of the Special Tax. In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Bonds (if the Reserve Account has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the City on behalf of the District of the proceeds of sale. The District may adjust the future Special Tax levied on taxable parcels in the District, subject to limitations described above under the caption “THE DISTRICT—Rate and Method of Apportionment,” to provide an amount required to pay interest on and principal of the Bonds, and the amount, if any, necessary to replenish the Reserve Account to an amount equal to the Reserve Requirement, and to pay all current expenses. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected against taxable parcels in the District will be at all times sufficient to pay the amounts required to be paid by the Indenture, even if the Special Tax is levied at the Maximum Special Tax rates. See “— Enforcement Delays – Bankruptcy.” No assurance can be given that the real property subject to sale or foreclosure will be sold, or if sold, that the proceeds of sale will be sufficient to pay any delinquent installments of the Special Tax. The Act does not require the City to purchase or otherwise acquire any lot or parcel of property to be sold at foreclosure if there is no other purchaser at such sale. The Act and the Indenture do specify that the Special Tax will have the same lien priority as for ad valorem property taxes in the case of delinquency. 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. Prior to July 1, 1983, the right of redemption from foreclosure sales was limited to a period of one year from the date of sale. Under legislation effective July 1, 1983, the statutory right of redemption from such foreclosure sales has been repealed. However, a period of 20 days must elapse after the date on which the notice of levy of the interest in real property was served on the judgment debtor before the sale of such lot or parcel can be made. Furthermore, if the purchaser at the sale is the judgment creditor (e.g., the District), an action may be commenced by the delinquent property owner within 90 days after the date of sale to set aside such sale. The constitutionality of the aforementioned legislation, which repeals the one year redemption period, has not been tested and there can be no assurance that, if tested, such legislation will be upheld. (Section 701.680 of the Code of Civil Procedure of the State.) 33 Concentration of Ownership Based on development and ownership status as of August 15, 2018, individual homeowners and D.R. Horton is expected to be responsible for approximately56.80% and 43.20%, respectively, of the projected Fiscal Year 2019-20 Special Tax levy. Between the Date of Value and October 1, 2018, D.R. Horton had conveyed an additional __ homes within the District to individual homeowners. Based on such additional transfer of property, individual homeowners and D.R. Horton are expected to be responsible for approximately _____% and _____%, respectively, of the projected Fiscal Year 2019-20 Special Tax levy. The timely payment of principal of and interest on the Bonds depends upon the willingness and ability of the current and future property owners in the District to pay the Special Taxes prior to delinquency. General and local economic conditions and governmental requirements or restrictions may affect the willingness of the current property owners, or any successor property owners, to pay the Special Taxes, and there is no assurance that the current property owners, or any successor property owners, will pay such Special Taxes even if financially able to do so. Due to the concentration of ownership of the property within the District, a failure by D.R. Horton or any successor property owner thereto to pay the Special Taxes may result in a default in the payment of debt service on the Bonds. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” Property Values The value of the property within the District is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of Special Taxes, the District’s only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes. See “THE DISTRICT — Appraisal Report” and Appendix D — “APPRAISAL REPORT.” The Appraiser has estimated, on the basis of certain assumptions and limiting conditions contained in the Appraisal Report, that as of the Date of Value, the market value of the land and improvements within the District was approximately $24,829,781. See “THE DISTRICT — Appraisal Report.” The Appraisal Report indicates the Appraiser’s opinion as to the market value of the properties referred to therein as of the date and under the conditions specified therein. The Appraiser’s opinion reflects conditions prevailing in the applicable market as of the Date of Value. The Appraiser’s opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future. Prospective purchasers of the Bonds should not assume that the taxable land within the District could be sold for the appraised amount or for the assessed values at a foreclosure sale for delinquent Special Taxes. In arriving at the estimate of market value of the property in the District, the Appraiser assumes that any sale will be unaffected by undue stimulus and will occur following a reasonable marketing period, which is not always present in a foreclosure sale. See Appendix D for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by theAppraiser. Any event which causes one of the Appraiser’s assumptions to be untrue could result in a reduction of the value of the taxable land and improvements within the District from the market value estimated by the Appraiser. No assurance can be given that any bid will be received for a parcel with delinquent Special Taxes offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquent Special Taxes. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes —Proceeds of Foreclosure Sales.” 34 Natural Disasters The District, like all California communities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads, bridges and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. The property within the District is not located in an Alquist Priolo Earthquake Study Zone and is not located within one-half mile of an active earthquake fault. Additionally, the District is not located in a flood plain area. In recent years, wildfires have caused extensive damage throughout the State, including within the County. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances entire neighborhoods have been destroyed. Several fires which occurred in 2017 damaged or destroyed property in areas that were not previously considered to be at risk from such events. The District is not located in an area which the Department of Forestry and Fire Protection of the State of California has designated as a high fire hazard severity zone. However, there is a risk of residential property within the District being destroyed by wildfires and no assurance can be given as to the severity or frequency of wildfires within the vicinity of the District. In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes. Hazardous Substances While government taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may also be relevant. One of the most serious in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions 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 “Super Fund 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 in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels within the District be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition. The District is not aware of the presence of any federally or state classified hazardous substances in violation of any environmental laws, located on the property within the District. However, it is possible that such materials do currently exist and that the District is not aware of them. It is possible that property in the District may be liable for hazardous substances in the future as a result of the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or the existence, currently, on the property of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling such substance. All of these possibilities could have the effect of reducing the value of the applicable property. 35 Enforcement Delays – Bankruptcy In the event of a delinquency in the payment of the Special Taxes, the District is required to commence enforcement proceedings under the circumstances described under the heading “SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure.” However, prosecution of such proceedings could be delayed due to crowded local court calendars or by bankruptcy, insolvency and other laws generally affecting creditors’rights (such as the Soldiers’ and Sailors’ Relief Act of 1940) and by the laws of the State relating to judicial and non- judicial foreclosure. Although bankruptcy proceedings would not cause the liens of the Special Taxes to become extinguished, bankruptcy of a person or entity with an interest in the applicable property could result in a delay in the enforcement proceedings because federal bankruptcy laws provide for an automatic stay of foreclosure and tax sale proceedings. Any such delay could increase the likelihood of delay or default in payment of the principal of and interest on the applicable Bonds. The various legal opinions to be delivered in connection with the issuance of the Bonds, including Bond Counsel’s approving legal opinion, are qualified as to the enforceability of the Bonds and the Indenture by reference to bankruptcy, reorganization, moratorium, insolvency and other laws affecting the rights of creditors generally or against public entities such as theDistrict. FDIC/Federal Government Interests in Parcels The ability of the District to collect interest and penalties specified by the Act and to foreclose the lien of delinquent Special Taxes may be limited in certain respects with regard to parcels in which the Federal Deposit Insurance Corporation (the “FDIC”), or other federal government entities such as Fannie Mae or Freddie Mac, has or obtains an interest. In the case of FDIC, in the event that any financial institution making a loan which is secured by parcels is taken over by the FDIC and the applicable Special Tax is not paid, the remedies available to the District may be constrained. The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that taxes other than ad valorem taxes which are secured by a valid lien in effect before the FDIC acquired an interest in a property will be paid unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement provides that the FDIC generally will not pay installments of non-ad valorem taxes which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize the validity of any lien to secure payment except in certain cases where the Resolution Trust Corporation had an interest in property on or prior to December 31, 1995. Moreover, the Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the non payment of taxes. The FDIC has taken a position similar to that expressed in the Policy Statement in legal proceedings brought against Orange County in United States Bankruptcy Court and in Federal District Court. The Bankruptcy Court issued a ruling in favor of the FDIC on certain of such claims. Orange County appealed that ruling, and the FDIC cross-appealed. On August 28, 2001, the Ninth Circuit Court of Appeals issued a ruling favorable to the FDIC except with respect to the payment of pre-receivership liens based upon delinquent property tax. The District is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency with respect to parcels in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale would prevent or delay the foreclosure sale. In the case of Fannie Mae and Freddie Mac, in the event a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or a private deed of trust secured by a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Taxes may be limited. Federal courts have held that, based on the supremacy clause 36 of the United States Constitution “this Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, anything in the Constitution or Laws of any State to the contrary notwithstanding.” In the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal government entity owns a parcel of taxable property but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the Districtwishes 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. For a discussion of risks associated with taxable parcels within the District becoming owned by the federal government, federal government entities or federal government sponsored entities, see “— Insufficiency of Special Tax Revenues.” The District’s remedies may also be limited in the case of delinquent Special Taxes with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement Administration) have or obtain an interest. Direct and Overlapping Indebtedness The ability of an owner of property within the District to pay the applicable Special Taxes could be affected by the existence of other taxes and assessments imposed upon taxable parcels. See “THE DISTRICT — Direct and Overlapping Debt” herein. The Cityand other public agencies whose boundaries overlap those of the District could impose additional taxes or assessment liens on the property within the District in order to finance public improvements or services to be located or provided inside of or outside of such area. The lien created on the property within the District through the levy of such additional taxes may be on a parity with the lien of the Special Taxes applicable to the property within the District. The imposition of additional liens on a parity with the Special Taxes may reduce the ability or willingness of property owners to pay the Special Taxes and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes. Payment of Special Taxes is not a Personal Obligation of the Property Owners An owner of a taxable parcel is not personally obligated to pay Special Taxes. Rather, Special Taxes are an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully Special Taxes, the District has no recourse against the property owner. No Acceleration Provision The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture. Limited Obligations The Bonds and interest thereon are not payable from the general funds of the City. Except with respect to the Net Taxes, neither the credit nor the taxing power of the District or the City is pledged for the payment of the Bonds or the interest thereon, and, except as provided in the Indenture, no Owner of the Bonds may compel 37 the exercise of any taxing power by the District or the City or force the forfeiture of any City or District property. The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of the City’s or the District’s property or upon any of the City’s or the District’s income, receipts or revenues, except the Net Taxes and other amounts pledged under the Indenture. The District’s legal obligations with respect to any delinquent Special Taxes are limited to: (i) payments from the Reserve Account to the extent of funds on deposit therein; and (ii) the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Special Taxes are delinquent. See the caption “SOURCES OF PAYMENT FOR THE BONDS—Special Taxes—Proceeds of Foreclosure Sales.” The Bonds cannot be accelerated in the event of any default. The obligation to pay Special Taxes does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to such liens. See the caption “—Payment of the Special Tax is Not a Personal Obligation of the Property Owners.” Enforcement of Special Tax payment obligations by the District is limited to judicial foreclosure in the Superior Court of California, County of Riverside. There is no assurance that any current or subsequent owner of a parcel subject to a Special Tax lien will be able to pay the amounts due or that such owner will choose to pay such amounts even though financially able to do so. Failure by owners of the parcels to pay Special Tax installments when due, delay in foreclosure proceedings, or the inability of the District to sell parcels that have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of Special Taxes levied against such parcels may result in the inability of the District to make full or timely payments of debt service on the Bonds, which may in turn result in the depletion of the Reserve Account. See the caption “—Enforcement Delays – Bankruptcy.” Ballot Initiatives Articles XIII A, XIII B, XIII C, and XIII D of the California Constitution were adopted pursuant to measures qualified for the ballot pursuant to the State’s constitutional initiative process. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State, the City, or other local agencies to increase revenues or to increase appropriations. Proposition 218 An initiative measure entitled “The Right to Vote on Taxes Act” (“Proposition 218”) was approved by the voters at the November 5, 1996 statewide general election. Among other things, Proposition 218 added a new Article XIII C to the California Constitution which states that “. . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” The Act provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. While the application of Proposition 218 in this context has not yet been interpreted by the courts and the matter is not completely free from doubt, it is not likelythat Proposition 218 has conferred on the voters the power to effect a repeal or reduction of the Special Tax if the result thereof would be to impair the security of the Bonds. It may be possible, however, for voters or the City Council, acting as the legislative body of the District, to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. Therefore, no assurance can be given with respect to the future levy of Special Taxes in amounts greater 38 than the amount necessary for the timely retirement of the Bonds. Nevertheless, to the maximum extent that the law permits it to do so, the District will covenant that it will not initiate proceedings under the Act to reduce the maximum Special Tax rates for the District, unless, in connection therewith, (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expense Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds. The District also will covenant that, in the event an initiative is adopted which purports to reduce or otherwise alter the Rate and Method, it will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. However, no assurance can be given as to the enforceability of the foregoing covenants. Shapiro Case With respect to the approval of the Special Taxes, on August 1, 2014, the California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997) (the “San Diego Decision”). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego (the “City of San Diego”). The CCFD is a financing district much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in the entire City of San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties located within the CCFD. The election authorizing the special tax was limited to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel is located. Thus, the election was not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was modeled after Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the specialtax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIIIA, Section 4 thereof and Article XIIIC, Section 2 thereof require that the electors in such an election be the registered voters within the district. The facts of the San Diego Decision show that there were hundreds of thousands of registered voters within the CCFD (viz., all of the registered voters in the City of San Diego). The elections held in the District at the time of had no registered voters at the time of suchelection. In the San Diego Decision, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court’s holding does not apply to the elections in connection with the formation of the District or the authorization of the Special Tax levy. Moreover, Section 53341 of the Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax…shall be commenced within 30 days after the special tax is approved by the voters.” Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds. Voters in the District approved Special Tax on July 25, 2017. Based on Sections 53341 and 53359 of the Act and analysis of existing laws, regulations, rulings and court decisions, Bond Counsel is of the opinion that no successful challenge to the Special Tax being levied in accordance with the Rate and Method may now be brought. The interpretation and application of Proposition 218 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. Loss of Tax Exemption As discussed under the heading “TAX MATTERS,” interest on the Bonds could cease to be excluded from gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a 39 result of future acts or omissions of the District. In addition, it is possible that future changes in applicable federal tax laws could cause interest on the Bonds to be included in gross income for federal income taxation or could otherwise reduce the equivalent taxable yield of such interest and thereby reduce the value of the Bonds. No Ratings – Limited Secondary Market The Districthas not applied to have the Bonds rated by any nationally recognized bond rating company, and it does not expect to do so in the future. There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Although the District has committed to provide certain financial and operating information, there can be no assurance that such information will be available to Bond owners on a timely basis. The failure to provide the required annual financial information does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, the absence of a credit rating for the Bonds or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. Limitations on Remedies Remedies available to the Owners of the Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of interest on the Bonds. Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency reorganization, fraudulent conveyance or transfer, moratorium or other similar laws affecting generally the enforcement of creditor’s rights, by equitable principles and by the exercise of judicial discretion and by limitations on remedies against public agencies in the State of California. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the Owners. Potential Early Redemption of Bonds from Prepayments or Assessment Bond Proceeds Property owners within the District are permitted to prepay their Special Taxes at any time. Such prepayments will result in a redemption of the Bonds on the Interest Payment Date for which timely notice may be given under the Indenture following the receipt of the prepayment. CONTINUING DISCLOSURE District Continuing Disclosure Pursuant to a Continuing Disclosure Certificate, dated as of November 1, 2018 (the “Disclosure Agreement”), to be executed and delivered by the District at the time of issuance of the Bonds, the District will covenant for the benefit of the holders and Beneficial Owners of the Bonds to provide certain financial information and operating data relating to the District by February 15 following the end of the District’s Fiscal Year (currently its Fiscal Year ends on June 30) (the “Annual Report”), commencing with the report for the Fiscal Year ended June 30, 2018, and to provide notices of the occurrence of certain enumerated events. The Annual Report and the notices of enumerated events will be filed by the District with EMMA. The specific nature of the information to be contained in the Annual Report and the notice of enumerated events is set forth in Appendix F—”FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12. 40 The District has not had any continuing disclosure undertakings outstanding during the previous five- year period. Although the City and its affiliated entities other than the District (such as the Lake Elsinore Public Financing Authority, the City’s former redevelopment agency and its successor agency (the “Agency”), and other community facilities districts formed by the City) are not obligated persons pursuant to Rule 15c2-12 with respect to the Bonds, during the last five years the City and such affiliated entities failed to comply in certain respects with continuing disclosure obligations related to outstanding bonded indebtedness. The failures to comply include late filings with respect to several annual reports, and failure to provide notice of late annual financial information, more specifically: (1) Comprehensive audited financial statements of the City, the Agency or certain community facilities districts, as applicable for Fiscal Year 2012-13 were filed more than 180 days late and the audited financial statements for Fiscal Year 2014-15 were filed more than 30 days late. (2) Updated tabular and other operating information relating to the City, the Agency and community facilities districts for Fiscal Years 2012-13, 2013-14, and 2016-17 were filed late, and certain instances more than 180 days late. (3)Failure to provide notices of the late filing of certain of the annual financial information that is described in items (1) and (2) above. (4)Several of the annual reports included incomplete information relating to community facilities districts, including tax prepayment information, improvement fund balances and special tax delinquency information. (5)Certain material event notices of changes in bond ratings were not filed in a timely fashion. The City and its affiliated entities have made additional filings to provide certain of the previously omitted information (including the existing ratings of the outstanding bonds). The City has retained Spicer Consulting Group, LLC to serve as Dissemination Agent for the continuing disclosure undertaking related to the Bonds, and has adopted policies and procedures with respect to its continuing disclosure practices. In addition, the City has reported the failures in compliance under its previous continuing disclosure undertakings pursuant to the Municipalities Continuing Disclosure Cooperation Initiative of the U.S. Securities Exchange Commission. Developer Continuing Disclosure To provide updated information with respect to the development within the District, D.R. Horton will enter into a Continuing Disclosure Agreement of the Developer (the “Developer Continuing Disclosure Agreement”) by and between D.R. Horton and Spicer Consulting Group, LLC, as dissemination agent, and will covenant to provide an Annual Report not later than June 15 of each year beginning June 15, 2019, and a Semiannual Report on each December 15, beginning December 15, 2019, until satisfaction of certain conditions set forth in the Developer Continuing Disclosure Agreement. The Annual Reports and the Semiannual Reports to be provided by D.R. Horton will contain updates regarding the development within the District as outlined in Section 4 of the Developer Continuing Disclosure Agreement attached as AppendixG. In addition to its Annual Reports and Semiannual Reports, the Developer will agree to provide notices of certain events set forth in the Developer Continuing Disclosure Agreement. D.R. Horton’ obligations under the Developer Continuing Disclosure Agreement will terminate upon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all the Bonds; or (b) the property owned by D.R. Horton within the District being responsible for less than 20% of the Special Tax levy. Based on the D.R. Horton’ projected schedule for buildout of the project in the District, it is expected that D.R. 41 Horton’ obligations under the Developer Continuing Disclosure Agreement will terminate prior to the time the first report thereunder will be due. TAX EXEMPTION In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of the same maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the Beneficial Owner will increase the Beneficial Owner’s basis in the Bond. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the Beneficial Owner of a Bond is excluded from the gross income of such Beneficial Owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals, and is exempt from State of California personal income tax. Bond Counsel’s opinion as to the exclusion from gross income of interest (and original issue discount) on the Bonds is based upon certain representations of fact and certifications made by the District, the City and others and is subject to the condition that the District, the City and others making such representations comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds to assure that interest (and original issue discount) on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District and the City will covenant to comply with all such requirements. The amount by which a Beneficial Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium, which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Beneficial Owner’s basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Beneficial Owner realizing a taxable gain when a Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Beneficial Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Bond premium. The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of other similar bonds). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the Bonds or their market value. SUBSEQUENT TO THE ISSUANCE OF THE BONDS THERE MIGHT BE FEDERAL, STATE, OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR INTERPRETATIONS OF FEDERAL, STATE, OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE, OR LOCAL TAX TREATMENT OF THE BONDS INCLUDING THE IMPOSITION OF ADDITIONAL 42 FEDERAL INCOME OR STATE TAXES BEING IMPOSED ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE BONDS STATUTORY CHANGES WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCURHAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS. Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest (and original issue discount) on the Bonds for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counselother than Stradling Yocca Carlson & Rauth, a Professional Corporation. Although Bond Counsel will render an opinion that interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes provided that the District and the City continue to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest (and original issue discount) with respect to the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds. Should interest on the Bonds (including any original issue discount) become includable in gross income for federal income tax purposes, the Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture. A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix C. LEGAL OPINION The legal opinion of Bond Counsel approving the validity of the Bonds, in substantially the form set forth as Appendix C hereto, will be made available to purchasers of the Bonds at the time of original delivery of the Bonds. Certain legal matters will be passed upon for the City and the District by Leibold McClendon, & Mann, Irvine, California, City Attorney, and for the District by Stradling Yocca Carlson & Rauth, a Professional Corporation, Disclosure Counsel, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. Bond Counsel undertakes no responsibility to the purchasers of the Bonds for the accuracy, completeness or fairness of this Official Statement. ABSENCE OF LITIGATION In connection with the issuance of the Bonds, the City Attorney will deliver an opinion to the effect that, to their actual knowledge, after due inquiry and investigation, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened, or any unfavorable decision, ruling or finding, against or affecting the District, which would adversely impact the District’s ability to complete the transactions described in, or contemplated by, the Indenture or this Official Statement, restrain or enjoin the collection of the Special Taxes, or in any way contest or affect the validity of the Bonds, the Indenture, the Special Taxes, or the transactions described herein. 43 NO RATING The District has not made, and does not contemplate making, an application to any rating organization for the assignment of a rating on the Bonds. UNDERWRITING The Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the “Underwriter”). The Underwriter has agreed to purchase the Bonds at a price of $__________ (being the $__________ aggregate principal amount of the Bonds, less an Underwriter’s discount of $__________ and [plus][minus] [net] original issue [premium][discount] of $__________). The Bond Purchase Agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter’s compensation is contingent upon the successful issuance of the Bonds. Under certain circumstances, the Underwriter may offer and sell the Bonds to certain dealers and others at prices lower or yields higher than those stated on the page immediately following the cover page of this Official Statement. The offering prices may be changed from time to time by the Underwriter. FINANCIAL INTERESTS The fees being paid to the Underwriter and its counsel, Bond Counsel, Disclosure Counsel and the Trustee are contingent upon the issuance and delivery of the Bonds. From time to time, Stradling Yocca Carlson & Rauth, a Professional Corporation, represents the Underwriter on matters unrelated to the Bonds. MUNICIPAL ADVISOR The District has retained Urban Futures Incorporated, Tustin, California, as Municipal Advisor for the sale of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. Urban Futures Incorporated, is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities. MISCELLANEOUS So far as any statements made in this Official Statement involve matters of opinion, assumptions, projections, anticipated events or estimates, whether or not expressly stated, they are set forth as such and not as presentations of fact, and actual results may differ substantially from those set forth therein. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the Owners of the Bonds. The summaries of certain provisions of the Bonds, statutes and other documents or agreements referred to in this Official Statement do not purport to be complete, and reference is made to each of them for a complete statement of their provisions. Copies are available for review by making requests to the City. 44 The execution and delivery of this Official Statement by the City Manager of the City has been duly authorized by the City Council of the City acting in its capacity as the legislative body of the District. CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) By: City Manager of the City of Lake Elsinore A-1 APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX SECOND AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) The following sets forth the Rate and Method of Apportionment for the levy and collection of Special Tax of the City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) (“CFD No. 2007-4”). The Special Tax shall be levied on and collected each Fiscal Year, in an amount determined through the application of the Rate and Method of Apportionment described below. All of the real property within CFD No. 2007-4 unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided. A. DEFINITIONS “Acre or Acreage”means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable Final Map, parcel map, condominium plan, or other recorded County parcel map or similar instrument. The square footage of an Assessor’s Parcel is equal to the Acreage multiplied by 43,560. “Act”means the Mello-Roos Community Facilities Act of 1982, being Chapter 2.5, Part 1, Division 2 of Title 5 of the California Government Code. “Administrative Expenses”means the actual or reasonably estimated costs directly related to the formation, annexation, and administration of CFD No. 2007-4 including, but not limited to: the costs of computing the Special Tax for Facilities and preparing the annual Special Tax for Facilities collection schedules (whether by the City or designee thereof or both); the costs to the City, CFD No. 2007-4, or any designee thereof associated with fulfilling the CFD No. 2007-4 disclosure requirements; the costs associated with responding to public inquiries regarding the Special Tax for Facilities; the costs of the City, CFD No. 2007-4 or any designee thereof related to an appeal of the Special Tax for Facilities; and the City's annual administration fees including payment of a proportional share of salaries and benefits of any City employees and City overhead whose duties are related to the administration and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2007-4 for any other administrative purposes of CFD No. 2007-4, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax for Facilities. “CFD Administrator”means an official of the City, or designee thereof, responsible for (i) determining the Special Tax for Facilities Requirement, (ii) determining the Special Tax for Services Requirement, and (iii) providing for the levy and collection of the Special Taxes. “Approved Property”means all Assessor’s Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax for Facilities is being levied, and (ii) that have not been issued a building permit on or before May 1st preceding the Fiscal Year in which the Special Tax for Facilities is being levied. “Assessor’s Parcel”means a lot or parcel shown on an Assessor’s Parcel Map with an assigned Assessor’s Parcel Number valid at the time the Special Tax for Facilities is enrolled for the Fiscal Year for which the Special Tax for Facilities is being levied. A-2 “Assessor’s Parcel Map”means an official map of the Assessor of the County designating parcels by Assessor’s Parcel Number. “Assessor’s Parcel Number”means that number assigned to an Assessor’s Parcel by the County for purposes of identification. “Assigned Special Tax for Facilities”means the Special Tax for Facilities of that name described in Section D below. “Backup Special Tax for Facilities”means the Special Tax for Facilities applicable to each Assessor’s Parcel of Developed Property, as determined in accordance with Section E below. “Bonds”means any obligation to repay a sum of money, including obligations in the form of bonds, notes, certificates of participation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, to which Special Tax for Facilities within CFD No. 2007-4 have been pledged. “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, reflected on the original construction building permit issued for construction of a Residential Unit, including square footage of internal living space subsequently added to a Residential Unit after issuance of a building permit for expansion or renovation of such Residential Unit. “Calendar Year”means the period commencing January 1 of any year and ending the following December 31. “CFD” or “CFD No. 2007-4”means Community Facilities District No. 2007-4 (Makenna Court) established by the City under the Act. “City”means the City of Lake Elsinore. “City Council”means the City Council of the City of Lake Elsinore, acting as the Legislative Body of CFD No. 2007-4, or its designee. “County”means the County of Riverside. “Developed Property”means all Assessor’s Parcels of Taxable Property, not classified as Approved Property, Undeveloped Property, Provisional Undeveloped Property that are not Exempt Property pursuant to the provisions of Section J. below : (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax for Facilities or Special Tax for Services is being levied, and (ii) a building permit for new construction has been issued on or before May 1st preceding the Fiscal Year in which the Special Tax for Facilities or Special Tax For Services is being levied. “Exempt Property”means all Assessor’s Parcels designated as being exempt from Special Tax for Facilities and/or Special Tax for Services pursuant to Section J, below. “Final Map”means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which building permits may be issued without further subdivision. “Fiscal Year”means the period commencing on July 1 of any year and ending the following June 30. A-3 “Indenture”means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Category”or “LUC”means any of the categories contained in Section B hereof to which an Assessor’s Parcel is assigned consistent with the land use approvals that have been received or proposed for the Assessor’s Parcel as of May 1 preceding the Fiscal Year in which the Special Tax for Facilities is being levied. “Maximum Special Tax for Facilities”means the Maximum Special Tax for Facilities, determined in accordance with Section C, that can be levied by CFD No. 2007-4 in any Fiscal Year on any Assessor’s Parcel. “Maximum Special Tax for Services”means the Maximum Special Tax for Services, as determined in accordance with Section M below that can be levied in any Fiscal Year on any Assessor's Parcel of Developed Property within CFD No. 2007-4. “Operating Fund”means a fund that shall be maintained for any Fiscal Year to pay for the actual costs of maintenance related to the Services, and the applicable Administrative Expenses. “Operating Fund Balance”means the amount of funds in the Operating Fund at the end of the preceding Fiscal Year. “Multi-Family 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 Residential Units available for rental by the general public, not for sale to an end user, and under common management, as determined by the CFD Administrator. “Non-Residential Property”means all Assessor's Parcels of Developed Property for which a building permit(s) was issued for a non-residential use. The CFD Administrator shall make the determination if an Assessor’s Parcel is Non-Residential Property. “Proportionately”means that the ratio of the actual Special Tax for Facilities levy to the applicable Assigned Special Tax for Facilities is equal for all applicable Assessor’s Parcels. In case of Developed Property subject to the apportionment of the Special Tax for Facilities under step four of Section F, “Proportionately” in step four means that the quotient of (a) actual Special Tax for Facilities less the Assigned Special Tax for Facilities divided by (b) the Backup Special Tax for Facilities less the Assigned Special Tax for Facilities, is equal for all applicable Assessor’s Parcels. “Provisional Undeveloped Property”means all Assessor’s Parcels of Taxable Property that would otherwise be classified as Exempt Property pursuant to the provisions of Section J, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum Acreage set forth in Section J. “Residential Unit”or “RU”means a residential unit that is used or intended to be used as a domicile by one or more persons, as determined by the CFD Administrator. “Residential Property”means all Assessor’s Parcels of Developed Property upon which completed Residential Units have been constructed or for which building permits have been issued for purposes of constructing one or more Residential Units. “Single Family Residential Property”means any Residential Property other than Multi-Family Residential Property on an Assessor’s Parcel. A-4 “Services”means maintenance services including but not limited to (i) maintenance and lighting of parks, parkways, streets, roads and open space, (ii) maintenance and operation of water quality improvements, (iii) public street sweeping, (iv) fund an operating reserve for the costs of such services as determined by the CFD Administrator. “Special Tax for Facilities”means the Special Tax for Facilities to be levied in each Fiscal Year on each Assessor's Parcel of Developed Property, Undeveloped Property and Provisionally Undeveloped Property to fund the Special Tax for Facilities Requirement. “Special Tax for Facilities Requirement”means that amount required in any Fiscal Year for CFD No. 2007-4 to: (i) pay debt service on all Outstanding Bonds due in the calendar year commencing in such Fiscal Year; (ii) pay periodic costs on the CFD No. 2007-4 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2007-4 Bonds due in the calendar year commencing in such Fiscal Year; (iii) pay a proportionate share of Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay for reasonably anticipated Special Tax for Facilities delinquencies; (vi) pay directly for acquisition or construction of CFD Public Facilities to the extent that the inclusion of such amount does not increase the Special Tax for Facilities levy on Approved Property or Undeveloped Property; less (vii) a credit for funds available to reduce the annual Special Tax for Facilities levy, as determined by the CFD Administrator pursuant to the Indenture. “Special Tax for Services”means any of the Special Tax for Services authorized to be levied within CFD No. 2007-4 pursuant to the Act to fund the Special Tax for Services Requirement. “Special Tax for Services Requirement”means that amount to be collected in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2007-4 in both the current Fiscal Year and the next Fiscal Year. The costs to be covered shall be the direct costs for maintenance services including but not limited to (i) maintenance and lighting of parks, parkways, streets, roads and open space, (ii) maintenance and operation of water quality improvements, (iii) public street sweeping, (iv) fund an operating reserve for the costs of such services as determined by the CFD Administrator, and (v) Administrative Expenses. Under no circumstances shall the Special Tax for Services Requirement include funds for Bonds. “Taxable Property”means all Assessor’s Parcels within the boundaries of CFD No. 2007-4, which are not Exempt Property. “Taxable Unit”means a Residential Unit or an Acre. “Trustee”means the trustee, fiscal agent, or paying agent under the Indenture. “Undeveloped Property”means all Assessor’s Parcels of Taxable Property which are not Developed Property, Approved Property or Provisional Undeveloped Property. B. ASSIGNMENT TO LAND USE CATERGORIES Each Fiscal Year, beginning with Fiscal Year 2017-18, each Assessor’s Parcel within CFD No. 2007-4 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 Undeveloped Property. A-5 C. MAXIMUM SPECIAL TAX FOR FACILITIES 1.Developed Property The Maximum Special Tax for Facilities for each Assessor’s Parcel of Developed Property in any Fiscal Year shall be the greater of (i) the Assigned Special Tax for Facilities or (ii) the Backup Special Tax for Facilities. 2.Approved Property, Undeveloped Property and Provisional Undeveloped Property The Maximum Special Tax for Facilities for each Assessor’s Parcel classified as Approved Property, Undeveloped Property, or Provisional Undeveloped Property in any Fiscal Year shall be the applicable Assigned Special Tax for Facilities. D. ASSIGNED SPECIAL TAX FOR FACILITIES 1.Developed Property Each Fiscal Year, each Assessor’s Parcel of Single Family Residential Property, Multi-Family Property or Non-Residential Property shall be subject to an Assigned Special Tax for Facilities. The Assigned Special Tax for Facilities applicable to an Assessor's Parcel of Developed Property for Fiscal Year 2017- 18 shall be determined pursuant to Table 1 below. TABLE 1 ASSIGNED SPECIAL TAX FOR FACILITIES RATES FOR DEVELOPED PROPERTY FISCAL YEAR 2017-18 2.Approved Property, Undeveloped Property and Provisional Undeveloped Property Each Fiscal Year, each Assessor’s Parcel of Approved Property, Undeveloped Property and Provisional Undeveloped Property shall be subject to an Assigned Special Tax for Facilities. The Assigned Special Tax for Facilities rate for an Assessor’s Parcel classified as Approved Property, Undeveloped Property and Provisional Undeveloped Property for Fiscal Year 2017-18 shall be $12,370 per Acre. 3.Increase in the Assigned Special Tax for Facilities On each July 1, commencing July 1, 2018, the Assigned Special Tax for Facilities rate for Developed Property, Approved Property, Undeveloped Property and Provisional Undeveloped Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. Land Use Category Description Building Square Footage Assigned Special Tax for Facilities 1 Single Family Residential Property Less than or equal to 2,200 sq. ft.$2,030 per RU 2 Single Family Residential Property 2,201 –2,400 sq. ft.$2,120 per RU 3 Single Family Residential Property 2,401 –2,600 sq. ft. $2,220 per RU 4 Single Family Residential Property More than or equal to 2,601 sq. ft $2,330 per RU 5 Multi-Family Residential Property N/A $12,370 per Acre 6 Non-Residential Property N/A $12,370 per Acre A-6 E. BACKUP SPECIAL TAX FOR FACILITIES At the time a Final Map is recorded, the Backup Special Tax for Facilities for all Assessor’s Parcels of Developed Property classified or reasonably expected to be classified as a Single Family Property within such Final Map area shall be determined by (i) multiplying (a) the Maximum Special Tax for Facilities rate for Undeveloped Property by (b) the total Acreage of Taxable Property in such Final Map area, excluding Acreage classified as Provisional Undeveloped Property, Acreage classified or reasonably expected to be classified as Multi-Family Residential Property, Acreage classified or reasonably expected to be classified as Non-Residential Property, and any Acreage reasonably expected to be classified as Exempt Property in such Final Map area, and (ii) dividing the results in (i) by the total number of Residential Units reasonably expected to be constructed within such Final Map area. The resulting quotient shall be the Backup Special Tax for Facilities for each Assessor’s Parcel of Single Family Residential Property within such Final Map area. The Backup Special Tax for Facilities shall not apply to Multi-Family Residential Property or Non-Residential Property. Notwithstanding the foregoing, if Assessor’s Parcels of Developed Property which are classified or to be classified as Single Family Residential Property are subsequently changed or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Tax for Facilities for the area that has been changed or modified shall be recalculated, based on the methodology above, to equal the amount of Backup Special Tax for Facilities that would have been generated if such change did not take place. On each July 1, commencing July 1, 2018, the Backup Special Tax for Facilities rate shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. F. METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILITIES 1. Special Tax for Facilities Commencing with Fiscal Year 2017-18 and for each following Fiscal Year, the City Council shall determine the Special Tax for Facilities Requirement and shall levy the Special Tax for Facilities on all Assessor’s Parcels of Taxable Property until the aggregate amount of Special Tax for Facilities equals the Special Tax for Facilities Requirement. The Special Tax for Facilities shall be levied for each Fiscal Year as follows: First:The Special Tax for Facilities shall be levied Proportionately on all Assessor’s Parcels of Developed Property up to 100% of the applicable Assigned Special Tax for Facilities to satisfy the Special Tax for Facilities Requirement; Second:If additional moneys are needed to satisfy the Special Tax for Facilities Requirement after the first step has been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor’s Parcel of Approved Property at up to 100% of the Maximum Special Tax for Facilities for Approved Property; Third:If additional monies are needed to satisfy the Special Tax for Facilities Requirement after the first two steps have been completed, the Special Tax for Facilities shall be levied Proportionately on all Assessor’s Parcels of Undeveloped Property up to 100% of the Maximum Special Tax for Facilities for Undeveloped Property. Fourth:If additional moneys are needed to satisfy the Special Tax for Facilities Requirement after the first three steps have been completed, the Special Tax for Facilities shall be levied on each Assessor’s Parcel of Developed Property whose Maximum Special Tax for Facilities is the Backup Special Tax for Facilities and such levy shall be increased Proportionately from the Assigned Special Tax for Facilities up to 100% of the Backup Special Tax for Facilities as needed to satisfy the Special Tax for Facilities Requirement; A-7 Fifth:If additional monies are needed to satisfy the Special Tax for Facilities Requirement after the first four steps have been completed, the Special Tax for Facilities shall be levied Proportionately on all Assessor’s Parcels of Provisional Undeveloped Property up to 100% of the Maximum Special Tax for Facilities for Provisional Undeveloped Property. Notwithstanding the above, under no circumstances will the Special Tax for Facilities levied in any Fiscal Year against any Assessor’s Parcel of Residential Property as a result of a delinquency in the payment of the Special Tax for Facilities applicable to any other Assessor’s Parcel be increased by more than ten percent (10%) above the amount that would have been levied in that Fiscal Year had there never been any such delinquency or default. G. PREPAYMENT OF SPECIAL TAX FOR FACILITIES The following additional definitions apply to this Section G: “CFD Public Facilities”means $3,720,000 expressed in 2017 dollars, which shall increase by the Construction Inflation Index on July 1, 2018, and on each July 1 thereafter, or such lower amount (i) determined by the City Council as sufficient to provide the public facilities under the authorized bonding program, or (ii) determined by the City Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Tax for Facilities levied under this Amended and Restated Rate and Method of Apportionment. “Construction Fund”means an account specifically identified in the Indenture or functionally equivalent to hold funds, which are currently available for expenditure to acquire or construct public facilities eligible under CFD No. 2007-4. “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 City 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 minus public facility costs available to be funded through existing construction or escrow accounts or funded by the Outstanding Bonds, and minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment. “Outstanding Bonds”means all previously issued Bonds issued and secured by the levy of Special Tax for Facilities which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Tax for Facilities. The Special Tax for Facilities obligation of an Assessor's Parcel of Developed Property, or an Assessor’s Parcel of Approved Property or Undeveloped Property for which a building permit has been issued or is expected to be issued, or an Assessor’s Parcel of Provisional Undeveloped Property may be prepaid in full, provided that there are no delinquent Special Tax for Facilities, penalties, or interest charges outstanding with respect to such Assessor’s Parcel at the time the Special Tax for Facilities obligation would be prepaid. The Prepayment Amount for an Assessor’s Parcel eligible for prepayment shall be determined as described below. An owner of an Assessor’s Parcel intending to prepay the Special Tax for Facilities obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such notice, the CFD Administrator shall notify such owner of the Prepayment Amount of such Assessor’s Parcel. The CFD Administrator may charge a reasonable fee for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The Prepayment Amount for each applicable Assessor's Parcel shall be calculated according to the following formula (capitalized terms defined below): A-8 Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Cost plus Administrative Fee less Reserve Fund Credit less Capitalized Interest Credit equals Prepayment Amount As of the date of prepayment, the Prepayment Amount shall be calculated as follows: 1.For an Assessor’s Parcel of Developed Property, compute the Assigned Special Tax for Facilities and Backup Special Tax for Facilities, if any, applicable to the Assessor’s Parcel. For an Assessor’s Parcel of Approved Property or Undeveloped Property, compute the Assigned Special Tax for Facilities and the Backup Special Tax for Facilities as though it was already designated as Developed Property based upon the building permit issued or expected to be issued for that Assessor’s Parcel. For an Assessor’s Parcel of Provisional Undeveloped Property compute the Assigned Special Tax for Facilities for that Assessor’s Parcel. 2.For each Assessor’s Parcel of Developed Property, Approved Property, Undeveloped Property or Provisional Undeveloped Property to be prepaid, (a) divide the Assigned Special Tax for Facilities computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Assigned Special Tax for Facilities applicable to all Assessor’s Parcels of Taxable Property at buildout, as reasonably determined by the City, and (b) divide the Backup Special Tax for Facilities computed pursuant to paragraph 1 for such Assessor’s Parcel by the sum of the estimated Backup Special Tax for Facilities applicable to all Assessor’s Parcels of Taxable Property at buildout, as reasonably determined by the CFD Administrator. 3. Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the Outstanding Bonds. The product shall be the “Bond Redemption Amount”. 4. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed with the proceeds of the Bond Redemption Amount. This product is the “Redemption Premium.” 5.Compute the Future Facilities Cost. 6.Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the amount determined pursuant to paragraph 5 to determine the Future Facilities Cost to be prepaid (the “Future Facilities Amount”). 7.Compute the amount needed to pay interest on the Bond Redemption Amount to be redeemed with the proceeds of the Prepayment Amount until the earliest redemption date for the Outstanding Bonds. 8.Determine the actual Special Tax for Facilities levied on the Assessor’s Parcel in the current Fiscal Year which has not yet been paid. 9.Estimate the amount of interest earnings to be derived from the reinvestment of the Bond Redemption Amount plus the Redemption Premium until the earliest redemption date for the Outstanding Bonds. 10.Add the amounts computed pursuant to paragraph 7 and 8 and subtract the amount computed pursuant to paragraph 9. This difference is the “Defeasance Cost.” 11.Estimate the administrative fees and expenses associated with the prepayment, including the costs of computation of the Prepayment Amount, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption. This amount is the “Administrative Fee.” A-9 12.Calculate the “Reserve Fund Credit” as the lesser of: (a) the expected reduction in the applicable reserve requirements, 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 requirements in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the applicable reserve funds on the prepayment date. Notwithstanding the foregoing, if the reserve fund requirement is satisfied by a surety bond or other instrument at the time of the prepayment, then no Reserve Fund Credit shall be given. Notwithstanding the foregoing, the Reserve Fund Credit shall in no event be less than 0. 13.If any capitalized interest for the Outstanding Bonds will not have been expended as of the date immediately following the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment. This amount is the “Capitalized Interest Credit.” 14.The Prepayment Amount is equal to the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Cost, and the Administrative Fee, less the Reserve Fund Credit and the Capitalized Interest Credit. 15.From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 10, 12, and 13 shall be deposited into the appropriate fund as established under the Indenture and used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 6 shall be deposited into the Construction Fund. The amount computed pursuant to paragraph 11 shall be retained by CFD 2007-4. The Special Tax for Facilities prepayment amount may be insufficient to redeem a full $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of Bonds or to make debt service payments. With respect to a Special Tax for Facilities obligation that is prepaid pursuant to this Section G, the City Council shall indicate in the records of CFD 2007-4 that there has been a prepayment of the Special Tax for Facilities obligation and shall cause a suitable notice to be recorded in compliance with the Act within thirty (30) days of receipt of such prepayment to indicate the prepayment of the Special Tax for Facilities obligation and the release of the Special Tax for Facilities lien on such Assessor’s Parcel and the obligation of such Assessor’s Parcel to pay such Special Tax for Facilities shall cease. Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Special Tax for Facilities that may be levied on Taxable Property, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Year. H. PARTIAL PREPAYMENT OF SPECIAL TAX FOR FACILITIES The Special Tax for Facilities obligation of an Assessor's Parcel of Developed Property, or an Assessor’s Parcel of Approved Property or Undeveloped Property for which a building permit has been issued or is expected to be issued, or and Assessor’s Parcel of Provisional Undeveloped Property, as calculated in this Section H below, may be partially prepaid, provided that there are no delinquent Special Tax for Facilities, penalties, or interest charges outstanding with respect to such Assessor’s Parcel at the time the Special Tax for Facilities obligation would be prepaid. A-10 The Partial Prepayment Amount shall be calculated according to the following formula: PP = (PG – A) x F +A The terms above have the following meanings: PP =the Partial Prepayment Amount. PG =the Prepayment Amount calculated according to Section G. F =the percent by which the owner of the Assessor’s Parcel is partially prepaying the Special Tax for Facilities obligation. A = the Administration Fee calculated according to Section G. The owner of any Assessor’s Parcel who desires such prepayment shall notify the CFD Administrator of such owner’s intent to partially prepay the Special Tax for Facilities and the percentage by which the Special Tax for Facilities shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for Facilities for an Assessor’s Parcel within 30 days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor’s Parcel that is partially prepaid, the City Council shall (i) distribute the funds remitted to it according to Section G, and (ii) shall indicate in the records of CFD No. 2007-4 that there has been a partial prepayment of the Special Tax for Facilities obligation and shall cause a suitable notice to be recorded in compliance with the Act within thirty (30) days of receipt of such partial prepayment of the Special Tax for Facilities obligation to indicate the partial prepayment of the Special Tax for Facilities obligation and the partial release of the Special Tax for Facilities lien on such Assessor’s Parcel, and the obligation of such Assessor’s Parcel to pay such prepaid portion of the Special Tax for Facilities shall cease. Notwithstanding the foregoing, no partial prepayment will be allowed unless the amount of Special Tax for Facilities that may be levied on Taxable Property after such partial prepayment, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Year. I.TERMINATION OF SPECIAL TAX FOR FACILITIES The Special Tax for Facilities shall cease not later than the 2057-2058 Fiscal Year, however, the Special Tax for Facilities will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on Bonds for which the Special Tax for Facilities has been pledged have been paid; (ii) all authorized facilities for CFD No. 2007-4 have been acquired, (iii) no delinquent Special Tax for Facilities remain uncollected and (iv) all other obligations of CFD No. 2007-4 have been satisfied. J. EXEMPTIONS The City shall classify as Exempt Property, in order of priority, (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 restricted in use 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) Assessor’s Parcels restricted to other types of public uses determined by the City Council, provided that no such classification would reduce the sum of all Taxable Property to less than 15.82 Acres. Notwithstanding the above, the City Council shall not classify an Assessor’s Parcel as Exempt Property if such classification would reduce the sum of all Taxable Property to less than 15.82 Acres. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 15.82 Acres will be classified as Provisional Undeveloped Property, and will be subject to Special Tax for Facilities pursuant to step five in Section F. A-11 K. MANNER OF COLLECTION OF SPECIAL TAX FOR FACILITIES The Special Tax for Facilities shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2007-4 may collect Special Tax for Facilities at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor’s Parcels as permitted by the Act. L. APPEALS RELATING TO SPECIAL TAX FOR FACILITIES Any property owner claiming that the amount or application of the Special Tax for Facilities 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 Special Tax for Facilities 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 Special Tax for Facilities, and rule on the appeal. If the CFD Administrator’s decision requires that the Special Tax for Facilities 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), but an adjustment shall be made to the Special Tax for Facilities on that Assessor’s Parcel in the subsequent Fiscal Year(s). The City Council may interpret this Rate and Method of Apportionment for purposes of clarifying any ambiguity and make determinations relative to the annual administration and levy of the Special Tax for Facilities and any landowner or resident’s appeals. Any decision of the City Council shall be final and binding as to all persons. M. SPECIAL TAX FOR SERVICES Commencing with Fiscal Year 2017-18 and for each following Fiscal Year, the City Council shall determine the Special Tax for Services Requirement and shall levy the Special Tax for Services on all Assessor’s Parcels of Developed Property until the aggregate amount of Special Tax for Services equals the Special Tax for Services Requirement. The Special Tax for Services shall be levied Proportionately on all Assessor’s Parcels of Developed Property up to 100% of the applicable Maximum Special Tax to satisfy the Special Tax for Services Requirement; Developed Property a.Maximum Special Tax for Services The Maximum Special Tax for Services for each Assessor’s Parcel of Developed Property for Fiscal Year 2017-18 is identified in Table 2 below: TABLE 2 MAXIMUM SPECIAL TAX FOR SERVICES FOR DEVELOPED PROPERTY Land Use Category Taxable Unit Maximum Special Tax Per Taxable Unit 1. Single Family Residential Property RU $307 2. Multi-Family Residential Property RU $154 3. Non-Residential Property Acre $685 On each July 1, commencing on July 1, 2018 the Maximum Special Tax for Services for Developed Property shall increase by i) the percentage increase in the Consumer Price Index (All Items) for Los Angeles - Riverside - Orange County (1982-84 = 100) since the beginning of the preceding Fiscal Year, or ii) by two percent (2.0%), whichever is greater. A-12 N. DURATION OF SPECIAL TAX FOR SERVICES The Special Tax for Services shall be levied in perpetuity to fund the Special Tax for Services Requirement, unless no longer required as determined at the sole discretion of the City Council. O. MANNER OF COLLECTION The Special Tax for Services shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2007-4 may collect the Special Tax for Services at a different time or in a different manner if necessary to meet its funding requirements. P. APPEALS RELATING TO SPECIAL TAX FOR SERVICES Any property owner claiming that the amount or application of the Special Tax for Services 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 Special Tax for Services 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 Special Tax for Services, and rule on the appeal. If the CFD Administrator’s decision requires that the Special Tax for Services 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), but an adjustment shall be made to the Special Tax for Services on that Assessor’s Parcel in the subsequent Fiscal Year(s). The City Council may interpret this Amended and Restated Rate and Method of Apportionment for purposes of clarifying any ambiguity and make determinations relative to the annual administration of the Special Tax for Services and any landowner or residents appeals. Any decision of the City Council shall be final and binding as to all persons. B-1 APPENDIX B CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING The following information relating to the City of Lake Elsinore (the “City”) and the County of Riverside, California (the “County”), California (the “State”) is supplied solely for purposes of information. Neither the City nor the County is obligated in any manner to pay principal of or interest on the Bonds or to cure any delinquency or default on the Bonds. The Bonds are payable solely from the sources described in the Official Statement. General The City was founded in 1883 and incorporated as a general law city effective April 23, 1888 in San Diego County. In 1893, the Elsinore Valley, previously located in San Diego County, became part of the new County of Riverside. The City encompasses approximately 43 square miles, with over 10 miles of lakeshore, and is located at the southwestern end of the County, 73 miles southeast of downtown Los Angeles and 74 miles north of downtown San Diego. Population The following table offers population figures for the City, the County and the State for 2014 through 2017. Area 2014 2015 2016 2017 2018 City of Lake Elsinore 57,488 59,404 61,422 62,487 63,365 County of Riverside 2,291,262 2,317,895 2,346,717 2,382,640 2,415,955 State of California 38,568,628 38,912,464 39,179,627 39,500,973 39,809,693 Source: California State Department of Finance, Demographic Research Unit. 2010 Census Benchmark. Building Activity The following tables provide summaries of the building permit valuations and the number of new dwelling units authorized in the City and County from 2013 through 2017. BUILDING PERMIT VALUATIONS City of Lake Elsinore 2013-2017 2013 2014 2015 2016 2017 Valuation ($000): Residential $113,861 $80,159 $75,979 $121,211 $165,978 Non-residential 4,262 5,300 5,879 18,587 14,739 Total*$118,123 $85,459 $81,858 $139,798 $180,717 Residential Units: Single family 685 429 372 457 569 Multiple family 0 0 0 0 0 Total 685 429 372 457 569 * Totals may not add to sums because of rounding. Source: Construction Industry Research Board. B-2 BUILDING PERMIT VALUATIONS County of Riverside 2013-2017 2013 2014 2015 2016 2016 Valuation ($000): Residential $1,375,593 $1,621,751 $1,536,742 $1,759,535 $1,794,108 Non-residential 873,977 814,990 911,465 1,346,019 1,093,090 Total*$2,249,570 $2,436,741 $2,448,207 $1,433,691 $1,903,417 Residential Units: Single family 4,716 5,007 5,007 5,662 6,265 Multiple family 1,427 1,931 1,189 1,039 1,070 Total 6,143 6,938 6,196 6,701 7,335 * Totals may not add to sums because of rounding. Source: Construction Industry Research Board. Employment The following tables show the largest employers located in the City and County as of June 30, 2017. LARGEST EMPLOYERS City of Lake Elsinore (as of June 30, 2017) Rank Name of Business Employees Type of Business 1.Lake Elsinore Unified School District 2,644 School District 2.M & M Framing 500 Construction 3.Stater Bros 319 Supermarkets 4.Lake Elsinore Hotel & Casino 275 Casino & Resort 5.Costco 259 Retail Stores 6.Walmart 234 Retail Stores 7.Riverside County – Dept. of Social Services 173 Government 8.Elsinore Valley Municipal Water District 154 Water District 9.Home Depot 150 Building Supplies 10.Target 150 Retail Stores Source: City of Lake Elsinore Comprehensive Annual Financial Report for the year ending June 30, 2017. B-3 LARGEST EMPLOYERS County of Riverside (as of June 30, 2017) Rank Name of Business Employees Type of Business 1.County of Riverside 22,538 County Government 2.University of California-Riverside 8,686 University 3.March Air Reserve Base 8,500 Military Reserve Base 4.Amazon 7,500 Distribution Center 5.Kaiser Permanente Riverside Medical Center 5,739 Medical Center 6.Corona-Norco Unified School District 5,399 School District 7.Riverside Unified School District 4,236 School District 8.Pechanga Resort and Casino 4,000 Casino & Resort 9.Riverside University Health Systems-Medical Center 3,876 Medical Center 10.Eisenhower Medical Center 3,665 Medical Center Source: County of Riverside Comprehensive Annual Financial Report for the year ending June 30, 2017. B-4 Employment and Industry Employment data by industry is not separately reported on an annual basis for the City but is compiled for the Riverside-San Bernardino-Ontario Metropolitan Statistical Area (the “MSA”), which includes all of Riverside and San Bernardino Counties. In addition to varied manufacturing employment, the MSA has large and growing commercial and service sector employment, as reflected in the table below. The following table represents the Annual Average Labor Force and Industry Employment for the County for the period from 2013 through 2017. RIVERSIDE-SAN BERNARDINO-ONTARIO MSA INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE 2013 2014 2015 2016 2017 Civilian Labor Force 1,893,100 1,921,000 1,956,900 1,984,900 2,023,200 Civilian Employment 1,706,800 1,765,300 1,828,200 1,866,600 1,920,400 Civilian Unemployment 186,300 155,700 128,600 118,300 102,800 Civilian Unemployment Rate 9.8%8.1%6.6%6.0%5.1% Total Farm 14,500 14,400 14,800 14,600 14,400 Total Nonfarm 1,233,300 1,289,300 1,353,100 1,401,900 1,451,600 Total Private 1,008,100 1,060,500 1,119,800 1,159,600 1,201,600 Goods Producing 158,600 170,200 183,000 191,500 196,600 Mining and Logging 1,200 1,300 1,300 900 900 Construction 70,000 77,600 85,700 92,000 97,000 Manufacturing 87,300 91,300 96,100 98,600 98,700 Service Providing 1,074,700 1,119,100 1,170,100 1,210,500 1,255,000 Trade, Transportation and Utilities 299,700 314,900 333,200 348,100 366,000 Wholesale Trade 56,400 58,900 61,600 62,800 63,700 Retail Trade 164,800 169,400 174,300 178,000 182,100 Transportation, Warehousing and Utilities 78,400 86,600 97,400 107,300 120,200 Information 11,500 11,300 11,400 11,500 11,300 Financial Activities 41,800 42,900 43,900 44,600 44,500 Professional and Business Services 131,900 138,700 147,400 145,000 147,200 Educational and Health Services 187,600 194,800 205,100 214,300 224,800 Leisure and Hospitality 135,900 144,800 151,700 160,200 165,700 Other Services 41,100 43,000 44,000 44,600 45,600 Government 225,200 228,800 233,300 242,300 250,000 Total, All Industries 1,247,800 1,303,700 1,367,900 1,416,600 1,466,000 Note:Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix B. Source:State of California, Employment Development Department, March 2017 Benchmark. B-5 The following table summarizes the labor force, employment and unemployment figures for the period from 2013 through 2017 for the City, the County, the State and the nation as a whole. CITY OF LAKE ELSINORE, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA AND UNITED STATES Average Annual Civilian Labor Force, Employment and Unemployment Year and Area Labor Force Employment(2)Unemployment(3) Unemployment Rate (%) 2013 City of Lake Elsinore 26,500 23,700 2,800 10.5% County of Riverside 996,400 897,700 98,700 9.9 State of California 18,625,000 16,958,400 1,666,600 8.9 United States 155,389,000 143,929,000 11,460,000 7.4 2014 City of Lake Elsinore 26,900 24,500 2,300 8.7% County of Riverside 1,013,500 930,400 83,100 8.2 State of California 18,758,400 17,351,300 1,407,100 7.5 United States 155,922,000 146,305,000 9,617,000 6.2 2015 City of Lake Elsinore 27,500 25,500 2,000 7.1% County of Riverside 1,035,700 966,300 69,400 6.7 State of California 18,896,500 17,724,800 1,171,700 6.2 United States 157,130,000 148,834,000 8,296,000 5.3 2016 City of Lake Elsinore 27,900 26,100 1,800 6.5% County of Riverside 1,052,600 988,200 64,500 6.1 State of California 19,093,700 18,048,800 1,044,800 5.5 United States 159,187,000 151,436,000 7,751,000 4.9 2017 City of Lake Elsinore 27,200 25,500 1,600 6.0% County of Riverside 1,072,500 1,016,200 56,300 5.2 State of California 19,312,000 18,393,100 918,900 4.8 United States 160,320,000 153,337,000 6,982,000 4.4 Note: Data is not seasonally adjusted. (1)Annual averages, unless otherwise specified. (2)Includes persons involved in labor-management trade disputes. (3)The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table. Source: U.S. Department of Labor – Bureau of Labor Statistics, California Employment Development Department. 2017 Benchmark. Personal Income Personal Income is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance. B-6 The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients. Total personal income in Riverside County increased by 52% between 2005 and 2016. The following tables summarize personal income for Riverside County for 2005 through 2016. PERSONAL INCOME Riverside County 2005-2016 (Dollars in Thousands) Year Riverside County Annual Percent Change 2005 $57,669,741 9.2% 2006 63,538,333 10.2 2007 66,347,611 4.4 2008 67,367,683 1.5 2009 65,359,484 (3.0) 2010 66,904,690 2.4 2011 71,213,948 6.4 2012 73,158,724 2.7 2013 75,223,346 2.8 2014 79,066,137 5.1 2015 84,429,454 6.8 2016 87,827,068 4.0 Source: U.S. Department of Commerce, Bureau of Economic Analysis. The following table summarizes per capita personal income for Riverside County, California and the United States for 2005-2016. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area. PER CAPITA PERSONAL INCOME Riverside County, State of California and the United States 2005-2016 Year Riverside County California United States 2005 $29,853 $39,521 $35,904 2006 31,574 42,334 38,144 2007 31,972 43,692 39,821 2008 31,932 44,162 41,082 2009 30,446 42,224 39,376 2010 30,380 43,323 40,278 2011 31,847 45,854 42,463 2012 32,301 48,359 44,283 2013 32,828 48,555 44,489 2014 34,044 51,317 46,486 2015 35,883 54,664 48,429 2016 36,782 56,308 49,204 Source: U.S. Department of Commerce, Bureau of Economic Analysis. B-7 Taxable Sales The table below presents taxable sales for the years 2010 through 2016(1) for the City. TAXABLE SALES City of Lake Elsinore 2010-2016(1) (Dollars in Thousands) Year Permits Taxable Transactions 2010 1,197 $599,836 2011 1,248 634,553 2012 1,274 665,409 2013 1,716 688,483 2014 1,176 728,088 2015(1)1,420 765,715 2016 1,510 791,622 (1)Beginning in 2015, the outlet counts in these reports show the number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Industry-level data for 2015 are not comparable to that of prior years. Source: “Taxable Sales in California (Sales & Use Tax)” - California State Board of Equalization. The table below presents taxable sales for the years 2010 through 2016(1) for the County. TAXABLE SALES County of Riverside 2010-2016(1) (Dollars in Thousands) Year Permits Taxable Transactions 2010 45,688 $23,152,780 2011 46,886 25,641,497 2012 46,316 28,096,009 2013 46,805 30,065,467 2014 48,453 32,035,687 2015(1)56,846 32,910,909 2016 57,771 34,231,144 (1)Beginning in 2015, the outlet counts in these reports show the number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Industry-level data for 2015 are not comparable to that of prior years. Source: “Taxable Sales in California (Sales & Use Tax)” - California State Board of Equalization. C-1 APPENDIX C FORM OF OPINION OF BOND COUNSEL Upon issuance of the Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to render its final approving opinion in substantially the following form: [Closing Date] City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Lake Elsinore, California Re:$__________ City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Special Tax Bonds, Series 2018 Ladies and Gentlemen: We have examined the Constitution and the laws of the State of California, a certified record of the proceedings of the City of Lake Elsinore (the “City”) taken in connection with the formation of City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) (the “District”) and the authorization and issuance of the District’s Special Tax Bonds, Series 2018 in the aggregate principal amount of $__________ (the “Bonds”) and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the District, the City, the initial purchasers of the Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us. The Bonds have been issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (comprising Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California), a resolution adopted by the City Council of the City, acting in its capacity as the legislative body of the District (the “City Council”) on October 9, 2018 (the “Resolution”), and a Bond Indenture (the “Indenture”) dated as of November 1, 2018, by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”). All capitalized terms not defined herein shall have the meaning set forth in the Indenture. Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that: (1)The Bonds have been duly and validly authorized by the District and are legal, valid and binding limited obligations of the District, enforceable in accordance with their terms and the terms of the Indenture. The Bonds are limited obligations of the District but are not a debt of the City, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and, except for the Net Taxes, neither the faith and credit nor the taxing power of the City, the State of California, or any of its political subdivisions is pledged for the payment thereof. (2)The Indenture has been duly executed and delivered by the District. The Indenture creates a valid pledge of, and the Bonds are secured by, the Net Taxes and the amounts on deposit in certain funds and accounts established under the Indenture, as and to the extent provided in the Indenture. The Indenture is enforceable in accordance with its terms; provided, however, we express no opinion as to the enforceability of the covenant of the District contained in the Indenture to levy Special Taxes for the payment of Administrative C-2 Expenses or as to indemnification, penalty, contribution, choice of law, choice of forum or waiver provisions contained therein. (3)Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. (4)Interest on the Bonds is exempt from State of California personal income tax. (5)The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity are to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond Owner will increase the Bond Owner’s basis in the applicable Bond. Original issue discount that accrues for the Bond Owner is excluded from the gross income of such Owner for federal income tax purposes, is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals (as described in paragraph (3) above) and is exempt from State of California personal income tax. (6)The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Internal Revenue Code of 1986, as amended (the “Code”); such amortizable Bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner. The opinions expressed in paragraphs (3) and (5) above as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Bonds is subject to the condition that the District complies with all requirements of the Code, that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements. Except as set forth in paragraphs (3), (4), (5) and (6) above, we express no opinion as to any tax consequences related to the Bonds. Certain agreements, requirements and procedures contained or referred to in the Indenture, the Tax Certificate executed by the District and the City and other documents related to the Bonds may be changed and certain actions may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in such documents. We express no opinion as to the effect on the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on any Bond if any such change occurs or action is taken or omitted upon advice or approval of bond counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation. Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Tax Certificate may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, by the application of equitable principles and the exercise of judicial discretion in appropriate cases and by the limitations on legal remedies against public agencies in the State of California. C-3 We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and expressly disclaim any duty to advise the Owners of the Bonds with respect to matters contained in the Official Statement or other offering material. The opinions expressed herein are based upon an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or do occur (or do not occur). Respectfully submitted, D-1 APPENDIX D APPRAISAL REPORT E-1 APPENDIX E SUMMARY OF THE INDENTURE The following is a summary of certain provisions of the Indenture which are not described elsewhere. This summary does not purport to be comprehensive and reference should be made to the Indenture for a full and complete statement of the provisions thereof. [TO COME FROM BOND COUNSEL] F-1 APPENDIX F FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE [TO COME FROM BOND COUNSEL] G-1 APPENDIX G FORM OF DEVELOPER CONTINUING DISCLOSURE AGREEMENT [TO COME FROM BOND COUNSEL] H-1 APPENDIX H BOOK-ENTRY ONLY SYSTEM The information in this Appendix concerning DTC and DTC’s book-entry only system has been obtained from sources that the District and the Underwriter believe to be reliable, but neither the District nor the Underwriter takes any responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered bond will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such annual maturity, and will be deposited with DTC. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. H-2 Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Bonds to the Trustee’s DTC account. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, bonds will be printed and delivered to DTC. THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. Stradling Yocca Carlson & Rauth Draft of 9/25/18 BOND INDENTURE By and between CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) and WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee Relating to $__________ CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BONDS, SERIES 2018 Dated as of November 1, 2018 Table of Contents Page i ARTICLE I DEFINITIONS Section 1.1.Definitions.....................................................................................................................1 ARTICLE II GENERAL AUTHORIZATION AND BOND TERMS Section 2.1.Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds..........................10 Section 2.2.Type and Nature of Bonds and Parity Bonds..............................................................10 Section 2.3.Equality of Bonds and Parity Bonds and Pledge of Net Taxes...................................11 Section 2.4.Description of Bonds; Interest Rates ..........................................................................11 Section 2.5.Place and Form of Payment........................................................................................12 Section 2.6.Form of Bonds and Parity Bonds................................................................................13 Section 2.7.Execution and Authentication.....................................................................................13 Section 2.8.Bond Register..............................................................................................................14 Section 2.9.Registration of Exchange or Transfer.........................................................................14 Section 2.10.Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds.....................................14 Section 2.11.Validity of Bonds and Parity Bonds ...........................................................................15 Section 2.12.Book-Entry System.....................................................................................................15 Section 2.13.Representation Letter..................................................................................................16 Section 2.14.Transfers Outside Book-Entry System .......................................................................16 Section 2.15.Payments to the Nominee...........................................................................................16 Section 2.16.Initial Depository and Nominee..................................................................................16 ARTICLE III CREATION OF FUNDS AND APPLICATION OF PROCEEDS Section 3.1.Creation of Funds; Application of Proceeds...............................................................17 Section 3.2.Deposits to and Disbursements from Special Tax Fund.............................................18 Section 3.3.Administrative Expense Account of the Special Tax Fund........................................18 Section 3.4.Interest Account and Principal Account of the Special Tax Fund..............................19 Section 3.5.Redemption Account of the Special Tax Fund...........................................................19 Section 3.6.Reserve Account of the Special Tax Fund..................................................................20 Section 3.7.Rebate Fund................................................................................................................21 Section 3.8.Surplus Fund...............................................................................................................24 Section 3.9.Acquisition and Construction Fund............................................................................25 Section 3.10.Investments.................................................................................................................25 ARTICLE IV REDEMPTION OF BONDS AND PARITY BONDS Section 4.1.Redemption of Bonds .................................................................................................27 Table of Contents (continued) Page ii Section 4.2.Selection of Bonds and Parity Bonds for Redemption ...............................................29 Section 4.3.Notice of Redemption.................................................................................................29 Section 4.4.Partial Redemption of Bonds or Parity Bonds............................................................30 Section 4.5.Effect of Notice and Availability of Redemption Money...........................................30 ARTICLE V COVENANTS AND WARRANTY Section 5.1.Warranty .....................................................................................................................31 Section 5.2.Covenants....................................................................................................................31 ARTICLE VI AMENDMENTS TO INDENTURE Section 6.1.Supplemental Indentures or Orders Not Requiring Owner Consent...........................35 Section 6.2.Supplemental Indentures or Orders Requiring Owner Consent..................................35 Section 6.3.Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds..........................................................................................................................36 ARTICLE VII TRUSTEE Section 7.1.Trustee.........................................................................................................................37 Section 7.2.Removal of Trustee.....................................................................................................37 Section 7.3.Resignation of Trustee................................................................................................38 Section 7.4.Liability of Trustee .....................................................................................................38 Section 7.5.Merger or Consolidation.............................................................................................41 ARTICLE VIII EVENTS OF DEFAULT; REMEDIES Section 8.1.Events of Default ........................................................................................................41 Section 8.2.Remedies of Owners...................................................................................................42 Section 8.3.Application of Revenues and Other Funds After Default...........................................42 Section 8.4.Power of Trustee to Control Proceedings...................................................................43 Section 8.5.Appointment of Receivers..........................................................................................43 Section 8.6.Non-Waiver.................................................................................................................43 Section 8.7.Limitations on Rights and Remedies of Owners ........................................................44 Section 8.8.Termination of Proceedings........................................................................................44 Table of Contents (continued) Page iii ARTICLE IX DEFEASANCE AND PARITY BONDS Section 9.1.Defeasance..................................................................................................................45 Section 9.2.Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness................................................................................................................46 ARTICLE X MISCELLANEOUS Section 10.1.Cancellation of Bonds and Parity Bonds....................................................................48 Section 10.2.Execution of Documents and Proof of Ownership.....................................................48 Section 10.3.Unclaimed Moneys.....................................................................................................49 Section 10.4.Provisions Constitute Contract....................................................................................49 Section 10.5.Future Contracts..........................................................................................................49 Section 10.6.Further Assurances......................................................................................................49 Section 10.7.Severability.................................................................................................................49 Section 10.8.Notices........................................................................................................................50 Signatures ................................................................................................................................... S-1 EXHIBIT A FORM OF SPECIAL TAX BOND ..........................................................................A-1 EXHIBIT B REQUISITION FOR DISBURSEMENT OF PROJECT COSTS ...........................B-1 BOND INDENTURE THIS BOND INDENTURE dated as of November 1, 2018, by and between CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) (the “District”) and WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee (the “Trustee”), governs the terms of the City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Special Tax Bonds, Series 2018 and any Parity Bonds issued in accordance herewith from time to time. RECITALS : A.The City Council of the City of Lake Elsinore, located in the County of Riverside, California (the “City Council”), has undertaken proceedings and declared the necessity to issue bonds on behalf of the District pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the “Act”). B.Based upon Resolution Nos. 2007-177 and 2007-178 adopted by the City Council on October 9, 2007, Resolution No. 2016-146 adopted by the City Council on December 13, 2016, Resolution No. 2017-093 adopted by the City Council on July 25, 2017, and elections held on October 9, 2007, December 13, 2016 and July 25, 2017 authorizing the levy of a special tax and the issuance of bonds, the District is authorized to issue bonds in one or more series pursuant to the Act, in an aggregate principal amount not to exceed $6,000,000. C.The District intends to finance various Project Costs (as defined herein) through the issuance of bonds in an aggregate principal amount of $__________ designated as the “City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Special Tax Bonds, Series 2018” (the “Bonds”); and D.The District has determined that all requirements of the Act for the issuance of the Bonds have been satisfied. NOW, THEREFORE, in order to establish the terms and conditions upon and subject to which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants contained herein and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable consideration, the receipt of which is hereby acknowledged, the District does hereby covenant and agree, for the benefit of the Owners of the Bonds and any Parity Bonds (as defined herein) which may be issued hereunder from time to time, as follows: ARTICLE I DEFINITIONS Section 1.1.Definitions. Unless the context otherwise requires, the following terms shall have the following meanings: Account. The term “Account” means any account created pursuant to this Indenture. 2 Act. The term “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Section 53311 et seq.of the California Government Code. Acquisition and Construction Fund. The term “Acquisition and Construction Fund” means the fund by that name established pursuant to Section 3.1 hereof. Administrative Expense Account. The term “Administrative Expense Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof. Administrative Expenses. The term “Administrative Expenses” means the administrative costs with respect to the calculation and collection of the Special Taxes, including all attorneys’ fees and other costs related thereto, the fees and expenses of the Trustee, any fees and related costs for credit enhancement for the Bonds or any Parity Bonds which are not otherwise paid as Costs of Issuance, any costs related to the District’s compliance with state and federal laws requiring continuing disclosure of information concerning the Bonds and the District, and any other costs otherwise incurred by City staff on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and any obligation of the District hereunder. Administrative Expenses Cap. The term “Administrative Expenses Cap” means $25,000. Alternate Penalty Account. The term “Alternate Penalty Account” means the account by that name created and established in the Rebate Fund pursuant to Section 3.1 hereof. Annual Debt Service. The term “Annual Debt Service” means the principal amount of any Outstanding Bonds or Parity Bonds payable in a Bond Year either at maturity or pursuant to a Sinking Fund Payment and any interest payable on any Outstanding Bonds or Parity Bonds in such Bond Year, if the Bonds and any Parity Bonds are retired as scheduled. Authorized Investments. The term “Authorized Investments” means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein: (1)For all purposes, including defeasance investments in refunding escrow accounts: (a)cash; or (b)obligations of, or obligations guaranteed as to principal and interest by, the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U.S., including U.S. treasury obligations, all direct or fully guaranteed obligations, Farmers Home Administration, General Services Administration, guaranteed Title XI financing, Government National Mortgage Association (GNMA) and State and Local Government Series; or (c)obligations of government-sponsored agencies that are not backed by the full faith and credit of the U.S. Government: Federal Home Loan Mortgage Corporation (FHLMC) debt obligations, Farm Credit System (formerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives), Federal Home Loan Banks (FHL Banks), Federal National Mortgage Association (FNMA) debt obligations, Financing Corp. (FICO) debt obligations, Resolution Funding Corp. (REFCORP) debt obligations and U.S. Agency for International Development (U.S.A.I.D.) guaranteed notes. 3 (2)For all purposes other than defeasance investments in refunding escrow accounts: (a)obligations of any of the following federal agencies, which obligations represent the full faith and credit of the United States of America: Export-Import Bank, Rural Economic Community Development Administration, U.S. Maritime Administration, Small Business Administration, U.S. Department of Housing & Urban Development (PHAs), Federal Housing Administration and Federal Financing Bank; (b)direct obligations of any of the following federal agencies, which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), obligations of the Resolution Funding Corporation (REFCORP) and senior debt obligations of the Federal Home Loan Bank System; (c)U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks (including those of the Trustee and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of “A-1” or “A-1+” by S&P and “P-1” by Moody’s and maturing no more than 360 days after the date of purchase (ratings on holding companies are not considered as the rating of the bank); (d)commercial paper which is rated at the time of purchase in the single highest classification “A-1+” by S&P and “P-1” by Moody’s and which matures not more than 270 days after the date of purchase; (e)investments in a money market fund rated “AAm,” “AAm-G” or better by S&P, including funds for which the Trustee or its affiliates provide investment advisory or other management services; (f)pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America, or any agency, instrumentality or local governmental unit of any such state, which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice, and (i)which are rated, based on irrevocable escrow account or fund (the “escrow”), in the highest rating category of S&P and Moody’s or any successors thereto; or (ii)(1) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (1)(b) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate; and (2) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate; (g)municipal obligations rated “Aaa/AAA” or general obligations of states with a rating of at least “Aa2/AA” or higher by both Moody’s and S&P; 4 (h)Investment Agreements (supported by appropriate opinions of counsel); and (i)the Local Agency Investment Fund of the State, created pursuant to Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name. The value of the above investments shall be determined as follows: (a)for the purpose of determining the amount in any fund, all Authorized Investments credited to such fund shall be valued at market value. The Trustee shall determine the market value based on accepted industry standards, including the Trustee’s internal systems, and from accepted industry providers. Accepted industry providers shall include, but are not limited to, pricing services provided by Financial Times Interactive Data Corporation, Bank of America Merrill Lynch or Salomon Smith Barney. Notwithstanding anything to the contrary herein, in making any valuation of investments hereunder, the Trustee may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system, and rely thereon; (b)as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest thereon; and (c)as to any investment not specified above: the value thereof established by prior agreement between the City and the Trustee. Authorized Representative of the District. The term “Authorized Representative of the District” means the Mayor, City Manager, Assistant City Manager, Finance Manager or City Clerk of the City, or any other officer or employee authorized by the City Council of the City or by an Authorized Representative of the District to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Representative of the District. Bond Counsel. The term “Bond Counsel” means an attorney at law or a firm of attorneys selected by the District of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia. Bond Register. The term “Bond Register” means the books which the Trustee shall keep or cause to be kept on which the registration and transfer of the Bonds and any Parity Bonds shall be recorded. Bonds. The term “Bonds” means the District’s Special Tax Bonds, Series 2018 issued on [November __], 2018 in the aggregate principal amount of $__________. Bond Year. The term “Bond Year” means the twelve month period commencing on September 2 of each year and ending on September 1 of the following year, except that the first Bond Year for the Bonds or an issue of Parity Bonds shall begin on the Delivery Date and end on the first September 1 which is not more than 12 months after the Delivery Date. Business Day. The term “Business Day” means a day which is not a Saturday or Sunday or a day of the year on which banks in New York, New York, Los Angeles, California, or the city where the corporate trust office of the Trustee is located, are not required or authorized to remain closed. 5 Certificate of an Authorized Representative. The term “Certificate of an Authorized Representative” means a written certificate or warrant request executed by an Authorized Representative of the District. City. The term “City” means the City of Lake Elsinore, County of Riverside, State of California. City Council. The term “City Council” means the City Council of the City. City Facilities Account. The term “City Facilities Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof. Code. The term “Code” means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or Internal Revenue Service interpreting and construing it. Continuing Disclosure Certificate. The term “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate dated as of [November] 1, 2018, as originally executed by the District and as it may be from time to time amended or supplemented in accordance with its terms. Costs of Issuance. The term “Costs of Issuance” means the costs and expenses incurred in connection with the formation of the District and the issuance and sale of the Bonds or any Parity Bonds, including the acceptance and initial annual fees and expenses of the Trustee and its counsel, legal fees and expenses, costs of printing the Bonds and Parity Bonds and the preliminary and final official statements for the Bonds and Parity Bonds, fees of financial consultants, costs of the appraisal and all other related fees and expenses, including reimbursement to property owners within the District for design, engineering and legal costs, as set forth in a Certificate of an Authorized Representative of the District. Costs of Issuance Account. The term “Costs of Issuance Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof. Delivery Date. The term “Delivery Date” means, with respect to the Bonds and each issue of Parity Bonds, the date on which the bonds of such issue were issued and delivered to the initial purchasers thereof. Depository. The term “Depository” means The Depository Trust Company, New York, New York, and its successors and assigns as securities depository for the Bonds, or any other securities depository acting as Depository under Article II hereof. District. The term “District” means City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) established pursuant to the Act and Resolution No. 2007-177 adopted by the City Council of the City on October 9, 2007. Event of Default. The term “Event of Default” meansan event described in Section 8.1 hereof. Fiscal Year. The term “Fiscal Year” means the period beginning on July 1 of each year and ending on the next following June 30. 6 Gross Taxes. The term “Gross Taxes” means the amount of all Special Taxes received by the District together with the proceeds collected from the sale of property pursuant to foreclosure for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions. Indenture. The term “Indenture” means this Bond Indenture, together with any Supplemental Indenture approved pursuant to Article VI hereof. Independent Financial Consultant. The term “Independent Financial Consultant” means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the District, who, or each of whom: (1) is in fact independent and not under the domination of the District or the City; (2) does not have any substantial interest, direct or indirect, in the District or the City; and (3) is not connected with the District or the City as a member, officer or employee of the District or the City, but who may be regularly retained to make annual or other reports to the District or the City. Interest Account. The term “Interest Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof. Interest Payment Date. The term “Interest Payment Date” means March 1, 2019 and each March 1 and September 1 thereafter; provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date will be paid on the Business Day next succeeding such date. Investment Agreement. The term “Investment Agreement” means one or more agreements for the investment of funds of the District complying with the criteria therefor as set forth in subsection (2)(h) of the definition of Authorized Investments herein. Maximum Annual Debt Service. The term “Maximum Annual Debt Service” means the maximum sum obtained for any Bond Year prior to the final maturity of the Bonds and any Parity Bonds by adding the following for each Bond Year: (1) the principal amount of all Outstanding Bonds and Parity Bonds payable in such Bond Year either at maturity or pursuant to a Sinking Fund Payment; and (2) the interest payable on the aggregate principal amount of all Bonds and Parity Bonds Outstanding in such Bond Year if the Bonds and Parity Bonds are retired as scheduled. Moody’s. The term “Moody’s” means Moody’s Investors Service, Inc., its successors and assigns. Net Taxes. The term “Net Taxes” means Gross Taxes minus amounts set aside to pay Administrative Expenses. Nominee. The term “Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.16 hereof. Ordinance. The term “Ordinance” means Ordinance No. 2017-1379 adopted by the City Council on August 8, 2017, providing for the levying of the Special Tax. Outstanding. The terms “Outstanding” or “Outstanding Bonds and Parity Bonds” means all Bonds and Parity Bonds theretofore issued by the District, except: (i) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation in accordance with Section 10.1 hereof;(ii)Bonds and Parity Bonds for payment or redemption of which monies shall have been theretofore deposited in 7 trust (whether upon or prior to the maturity or the redemption date of such Bonds or Parity Bonds), provided that, if such Bonds or Parity Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in this Indenture or any applicable Supplemental Indenture for Parity Bonds; and (iii) Bonds and Parity Bonds which have been surrendered to the Trustee for transfer or exchange pursuant to Section 2.9 hereof or for which a replacement has been issued pursuant to Section 2.10 hereof. Owner. The term “Owner” means the person or persons in whose name or names any Bond or Parity Bond is registered. Parity Bonds. The term “Parity Bonds” means all bonds, notes or other similar evidences of indebtedness hereafter issued, payable out of the Net Taxes and which, as provided in this Indenture or any Supplemental Indenture, rank on a parity with the Bonds. Participants. The term “Participants” means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Bonds or Parity Bonds as securities depository. Person. The term “Person” means natural persons, firms, corporations, partnerships, associations, trusts, public bodies and other entities. Prepayments. The term “Prepayments” means any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxes for one or more parcels in the District made in accordance with the RMA. Principal Account. The term “Principal Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof. Principal Office of the Trustee. The term “Principal Office of the Trustee” means the office of the Trustee located in Costa Mesa, California, or such other office or offices as the Trustee may designate from time to time, or the office of any successor Trustee where it principally conducts its business of serving as trustee under indentures pursuant to which municipal or governmental obligations are issued. Project. The term “Project” means those public facilities described in the Resolution of Formation which are to be acquired or constructed within and outside of the District, including all engineering, planning and design services and other incidental expenses related to such facilities and other facilities, if any, authorized by the qualified electors within the District from time to time. Project Costs. The term “Project Costs” means the amounts necessary to finance the Project, to create and replenish any necessary reserve funds, to pay the initial and annual costs associated with the Bonds or any Parity Bonds, including, but not limited to, remarketing, credit enhancement, Trustee and other fees and expenses relating to the issuance of the Bonds or any Parity Bonds and the formation of the District, and to pay any other “incidental expenses” of the District, as such term is defined in the Act. Rating Agency. The term “Rating Agency” means Moody’s or S&P, or both, as the context requires. 8 Rebate Account. The term “Rebate Account” means the account by that name created and established in the Rebate Fund pursuant to Section 3.1 hereof. Rebate Fund. The term “Rebate Fund” means the fund by that name established pursuant to Section 3.1 hereof in which there are established the Accounts described in Section 3.1 hereof. Rebate Regulations. The term “Rebate Regulations” means any final, temporary or proposed Regulations promulgated under Section 148(f) of the Code. Record Date. The term “Record Date” means the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day. Redemption Account. The term “Redemption Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof. Regulations. The term “Regulations” means the regulations adopted or proposed by the Department of Treasury from time to time with respect to obligations issued pursuant to Section 103 of the Code. Representation Letter. The term “Representation Letter” means the Blanket Letter of Representations from the District to the Depository as described in Section 2.13 hereof. Reserve Account. The term “Reserve Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof. “Reserve Policy” means a letter of credit, insurance policy, surety bond or other such funding instrument issued by a municipal bond insurance company rated least “Aa2” or higher by Moody’s or “AA” or higher by S&P, delivered to the Trustee for the purpose of providing all or a portion of the Reserve Requirement for Bonds and Parity Bonds. Reserve Requirement. The term “Reserve Requirement” means that amount as of any date of calculation equal to the lesser of: (i) 10% of the initial principal amount of the Bonds and Parity Bonds, if any; (ii) Maximum Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any; and (iii) 125% of average Annual Debt Service on the then Outstanding Bonds and Parity Bonds. Resolution of Formation. The term “Resolution of Formation” means collectively, Resolution No. 2007-177 adopted by the City Council on October 9, 2007, Resolution No. 2016-146 adopted by the City Council on December 13, 2016, and Resolution No. 2017-093 adopted by the City Council on July 25, 2017, pursuant to which the City Council established the Districtand undertook certain change proceedings for the District. RMA. The term “RMA” means the Second Amended and Restated Rate and Method of Apportionment of Special Tax for the District approved by the qualified electors of the District at the July 25, 2017 election. Sinking Fund Payment. The term “Sinking Fund Payment” means the annual payment to be deposited in the Redemption Account to redeem a portion of the Term Bonds in accordance with the schedules set forth in Section 4.1(b) hereof and any annual sinking fund payment schedule to retire any Parity Bonds which are designated as Term Bonds. 9 Six-Month Period. The term “Six-Month Period” means the period of time beginning on the Delivery Date of each issue of Bonds or Parity Bonds, as applicable, and ending six consecutive months thereafter, and each six-month period thereafter until the latest maturity date of the Bonds and the Parity Bonds (and any obligations that refund an issue of the Bonds or Parity Bonds). Special Tax Administrator. The term “Special Tax Administrator” means the individual or entity appointed by the City to administer the calculation and collection of the Special Taxes. Special Tax Requirement. The term “Special Tax Requirement” means that amount required in any Fiscal Year for the District to: (i) pay debt service on all Outstanding Bonds and Parity Bonds due in the calendar year commencing in such Fiscal Year; (ii) pay Administrative Expenses; (iii) pay any amounts required to establish or replenish any reserve funds on all Outstanding Bonds and Parity Bonds; (iv) pay for reasonable anticipated Special Tax delinquencies; (v) pay directly for acquisition or construction of facilities authorized under the Act and the RMA to the extent that the inclusion of such amount does not increase the Special Tax levy on Undeveloped Property (as defined in the RMA); (vi) pay any amounts required to establish or replenish any delinquency management funds established in association with the Special Taxes; less (vii) a credit for funds available to reduce the annual Special Tax levy, as determined by the District pursuant to this Indenture. Special Tax Fund. The term “Special Tax Fund” means the fund by that name created and established pursuant to Section 3.1 hereof. Special Taxes. The term “Special Taxes” means the taxes authorized to be levied by the District on property within the District in accordance with the Ordinance, the Resolution of Formation, the Act and the voter approval obtained at the July 25, 2017 election in the District, including any scheduled payments and any Prepayments thereof, the net 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 penalties and interest thereon; provided that any delinquent Special Tax sold to an independent third- party or to the City for 100% of the delinquent amount shall no longer be pledged hereunder to the payment of the Bonds or Parity Bonds. S&P. The term “S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, its successors and assigns. Subaccount. The term “Subaccount” means any subaccount created pursuant to this Indenture. Supplemental Indenture. The term “Supplemental Indenture” means any supplemental indenture amending or supplementing this Indenture. Surplus Fund. The term “Surplus Fund” means the fund by that name created and established pursuant to Section 3.1 hereof. Tax Certificate. The term “Tax Certificate” means the certificate by that name to be executed by the District on a Delivery Date to establish certain facts and expectations and which contains certain covenants relevant to compliance with the Code. Tax-Exempt. The term “Tax-Exempt” means, with reference to an Authorized Investment, an Authorized Investment the interest earnings on which are excludable from gross income for federal 10 income tax purposes pursuant to Section 103(a) of the Code, other than one described in Section 57(a)(5)(C) of the Code. Term Bonds. The term “Term Bonds” means the Bonds maturing on September 1, 20__ and September 1, 20__ and any term maturities of an issue of Parity Bonds as specified in a Supplemental Indenture. Trustee. The term “Trustee” means Wilmington Trust, National Association, a national banking association duly organized and existing under the laws of the United States, at its principal corporate trust office in Costa Mesa, California, and its successors or assigns, or any other bank or trust company which may at any time be substituted in its place as provided in Sections 7.2 or 7.3, and any successor thereto. Underwriter. The term “Underwriter” means, with respect to the Bonds, Stifel, Nicolaus & Company, Incorporated, and with respect to each issue of Parity Bonds, the institution or institutions, if any, with whom the District enters into a purchase contract for the sale of such issue. Water Facilities Account. The term “Water Facilities Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof. ARTICLE II GENERAL AUTHORIZATION AND BOND TERMS Section 2.1.Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds. Under and pursuant to the Act, the Bonds in the aggregate principal amount of $__________, together with any Parity Bonds authorized by the City Council in accordance with Section 9.2 hereof, shall be issued for the purposes of financing the Project, paying Costs of Issuance, and funding the Reserve Account; provided that the aggregate principal amount of the Bonds and any Parity Bonds shall not exceed the total indebtedness presently authorized or subsequently authorized by the qualified electors within the District in accordance with the Act. The Bonds and any Parity Bonds shall be and are limited obligations of the District and shall be payable as to the principal thereof and interest thereon and any premiums upon the redemption thereof solely from the Net Taxes and the other amounts in the Special Tax Fund (other than amounts in the Administrative Expense Account of the Special Tax Fund). Section 2.2.Type and Nature of Bonds and Parity Bonds. Neither the faith and credit nor the taxing power of the City, the State of California, or any political subdivision thereof other than the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Net Taxes, no other taxes are pledged to the payment of the Bonds or any Parity Bonds. The Bonds and any Parity Bonds are not general or special obligations of the City nor general obligations of the District, but are limited obligations of the District payable solely from certain amounts deposited by the District in the Special Tax Fund (exclusive of the Administrative Expense Account), as more fully described herein. The District’s limited obligation to pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds from amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any Parity Bonds may compel the exercise of the taxing power by the District (except as pertains to the Special Taxes) or the City or the forfeiture of any of their property. The principal of and interest on the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of 11 California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal or equitable pledge, charge, lien, or encumbrance upon any of the District’s property, or upon any of its income, receipts or revenues, except the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are, under the terms of this Indenture and the Act, set aside for the payment of the Bonds, any Parity Bonds and interest thereon, and neither the members of the legislative body of the District or the members of the City Council nor any persons executing the Bonds or any Parity Bonds are liable personally on the Bonds or any Parity Bonds, by reason of their issuance. Notwithstanding anything to the contrary contained in this Indenture, the District shall not be required to advance any money derived from any source of income other than the Net Taxes for the payment of the interest on or the principal of the Bonds or any Parity Bonds, or for the performance of any covenants contained herein. The District may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose. Section 2.3.Equality of Bonds and Parity Bonds and Pledge of Net Taxes. Pursuant to the Act and this Indenture, the Bonds and any Parity Bonds shall be equally payable from and secured by a first pledge of and lien on the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account), without priority for number, date of the Bonds or Parity Bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and any Parity Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are hereby set aside for the payment of the Bonds and any Parity Bonds; provided that any delinquent Special Tax sold to an independent third-party or to the City for 100% of the delinquent amount shall no longer be pledged hereunder to the payment of the Bonds or Parity Bonds. Amounts in the Special Tax Fund (other than the Administrative Expense Account therein) shall constitute a trust fund held for the benefit of the Owners to be applied to the payment of the interest on and principal of the Bonds and any Parity Bonds and, so long as any of the Bonds and any Parity Bonds or interest thereon remain Outstanding, shall not be used for any other purpose, except as permitted by this Indenture or any Supplemental Indenture. Notwithstanding any provision contained in this Indenture to the contrary, Net Taxes deposited in the Rebate Fund and the Surplus Fund shall no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate Fund, the Surplus Fund, the Acquisition and Construction Fund or the Administrative Expense Account of the Special Tax Fund shall be construed as a trust fund held for the benefit of the Owners. Nothing in this Indenture or any Supplemental Indenture shall preclude: (i) subject to the limitations contained hereunder, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State of California; or (ii) the issuance, subject to the limitations contained herein, of Parity Bonds which shall be payable from Net Taxes. Section 2.4.Description of Bonds; Interest Rates. The Bonds and any Parity Bonds shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof. The Bonds and any Parity Bonds of each issue shall be numbered as desired by the Trustee. The Bonds shall be designated “City of Lake Elsinore Community Facilities District No. 2007- 4 (Makenna Court) Special Tax Bonds, Series 2018.” The Bonds shall be dated as of their Delivery Date and shall mature and be payable on September 1 in the years and in the aggregate principal 12 amounts and shall be subject to and shall bear interest at the rates set forth in the table below payable on March 1, 2019 and each Interest Payment Date thereafter: Maturity Date September 1 Principal Amount Interest Rate $% Interest shall be payable on each Bond and Parity Bond from the date established in accordance with Section 2.5 below on each Interest Payment Date thereafter until the principal sum of such Bond or Parity Bond has been paid; provided, however, that if at the maturity date of any Bond or Parity Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds are available for the payment or redemption thereof in full, in accordance with the terms of this Indenture, such Bonds and Parity Bonds shall then cease to bear interest. Interest due on the Bonds and Parity Bonds shall be calculated on the basis of a 360-day year comprised of twelve 30-day months. Section 2.5.Place and Form of Payment. The Bonds and Parity Bonds shall be payable both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful money of the United States of America. The principal of the Bonds and Parity Bonds and any premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof at the Principal Office of the Trustee, or at the designated office of any successor Trustee. If the Nominee of the Bonds is registered to Cede & Co., payment of principal and any premiums shall be made without presentment. Interest on any Bond or Parity Bond shall be payable from the Interest Payment Date next preceding the date of authentication of such Bond or Parity Bond, unless: (i) such date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment 13 Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of such Bond or Parity Bond, in which event interest shall be payable from the dated date of such Bond or Parity Bond, as applicable; provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in default, interest on such Bond or Parity Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment on such Bond or Parity Bond, interest on such Bond or Parity Bond shall be payable from its dated date. Interest on any Bond or Parity Bond shall be paid to the person whose name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the close of business on the Record Date. Such interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, to such Owner at his or her address as it appears on the Bond Register. In addition, upon a request in writing received by the Trustee on or before the applicable Record Date from an Owner of $1,000,000 or more in principal amount of the Bonds or of any issue of Parity Bonds, payment shall be made on the Interest Payment Date by wire transfer in immediately available funds to an account within the United States of America designated by such Owner. Section 2.6.Form of Bonds and Parity Bonds. The definitive Bonds may be printed from steel engraved or lithographic plates or may be typewritten. The Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which form is hereby approved and adopted as the form of such Bonds and of the certificate of authentication. Each issue of Parity Bonds and the certificate of authentication therefor shall be in the form provided in the Supplemental Indenture for such issue of Parity Bonds. Until definitive Bonds or Parity Bonds, as applicable, shall be prepared, the District may cause to be executed and delivered in lieu of such definitive Bonds or Parity Bonds temporary bonds in typed, printed, lithographed or engraved form and in fully registered form, subject to the same provisions, limitations and conditions as are applicable in the case of definitive Bonds or Parity Bonds, except that they may be in any denominations authorized by the District. Until exchanged for definitive Bonds or Parity Bonds, as applicable, any temporary bond shall be entitled and subject to the same benefits and provisions of this Indenture as definitive Bonds and Parity Bonds. If the District issues temporary bonds or Parity Bonds, it shall execute and furnish definitive Bonds or Parity Bonds, as applicable, without unnecessary delay and thereupon any temporary bond or Parity Bond may be surrendered to the Trustee at its office, without expense to the Owner, in exchange for a definitive Bond or Parity Bond of the same issue, maturity, interest rate and principal amount in any authorized denomination. All temporary bonds or Parity Bonds so surrendered shall be cancelled by the Trustee and shall not be reissued. Section 2.7.Execution and Authentication. The Bonds and Parity Bonds shall be signed on behalf of the District by the manual or facsimile signature of the Mayor of the City and countersigned by the manual or facsimile signature of the Clerk of the City, or any duly appointed Deputy Clerk, in their capacity as officers of the District, and the seal of the City or the District (or a facsimile thereof) may be impressed, imprinted, engraved or otherwise reproduced thereon, and attested by the signature of the Clerk of the City. In case any one or more of the officers who shall have signed or sealed any of the Bonds or Parity Bonds shall cease to be such officer before the Bonds or Parity Bonds so signed and sealed have been authenticated and delivered by the Trustee (including new Bonds or Parity Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchange of Bonds or Parity Bonds or lost, stolen, destroyed or mutilated Bonds or Parity Bonds), such Bonds and Parity Bonds shall nevertheless be valid and may be authenticated and delivered as 14 herein provided, and may be issued as if the person who signed or sealed such Bonds or Parity Bonds had not ceased to hold such office. Only the Bonds as shall bear thereon such certificate of authentication in the form set forth in Exhibit A attached hereto shall be entitled to any right or benefit under this Indenture, and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Trustee. Section 2.8.Bond Register. The Trustee will keep or cause to be kept, at its office, sufficient books for the registration and transfer of the Bonds and any Parity Bonds which shall upon reasonable prior notice be open to inspection by the District during all regular business hours, and, subject to the limitations set forth in Section 2.9 below, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred on said Bond Register, Bonds and any Parity Bonds as herein provided. The District and the Trustee may treat the Owner of any Bond or Parity Bond whose name appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all purposes and the District and the Trustee shall not be affected by any notice to the contrary. The District and the Trustee may rely on the address of the Owner as it appears in the Bond Register for any and all purposes. It shall be the duty of the Owner to give written notice to the Trustee of any change in the Owner’s address so that the Bond Register may be revised accordingly. Section 2.9.Registration of Exchange or Transfer. Subject to the limitations set forth in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Owner or his or her duly authorized attorney. Bonds or Parity Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds or Parity Bonds for other authorized denominations of the same maturity and issue. The Trustee shall not collect from the Owner any charge for any new Bond or Parity Bond issued upon any exchange or transfer, but shall require the Owner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds or Parity Bonds shall be surrendered for registration of transfer or exchange, the District shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds or a new Parity Bond or Parity Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee shall not be required to register transfers or make exchanges of: (i) Bonds or Parity Bonds for a period of 15 days next preceding any selection of the Bonds or Parity Bonds to be redeemed; or (ii) any Bonds or Parity Bonds chosen for redemption. Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds. If any Bond or Parity Bond shall become mutilated, the District shall execute, and the Trustee shall authenticate and deliver, a new Bond or Parity Bond of like tenor, date, issue and maturity in exchange and substitution for the Bond or Parity Bond so mutilated, but only upon surrender to the Trustee of the Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the Trustee shall be cancelled by the Trustee pursuant to Section 10.1 hereof. If any Bond or Parity Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory to the Trustee and, if any indemnity satisfactory to the Trustee 15 shall be given, the District shall execute and the Trustee shall authenticate and deliver a new Bond or Parity Bond, as applicable, of like tenor, maturity and issue, numbered and dated as the Trustee shall determine in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or stolen. Any Bond or Parity Bond issued in lieu of any Bond or Parity Bond alleged to be mutilated, lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all other Bonds and Parity Bonds issued hereunder. The Trustee shall not treat both the original Bond or Parity Bond and any replacement Bond or Parity Bond as being Outstanding for the purpose of determining the principal amount of Bonds or Parity Bonds which may be executed, authenticated and delivered hereunder or for the purpose of determining any percentage of Bonds or Parity Bonds Outstanding hereunder, but both the original and replacement Bond or Parity Bond shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new Bond or Parity Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to such Bonds or Parity Bonds. Section 2.11. Validity of Bonds and Parity Bonds. The validity of the authorization and issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any proceedings taken by the District for the financing of the Project, or by the invalidity, in whole or in part, of any contracts made by the District in connection therewith, and shall not be dependent upon the completion of the financing of the Project or upon the performance by any Person of his obligation with respect to the Project, and the recital contained in the Bonds or any Parity Bonds that the same are issued pursuant to the Act and other applicable laws of the State shall be conclusive evidence of their validity and of the regularity of their issuance. Section 2.12. Book-Entry System. The Bonds shall be initially delivered in the form of a separate single fully registered Bond (which may be typewritten) for each maturity of the Bonds. Upon initial delivery, the ownership of each such Bond shall be registered in the registration books kept by the Trustee in the name of the Nominee as nominee of the Depository. Except as provided in Section 2.14 hereof, all of the Outstanding Bonds shall be registered in the registration books kept by the Trustee in the name of the Nominee. At the election of the District, any Parity Bonds may also be issued as book-entry bonds registered in the name of the Nominee as provided herein, in which case the references in Sections 2.12 through 2.15 to “Bonds” shall be applicable to such Parity Bonds. With respect to Bonds registered in the registration books kept by the Trustee in the name of the Nominee, the District and the Trustee shall have no responsibility or obligation to any such Participant or to any Person on behalf of which such a Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the District and the Trustee shall have no responsibility or obligation with respect to: (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds; (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any notice with respect to the Bonds, including any notice of redemption; (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event that the Bonds are redeemed in part; or (iv) the payment to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest due with respect to the Bonds. The District and the Trustee may treat and consider the Person in whose name each Bond is registered in the registration books kept by the Trustee as the holder and absolute owner of such Bond for the purpose of payment of the principal of, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond and for all other purposes whatsoever. The Trustee shall pay all 16 principal of, premium, if any, and interest due on the Bonds only to or upon the order of the respective Owner, as shown in the registration books kept by the Trustee, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy and discharge fully the District’s obligations with respect to payment of the principal, premium, if any, and interest due on the Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the registration books kept by the Trustee, shall receive a Bond evidencing the obligation of the District to make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by the Depository to the Trustee and the District of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such new nominee of the Depository. Section 2.13. Representation Letter. In order to qualify the Bonds and any Parity Bonds which the District elects to register in the name of the Nominee for the Depository’s book-entrysystem, an Authorized Representative of the District is hereby authorized to execute from time to time and deliver to such Depository the Representation Letter. The execution and delivery of the Representation Letter shall not in any way limit the provisions of Section 2.12 or in any other way impose upon the District or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Trustee. The District agrees to take all action necessary to continuously comply with all representations made by it in the Representation Letter. In addition to the execution and delivery of the Representation Letter, the Authorized Representatives of the District are hereby authorized to take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program. Section 2.14. Transfers Outside Book-Entry System. In the event that: (i) the Depository determines not to continue to act as securities depository for the Bonds; or (ii) the District determines that the Depository shall no longer so act, then the District will discontinue the book-entry system with the Depository. If the District fails to identify another qualified securities depository to replace the Depository then the Bonds so designated shall no longer be restricted to being registered in the registration books kept by the Trustee in the name of the Nominee, but shall be registered in whatever name or names Persons transferring or exchanging Bonds shall designate, in accordance with the provisions of Section 2.9 hereof. Section 2.15. Payments to the Nominee. Notwithstanding any other provisions of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal, premium, if any, and interest due with respect to such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository. Section 2.16. Initial Depository and Nominee. The initial Depository under this Indenture shall be The Depository Trust Company, New York, New York. The initial Nominee shall be Cede & Co., as Nominee of The Depository Trust Company, New York, New York. 17 ARTICLE III CREATION OF FUNDS AND APPLICATION OF PROCEEDS Section 3.1.Creation of Funds; Application of Proceeds. (a)There are hereby created and established and shall be maintained by the Trustee the following funds and accounts: (1)The City of Lake Elsinore Community Facilities District No. 2007-4(Makenna Court) Special Tax Fund (the “Special Tax Fund”) (in which there shall be established and created an Interest Account, a Principal Account, a Redemption Account, a Reserve Account, and an Administrative Expense Account). (2)The City of Lake Elsinore Community Facilities District No. 2007-4(Makenna Court) Rebate Fund (the “Rebate Fund”) (in which there shall be established a Rebate Account and an Alternate Penalty Account). (3)The City of Lake Elsinore Community Facilities District No. 2007-4(Makenna Court) Acquisition and Construction Fund (the “Acquisition and Construction Fund”) (in which there shall be established a City Facilities Account, a Water Facilities Account and a Costs of Issuance Account). (4)The City of Lake Elsinore Community Facilities District No. 2007-4(Makenna Court) Surplus Fund (the “Surplus Fund”). The amounts on deposit in the foregoing funds, accounts and subaccounts shall be held by the Trustee. The Trustee shall invest and disburse the amounts in such funds, accounts and subaccounts in accordance with the provisions of this Article III and shall disburse investment earnings thereon in accordance with the provisions of Section 3.10 hereof. In connection with the issuance of any Parity Bonds, which may be issued only for the purpose of refunding the Bonds as described in Section 9.2, the Trustee, at the direction of an Authorized Representative of the District, may create new funds, accounts or subaccounts, or may create additional accounts and subaccounts within any of the foregoing funds and accounts for the purpose of separately accounting for the proceeds of the Bonds and any Parity Bonds. (b)The proceeds of the sale of the Bonds shall be received by the Trustee on behalf of the District and deposited and transferred as follows: (1)$__________ shall be transferred to the Costs of Issuance Account of the Acquisition and Construction Fund to pay the Costs of Issuance of the Bonds; (2)$__________ shall be transferred to the Reserve Account of the Special Tax Fund to fund the Reserve Requirement; and (3)$__________ shall be transferred to the Acquisition and Construction Fund of which $__________ shall be deposited in the City Facilities Account and $__________ shall be deposited in the Water Facilities Account. 18 The Trustee may, in its discretion, establish temporary funds or accounts in its books and records to facilitate such transfers. Section 3.2.Deposits to and Disbursements from Special Tax Fund. (a)Except for Prepayments, which shall be deposited to the Redemption Account of the Special Tax Fund, the Trustee shall, on each date on which the Special Taxes are received from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The Trustee shall transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in the amounts set forth in the following Sections, in the following order of priority, to: (1)the Administrative Expense Account of the Special Tax Fund up to the Administrative Expenses Cap; (2)the Interest Account of the Special Tax Fund; (3)the Principal Account of the Special Tax Fund; (4)the Redemption Account of the Special Tax Fund; (5)the Reserve Account of the Special Tax Fund; (6)the Administrative Expense Account of the Special Tax Fund to the extent that Administrative Expenses exceed or are expected to exceed the Administrative Expense Cap; (7)the Rebate Fund; and (8)the Surplus Fund. (b)At maturity of all of the Bonds and Parity Bonds and, after all principal and interest then due on the Bonds and Parity Bonds then Outstanding have been paid or provided for and any amounts owed to the Trustee have been paid in full, moneys in the Special Tax Fund and any accounts therein may be used by the District for any lawful purpose. Section 3.3.Administrative Expense Account of the Special Tax Fund. The Trustee shall transfer from the Special Tax Fund and deposit in the Administrative Expense Account of the Special Tax Fund from time to time amounts necessary to make timely payment of Administrative Expenses as set forth in a Certificate of an Authorized Representative of the District; provided, however, that, except as set forth in the following sentence, the total amount transferred with respect to a Bond Year shall not exceed the Administrative Expenses Cap until such time as there has been deposited to the Interest Account and the Principal Account an amount, together with any amounts already on deposit therein, that is sufficient to pay the interest and principal on all Bonds and Parity Bonds due in such Bond Year and to restore the Reserve Account to the Reserve Requirement. Notwithstanding the foregoing, amounts in excess of the Administrative Expenses Cap may be transferred to the Administrative Expense Account to the extent necessary to collect delinquent Special Taxes. Moneys in the Administrative Expense Account of the Special Tax Fund may be invested in any Authorized Investments as directed in writing by an Authorized Representative of the District and shall be disbursed as directed in a Certificate of an Authorized Representative. 19 Section 3.4.Interest Account and Principal Account of the Special Tax Fund. The principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal due upon redemption, shall be paid by the Trustee from the Principal Account and the Interest Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of principal of and interest on the Bonds and any Parity Bonds will be made when due, after making the transfer required by Section 3.3, at least one Business Day prior to each March 1 and September 1, the Trustee shall make the following transfers from the Special Tax Fund first to the Interest Account and then to the Principal Account; provided, however, that to the extent that deposits have been made in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds or any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be made; and provided, further, that, if amounts in the Special Tax Fund (exclusive of the Reserve Account and the Administrative Expense Account) are inadequate to make the foregoing transfers, then any deficiency shall be made up by transfers from the Reserve Account: (a)To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date shall be equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account shall be used for the payment of interest on the Bonds and any Parity Bonds as the same become due. (b)To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year, commencing September 1, 20__, shall equal the principal payment due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity. Section 3.5.Redemption Account of the Special Tax Fund. (a)With respect to each September 1 on which a Sinking Fund Payment is due, after the deposits have been made to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund as required by Sections 3.3 and 3.4 hereof, the Trustee shall next transfer into the Redemption Account of the Special Tax Fund from the Special Tax Fund the amount needed to make the balance in the Redemption Account one Business Day prior to each September 1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency shall be made up by an immediate transfer from the Reserve Account, if funded, pursuant to Section 3.6 below. Moneys so deposited in the Redemption Account shall be used and applied by the Trustee to call and redeem Term Bonds in accordance with the Sinking Fund Payment schedules set forth in Section 4.1(b) hereof, and to redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the Supplemental Indenture for such Parity Bonds. (b)After making the deposits to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund pursuant to Sections 3.3 and 3.4 above and to the Redemption Account for Sinking Fund Payments then due pursuant to subparagraph (a) of this Section, and in accordance with the District’s election to call Bonds for optional redemption as set forth in 20 Section 4.1(a) hereof, or to call Parity Bonds for optional redemption as set forth in any Supplemental Indenture for Parity Bonds, the Trustee shall transfer from the Special Tax Fund and deposit in the Redemption Account moneys available for the purpose and sufficient to pay the principal and the premiums, if any, payable on the Bonds or Parity Bonds called for optional redemption; provided, however, that amounts in the Special Tax Fund (other than the Administrative Expense Account therein) may be applied to optionally redeem Bonds and Parity Bonds only if immediately following such redemption the amount in the Reserve Account will equal the Reserve Requirement. (c)Prepayments deposited to the Redemption Account shall be applied on the redemption date established pursuant to Section 4.1(c) hereof to the payment of the principal of, premium, if any, and interest on the Bonds and Parity Bonds to be redeemed with such Prepayments. (d)Moneys set aside in the Redemption Account shall be used solely for the purpose of redeeming Bonds and Parity Bonds and shall be applied on or after the redemption date to the payment of principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon presentation and surrender of such Bonds or Parity Bonds, and, in the case of an optional redemption or a special mandatory redemption from Prepayments, to pay the interest thereon; provided, however, that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account may be used to purchase Outstanding Bonds or Parity Bonds in the manner hereinafter provided. Purchases of Outstanding Bonds or Parity Bonds may be made by the District at public or private sale as and when and at such prices as the District may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption or a special mandatory redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to Section 4.1(a) or 4.1(c) hereof, as applicable, or in the case of Parity Bonds the premium established in any Supplemental Indenture. Any accrued interest payable upon the purchase of Bonds or Parity Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date. Section 3.6.Reserve Account of the Special Tax Fund. There shall be maintained in the Reserve Account of the Special Tax Fund an amount equal to the Reserve Requirement. The Reserve Requirement may be satisfied in whole or in part by cash, a Reserve Policy, or a combination thereof. The amounts in the Reserve Account shall be applied as follows: (a)Moneys in the Reserve Account shall be used solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on the Bonds and any Parity Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due and for the purpose of making any required transfer to the Rebate Fund pursuant to Section 3.7 hereof upon written direction from the District. If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any Parity Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee shall withdraw from the Reserve Account, first from the cash on deposit therein, and second from a draw on the Reserve Policy, if any, for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys necessary for such purposes. 21 (b)Whenever moneys are withdrawn from the Reserve Account, after making the required transfers referred to in Sections 3.3, 3.4 and 3.5 above, the Trustee shall transfer to the Reserve Account from available moneys in the Special Tax Fund, or from any other legally available funds which the District elects to apply to such purpose, the amount needed to restore the amount of such Reserve Account to the Reserve Requirement by first, repaying any amounts due under the Reserve Policy, and second to fund the Reserve Account to the Reserve Requirement. Moneys in the Special Tax Fund shall be deemed available for transfer to the Reserve Account only if the Trustee determines that such amounts will not be needed to make the deposits required to be made to the Administrative Expense Account, the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund on or before the next September 1. If amounts in the Special Tax Fund together with any other amounts transferred to replenish the Reserve Account are inadequate to restore the Reserve Account to the Reserve Requirement, including any amounts necessary to pay costs related to the Reserve Policy, if any, then the District shall include the amount necessary to restore the Reserve Account to the Reserve Requirement, in the next annual Special Tax levy to the extent of the maximum permitted Special Tax rates. (c)In connection with a redemption of Bonds pursuant to Section 4.1(a) or 4.1(c) or Parity Bonds in accordance with any Supplemental Indenture, or a partial defeasance of Bonds or Parity Bonds in accordance with Section 9.1 hereof, amounts in the Reserve Account may be applied to such redemption or partial defeasance so long as the amount on deposit in the Reserve Account following such redemption or partial defeasance equals the Reserve Requirement. The District shall set forth in a Certificate of an Authorized Representative the amount in the Reserve Account to be transferred to the Redemption Account on a redemption date or to be transferred pursuant to the Indenture to partially defease Bonds, and the Trustee shall make such transfer on the applicable redemption or defeasance date, subject to the limitation in the preceding sentence. (d)To the extent that the Reserve Account is at the Reserve Requirement as of the first day of the final Bond Year for the Bonds or an issue of Parity Bonds, amounts in the Reserve Account may be applied to pay the principal of and interest due on the Bonds and Parity Bonds, as applicable, in the final Bond Year for such issue. Moneys in the Reserve Account in excess of the Reserve Requirement not transferred in accordance with the preceding provisions of this Section shall be withdrawn from the Reserve Account on the Business Day before each March 1 and September 1 and shall be transferred to the Acquisition and Construction Fund, as directed by an Authorized Representative of the District, until all amounts have been disbursed from the Acquisition and Construction Fund (or such fund is closed) and thereafter to the Interest Account of the Special Tax Fund. Section 3.7.Rebate Fund. (a)The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder designated as the Rebate Fund and shall establish a separate Rebate Account and Alternate Penalty Account therein. All money at any time deposited in the Rebate Account or the Alternate Penalty Account of the Rebate Fund shall be held by the Trustee in trust, for payment to the United States Treasury. A separate subaccount of the Rebate Account and the Alternate PenaltyAccount shall be established for the Bonds and each issue of Parity Bonds the interest on which is excluded from gross income for federal income tax purposes. All amounts on deposit in the Rebate Fund with respect to the Bonds or an issue of Parity Bonds shall be governed by this Section 3.7 and the Tax Certificate for such issue, unless the District obtains an opinion of Bond Counsel that the 22 exclusion from gross income for federal income tax purposes of interest payments on the Bonds and Parity Bonds will not be adversely affected if such requirements are not satisfied. (1)Rebate Account. The following requirements shall be satisfied with respect to each subaccount of the Rebate Account: (i)Annual Computation. Within 55 days of the end of each Bond Year, the District shall calculate or cause to be calculated the amount of rebatable arbitrage for the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage described in the Tax Certificate for each issue (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been made), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Rebate Regulations (the “Rebatable Arbitrage”). The District shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section. (ii)Annual Transfer. Within 55 days of the end of each Bond Year for which Rebatable Arbitrage must be calculated as required by the Tax Certificate for each issue, upon the written direction of an Authorized Representative of the District, an amount shall be deposited to each subaccount of the Rebate Account by the Trustee from any funds so designated by the District if and to the extent required, so that the balance in the Rebate Account shall equal the amount of Rebatable Arbitrage so calculated by or on behalf of the District in accordance with clause (i) of this subsection (a)(1) with respect to the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable. In the event that immediately following any transfer required by the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit to the credit of the applicable subaccount of the Rebate Account exceeds the amount required to be on deposit therein, upon written instructions from an Authorized Representative of the District, the Trustee shall withdraw the excess from the appropriate subaccount of the Rebate Account and then credit the excess to the Special Tax Fund. (iii)Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in each subaccount of the Rebate Account: (X)not later than 60 days after the end of: (A) the fifth Bond Year for the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable; and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year for the Bonds and each issue of Parity Bonds, as applicable; and (Y)not later than 60 days after the payment or redemption of all of the Bonds or an issue of Parity Bonds, as applicable, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code. In the event that, prior to the time of any payment required to be made from the Rebate Account, the amount in the Rebate Account is not sufficient to make such payment when such payment 23 is due, the District shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this subsection (a)(1) shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, or shall be made in such other manner as provided under the Code. (2)Alternate Penalty Account. (i)Six-Month Computation. If the 1½% Penalty has been elected for the Bonds or an issue of Parity Bonds, within 85 days of each particular Six-Month Period, the District shall determine or cause to be determined whether the 1½% Penalty is payable (and the amount of such penalty) as of the close of the applicable Six-Month Period. The District shall obtain expert advice in making such determinations. (ii)Six-Month Transfer. Within 85 days of the close of each Six-Month Period, the Trustee, at the written direction of an Authorized Representative of the District, shall deposit an amount in the appropriate subaccounts of the Alternate Penalty Account from any source of funds held by the Trustee pursuant to this Indenture and designated by the District in such written directions or provided to it by the District, if and to the extent required, so that the balance in each subaccount of the Alternate Penalty Account equals the amount of 1½% Penalty due and payable to the United States Treasury determined as provided in subsection (a)(2)(i) above. In the event that immediately following any transfer provided for in the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit in a subaccount of the Alternate Penalty Account exceeds the amount required to be on deposit therein to make the payments required by subsection (iii) below, the Trustee, at the written direction of an Authorized Representative of the District, may withdraw the excess from the applicable subaccount of the Alternate Penalty Account and credit the excess to the Special Tax Fund. (iii)Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in a subaccount of the Alternate Penalty Account, not later than 90 days after the close of each Six-Month Period the 1½% Penalty, if applicable and payable, computed with respect to the Bonds and any issue of Parity Bonds in accordance with Section 148(f)(4) of the Code. In the event that, prior to the time of any payment required to be made from a subaccount of the Alternate Penalty Account, the amount in such subaccount is not sufficient to make such payment when such payment is due, the District shall calculate the amount of such deficiency and direct the Trustee, in writing, to deposit an amount equal to such deficiency into such subaccount of the Alternate Penalty Account from any funds held by the Trustee pursuant to this Indenture and designated by the District in such written directions prior to the time such payment is due. Each payment required to be made pursuant to this subsection (a)(2) shall be made to the Internal Revenue Service, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T or shall be made in such other manner as provided under the Code. (b)Disposition of Unexpended Funds. Any funds remaining in the Accounts of the Rebate Fund with respect to the Bonds or an issue of Parity Bonds after redemption and payment of such issue and after making the payments described in subsections (a)(1)(iii) or (a)(2)(iii) (whichever is applicable), may be withdrawn by the Trustee at the written direction of the District and utilized in any manner by the District. 24 (c)Survival of Defeasance and Final Payment. Notwithstanding anything in this Section or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance and final payment of the Bonds and any Parity Bonds with respect to which an Account has been created in the Rebate Fund. (d)Amendment Without Consent of Owners. This Section 3.7 may be deleted or amended in any manner without the consent of the Owners, provided that prior to such event there is delivered to the District an opinion of Bond Counsel to the effect that such deletion or amendment will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and any issue of Parity Bonds issued on a tax-exempt basis. (e)Trustee. The Trustee shall have no responsibility to monitor or calculate any amounts payable to the U.S. Treasury pursuant to this Section and shall be deemed constructively to have complied with its obligations hereunder if it follows the written instructions of the District given pursuant to this Section. Section 3.8.Surplus Fund. After making the transfers required by Sections 3.3, 3.4, 3.5, 3.6 and 3.7 hereof, as soon as practicable after each September 1, the Trustee shall transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, unless on or prior to such date, it has received a Certificate of an Authorized Representative directing that certain amounts be retained in the Special Tax Fund because the District has included such amounts as being available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year pursuant to Section 5.2(b) hereof. Moneys deposited in the Surplus Fund will be transferred by the Trustee at the direction of an Authorized Representative of the District: (i) to the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to pay the principal of, including Sinking Fund Payments, premium, if any, and interest on the Bonds and any Parity Bonds when due in the event that moneys in the Special Tax Fund and the Reserve Account of the Special Tax Fund are insufficient therefor; (ii) to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement; (iii) to the Administrative Expense Account of the Special Tax Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense Account of the Special Tax Fund are insufficient to pay Administrative Expenses; and (iv) to the District, for any other lawful purpose of the District. The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity Bonds and may be used by the District for any lawful purpose. In the event that the District reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds or Parity Bonds, the District shall notify the Trustee in a Certificate of an Authorized Representative and the Trustee shall segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of the Surplus Fund shall be invested at the written direction of the District in Authorized Investments the interest on which is excludable from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds to which such amounts are to be applied, unless, in the opinion of Bond Counsel, investment at a higher yield will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes. Such amounts shall be disbursed as directed by an Authorized Representative of the District. 25 Section 3.9.Acquisition and Construction Fund. (a)The moneys in the Costs of Issuance Account shall be disbursed by the Trustee pursuant to a Certificate of an Authorized Representative of the District, and any balance remaining therein after 180 daysshall be transferred by the Trustee to the Administrative Expense Account of the Special Tax Fund as directed in writing by an Authorized Representative of the District. Following such transfer to the Administrative Expense Account, the Costs of Issuance Account shall be closed. (b)The moneys in the Acquisition and Construction Fund and the Accounts therein (other than the Costs of Issuance Account) shall be applied exclusively to pay the Project Costs. Amounts for Project Costs shall be disbursed by the Trustee from the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account), as specified in a Request for Disbursement of Project Costs, substantially in the form of Exhibit B-1 attached hereto. A properly executed Request for Disbursement of Project Costs must be submitted in connection with each requested disbursement and the Trustee may rely thereon without investigating the accuracy thereof. Amounts in an Account of the Acquisition and Construction Fund may be transferred to another Account or Accounts therein pursuant to a Certificate of an Authorized Representative of the District. (c)Upon receipt of a Certificate of an Authorized Representative of the District stating that all or a specified portion of the amount remaining in the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account) is no longer needed to pay Project Costs, the Trustee shall: (i) transfer all or such specified portion, as applicable, of the moneys remaining on deposit in the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account) to the Interest Account, the Principal Account or Redemption Account of the Special Tax Fund, to the Costs of Issuance Account or to the Surplus Fund, as directed in such certificate, provided that in connection with any direction to transfer amounts to the Surplus Fund there shall have been delivered to the Trustee with such certificate an opinion of Bond Counsel to the effect that such transfer to the Surplus Fund will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes; and (ii) thereafter, close the Acquisition and Construction Fund. Section 3.10. Investments. Moneys held in any of the Funds, Accounts and Subaccounts under this Indenture shall be invested at the written direction of the District upon at least two (2) Business Days’ notice in accordance with the limitations set forth below only in Authorized Investments which shall be deemed at all times to be a part of such Funds, Accounts and Subaccounts. Any loss resulting from such Authorized Investments shall be credited or charged to the Fund, Account or Subaccount from which such investment was made, and any investment earnings on a Fund, Account or Subaccount shall be applied as follows: (i) investment earnings on all amounts deposited in the Acquisition and Construction Fund (including the accounts therein), the Special Tax Fund, the Surplus Fund and the Rebate Fund and each Account therein (other than the Reserve Account of the Special Tax Fund) shall be deposited in those respective Funds, Accounts and Subaccounts; and (ii) investment earnings on all amounts deposited in the Reserve Account shall be deposited therein to be applied as set forth in Section 3.6. Moneys in the Funds, Accounts and Subaccounts held under this Indenture may be invested by the Trustee as directed in writing by the District, from time to time, in Authorized Investments subject to the following restrictions (provided that the Trustee is not required to verify compliance with such restrictions and may rely on the District’s written instructions as evidence of such compliance): 26 (a)Moneys in the Acquisition and Construction Fund shall be invested in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available without penalty, as close as practicable to the date the District estimates the moneys represented by the particular investment will be needed for withdrawal from the Acquisition and Construction Fund. Notwithstanding anything herein to the contrary, amounts in the Acquisition and Construction Fund three years after the Delivery Date for the Bonds and the proceeds of each issue of Parity Bonds issued on a tax-exempt basis which are remaining on deposit in the Acquisition and Construction Fund on the date which is three years following the date of issuance of such issue of Parity Bonds shall be invested by the District only in Authorized Investments the interest on which is excluded from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds from which such proceeds were derived, unless in the opinion of Bond Counsel such restriction is not necessary to prevent interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes from being included in gross income for federal income tax purposes. (b)Moneys in the Interest Account, the Principal Account, and the Redemption Account of the Special Tax Fund shall be invested only in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available for withdrawal without penalty, on such dates so as to ensure the payment of principal of, premium, if any, and interest on the Bonds and any Parity Bonds as the same become due. (c)Moneys in the Reserve Account of the Special Tax Fund may be invested only in Authorized Investments (other than the Authorized Investment described in clause (2)(i) of the definition thereof) which, taken together, have a weighted average maturity not in excess of five years; provided that such amounts may be invested in an Investment Agreement to the later of the final maturity of the Bonds or any Parity Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in accordance with Section 3.6 hereof; and provided that no such Authorized Investment of amounts in the Reserve Account allocable to the Bonds or an issue of Parity Bonds shall mature later than the respective final maturity date of the Bonds or the issue of Parity Bonds, as applicable. (d)Moneys in the Rebate Fund shall be invested only in Authorized Investments of the type described in clause (1) of the definition thereof which by their terms will mature, as nearly as practicable, on the dates such amounts are needed to be paid to the United States Government pursuant to Section 3.7 hereof or in Authorized Investments of the type described in clause (2)(e) of the definition thereof. (e)In the absence of written investment directions from the District, the Trustee shall invest solely in Authorized Investments specified in clause (2)(e) of the definition thereof. If no such written investment direction from the District is received, the funds shall be uninvested. The Trustee shall sell, or present for redemption, any Authorized Investment whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer to such funds and accounts or from such funds and accounts. Notwithstanding anything herein to the contrary, the Trustee shall not be responsible for any loss from investments, sales or transfers undertaken in accordance with the provisions of this Indenture. Any Authorized Investments that are registrable securities shall be registered in the name of the Trustee. 27 The Trustee may act as principal or agent in the making or disposing of any investment and shall be entitled to its customary fee for making such investment. The Trustee may sell at the best market price obtainable, or present for redemption, any Authorized Investment so purchased 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 Authorized Investment is credited, and, subject to the provisions of Section 7.4, the Trustee shall not be liable or responsible for any loss resulting from such investment. For investment purposes, the Trustee may commingle the funds and accounts established hereunder, but shall account for each separately. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or which any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as principal for its own account. The District acknowledges that, to the extent that regulations of the Comptroller of the Currency or other applicable regulatory entity grant the District the right to receive brokerage confirmations of security transactions as they occur, the District specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the District periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. ARTICLE IV REDEMPTION OF BONDS AND PARITY BONDS Section 4.1.Redemption of Bonds. (a)Optional Redemption. The Bonds may be redeemed at the option of the District from any source of funds on any Interest Payment Date on or after ________ 1, 20__, in whole or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: Redemption Date Redemption Price ________ 1, 20__ and ________ 1, 20__103% ________ 1, 20__ and ________ 1, 20__102 ________ 1, 20__ and ________ 1, 20__101 ________ 1, 20__ and any Interest Payment Date Thereafter 100 In the event that the District elects to redeem Bonds as provided above, the District shall give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notice to the Trustee shall be given at least 30 but no more than 60 days prior to the redemption date, or by such later date as is acceptable to the Trustee. (b)Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established hereunder, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20__ Term Bond equal 28 to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows: Term Bonds Maturing September 1, 20__ Sinking Fund Redemption Date (September 1)Sinking Fund Payments $ * _____________ * Maturity. The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account establishedhereunder, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows: Term Bonds Maturing September 1, 20__ Sinking Fund Redemption Date (September 1)Sinking Fund Payments $ * _____________ * Maturity. If the District purchases Term Bonds during the Fiscal Year immediately preceding one of the sinking fund redemption dates specified above, the District shall notify the Trustee at least 45 days prior to the redemption date as to the principal amount purchased, and the amount purchased shall be credited at the time of purchase to the next Sinking Fund Payment for the Term Bond so purchased, to the extent of the full principal amount of the purchase. All Bondspurchased pursuant to this subsection shall be cancelled pursuant to Section 10.1 hereof. In the event of a partial optional redemption or special mandatory redemption of the Term Bonds, each of the remaining Sinking Fund Payments for such Term Bonds shall be reduced, as nearly as practicable, on a pro rata basis. (c)Special Mandatory Redemption. The Bonds are subject to special mandatory redemption as a whole or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the 29 Redemption Account pursuant to Section 3.2, plus amounts transferred from the Reserve Account pursuant to Section 3.6(c), at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date: Redemption Date Redemption Price Any Interest Payment Date [from _____ 1, 20__] through March 1, 20__103% September 1, 20__ and March 1, 20__102 September 1, 20__ and March 1, 20__101 September 1, 20__ and any Interest Payment Date thereafter 100 (d)The redemption provisions for Parity Bonds shall be set forth in a Supplemental Indenture. Section 4.2.Selection of Bonds and Parity Bonds for Redemption. If less than all of the Bonds or Parity Bonds Outstanding are to be redeemed, the portion of any Bond or Parity Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or an integral multiple thereof. In selecting portions of such Bonds or Parity Bonds for redemption, the Trustee shall treat such Bonds or Parity Bonds, as applicable, as representing that number of Bonds or Parity Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Bonds or Parity Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity Bonds. The Trustee shall promptly notify the District in writing of the Bonds or Parity Bonds, or portions thereof, selected for redemption. Section 4.3.Notice of Redemption. When Bonds or Parity Bonds are due for redemption under Section 4.1 above or under another redemption provision set forth in a Supplemental Indenture relating to any Parity Bonds, the Trustee shall give notice, in the name of the District, of the redemption of such Bonds or Parity Bonds. Such notice of redemption shall: (i) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds or Parity Bonds selected for redemption, except that where all of the Bonds or all of an issue of Parity Bonds are subject to redemption, or all of the Bonds or Parity Bonds of one maturity are to be redeemed, the bond numbers of such issue need not be specified; (ii) state the date fixed for redemption and surrender of the Bonds or Parity Bonds to be redeemed; (iii) state the redemption price; (iv) state the place or places where the Bonds or Parity Bonds are to be redeemed; (v) in the case of Bonds or Parity Bonds to be redeemed only in part, state the portion of such Bond or Parity Bond which is to be redeemed; (vi) state the date of issue of the Bonds or Parity Bonds as originally issued; (vii) state the rate of interest borne by each Bond or Parity Bond being redeemed; and (viii) state any other descriptive information needed to identify accurately the Bonds or Parity Bonds being redeemed as shall be specified by the Trustee. Such notice shall further state that on the date fixed for redemption, there shall become due and payable on each Bond, Parity Bond or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon shall cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Trustee shall mail a copy of such notice of redemption, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register, and to the original purchaser of any Bonds or Parity Bonds; provided, however, so long as the Bonds and Parity Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. The actual receipt by the Owner of any Bond or Parity Bond of notice of such redemption shall not be a condition precedent to redemption, and neither the failure 30 to receive nor any defect in such notice shall affect the validity of the proceedings for the redemption of such Bonds or Parity Bonds, or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as herein provided shall be conclusive as against all parties and the Owner shall not be entitled to show that he or she failed to receive notice of such redemption. In addition to the foregoing notice, further notice shall be given by the Trustee as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption shall be sent not later than the date that notice of redemption is given to the Owners pursuant to the first paragraph of this Section by first class mail or facsimile to the Depository and to any other registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds and Parity Bonds as determined by the Trustee and to one or more of the national information services that the Trustee determines are in the business of disseminating notice of redemption of obligations such as the Bonds and Parity Bonds. Upon the payment of the redemption price of any Bonds and Parity Bonds being redeemed, each check or other transfer of funds issued for such purpose shall to the extent practicable bear the CUSIP number identifying, by issue and maturity, the Bonds and Parity Bonds being redeemed with the proceeds of such check or other transfer. With respect to any notice of optional redemption of Bonds or Parity Bonds, such notice may state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds or Parity Bonds to be redeemed and that, if such moneys shall not have been so received, said notice shall be of no force and effect and the Trustee shall not be required to redeem such Bonds or Parity Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption shall not be made, and the Trustee shall within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. Section 4.4.Partial Redemption of Bonds or Parity Bonds. Upon surrender of any Bond or Parity Bond to be redeemed in part only, the District shall execute and the Trustee shall authenticate and deliver to the Owner, at the expense of the District, a new Bond or Bonds or a new Parity Bond or Parity Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the foregoing limitations. Section 4.5.Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in Section 4.3 hereof, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: (a)the Bonds and Parity Bonds, or portions thereof, designated for redemption shall, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in this Indenture or in any Supplemental Indenture with respect to any Parity Bonds, anything in this Indenture or in the Bonds or the Parity Bonds to the contrary notwithstanding; 31 (b)upon presentation and surrender thereof at the office of the Trustee, the redemption price of such Bonds and Parity Bonds shall be paid to the Owners thereof; (c)as of the redemption date the Bonds or the Parity Bonds, or portions thereof so designated for redemption shall be deemed to be no longer Outstanding and such Bonds or Parity Bonds, or portions thereof, shall cease to bear further interest; and (d)as of the date fixed for redemption no Owner of any of the Bonds, Parity Bonds or portions thereof so designated for redemption shall be entitled to any of the benefits of this Indenture or any Supplemental Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available. ARTICLE V COVENANTS AND WARRANTY Section 5.1.Warranty. The District shall preserve and protect the security pledged hereunder to the Bonds and any Parity Bonds against all claims and demands of all persons. Section 5.2.Covenants. So long as any of the Bonds or Parity Bonds issued hereunder are Outstanding and unpaid, the District makes the following covenants with the Owners under the provisions of the Act and this Indenture (to be performed by the District or its proper officers, agents or employees), which covenants are necessary and desirable to secure the Bonds and Parity Bonds and tend to make them more marketable; provided, however, that said covenants do not require the District to expend any funds or moneys other than the Special Taxes and other amounts deposited to the Special Tax Fund: (a)Punctual Payment; Against Encumbrances. The District covenants that it will receive all Special Taxes in trust for the Owners and will deposit all Special Taxes with the Trustee immediately upon their apportionment to the District, and the District shall have no beneficial right or interest in the amounts so deposited except as provided by this Indenture. All such Special Taxes shall be disbursed, allocated and applied solely to the uses and purposes set forth herein, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the District. The District covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond and Parity Bond issued hereunder, together with the premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and the Parity Bonds and in accordance with this Indenture to the extent that Net Taxes and other amounts pledged hereunder are available therefor, and that the payments into the Funds and Accounts created hereunder will be made, all in strict conformity with the terms of the Bonds, any Parity Bonds, and this Indenture, and that it will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds and any Parity Bonds issued hereunder. The District will not mortgage or otherwise encumber, pledge or place any charge upon any of the Net Taxes except as provided in this Indenture, and will not issue any obligation or security having a lien or charge upon the Net Taxes superior to or on a parity with the Bonds, other than Parity Bonds. Nothing herein shall prevent the District from issuing or incurring indebtedness which is payable from 32 a pledge of Net Taxes which is subordinate in all respects to the pledge of Net Taxes to repay the Bonds and the Parity Bonds, subject to compliance with the District’s bonded indebtedness limit. (b)Levy of Special Tax. Beginning in Fiscal Year 2019and so long as any Bonds or Parity Bonds issued under this Indenture are Outstanding, the District covenants to levy the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay: (1) the principal of and interest on the Bonds and any Parity Bonds when due; (2) the Administrative Expenses; and (3) any amounts required to replenish the Reserve Account of the Special Tax Fund to the Reserve Requirement, including any amounts to pay costs related to the Reserve Policy, if any. The District further covenants that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are Outstanding. (c)Commence Foreclosure Proceedings. The District covenants for the benefit of the Owners of the Bonds and any Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the Reserve Account is at least equal to the Reserve Requirement. The District may, but shall not be obligated to, advance funds from any source of legally available funds in order to maintain the Reserve Account. The District may treat any delinquent Special Tax sold to an independent third-party or to the City for at least 100% of the delinquent amount as having been paid. Proceeds of any such sale up to 100% of the delinquent amount will be deposited in the Special Tax Fund. The District covenants that it will deposit the net proceeds of any foreclosure in the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to make current payments of principal and interest on the Bonds and any Parity Bonds, to bring the amount on deposit in the Reserve Account up to the Reserve Requirement and to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds. (d)Payment of Claims. The District will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net Taxes or other funds in the Special Tax Fund (other than the Administrative Expense Account therein), or which might impair the security of the Bonds or any Parity Bonds then Outstanding; provided, however, that nothing herein contained shall require the District to make any such payments so long as the District in good faith shall contest the validity of any such claims. (e)Books and Accounts. The District will keep proper books of records and accounts, separate from all other records and accounts of the District, in which complete and correct entries shall be made of all transactions relating to the Project, the levy of the Special Tax and the deposits to the Special Tax Fund. Such books of records and accounts shall at all times during business hours be subject to the inspection of the Trustee or of the Owners or the Owners of any issue of Parity Bonds then Outstanding or their representatives authorized in writing. 33 (f)Federal Tax Covenants. Notwithstanding any other provision of this Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds and any Parity Bonds issued on a tax-exempt basis for federal income tax purposes will not be adversely affected for federal income tax purposes, the District covenants to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality of the foregoing, as follows: (1)Private Activity. The District will take no action or refrain from taking any action or make any use of the proceeds of the Bonds or any Parity Bonds or of any other monies or property which would cause the Bonds or any Parity Bonds issued on a tax-exempt basis for federal income tax purposes to be “private activity bonds” within the meaning of Section 141 of the Code. (2)Arbitrage. The District will make no use of the proceeds of the Bonds or any Parity Bonds or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action which will cause the Bonds or any Parity Bonds issued on a tax-exempt basis for federal income tax purposes to be “arbitrage bonds” within the meaning of Section 148 of the Code. (3)Federal Guaranty. The District will make no use of the proceeds of the Bonds or any Parity Bonds or take or omit to take any action that would cause the Bonds or any Parity Bonds issued on a tax-exempt basis for federal income tax purposes to be “federally guaranteed” within the meaning of Section 149(b) of the Code. (4)Information Reporting. The District will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code. (5)Hedge Bonds. The District will make no use of the proceeds of the Bonds or any Parity Bonds or any other amounts or property, regardless of the source, or take any action or refrain from taking any action that would cause the Bonds or any Parity Bonds issued on a tax-exempt basis for federal income tax purposes to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the District takes all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds and any applicable Parity Bonds. (6)Miscellaneous. The District will take no action or refrain from taking any action inconsistent with its expectations stated in the Tax Certificate executed on the Delivery Date by the District in connection with the Bonds and any issue of Parity Bonds and will comply with the covenants and requirements stated therein and incorporated by reference herein. (7)Other Tax-Exempt Issues. The District will not use proceeds of other tax-exempt securities to redeem any Bonds or Parity Bonds without first obtaining the written opinion of Bond Counsel that doing so will not impair the exclusion from gross income for federal income tax purposes of interest on the Bonds and any Parity Bonds issued on a tax-exempt basis. (8)Subsequent Opinions. If the District obtains a subsequent opinion of Bond Counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation, where such opinion is required in connection with a change or amendment to this Indenture or the procedures set forth in the Tax Certificate, it will obtain an opinion substantially to the effect originally delivered by Stradling Yocca Carlson & Rauth, a Professional Corporation, that interest on the Bonds is excluded from gross income for federal income tax purposes. 34 (g)Reduction of Maximum Special Taxes. The District hereby finds and determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the Act in community facilities districts in Southern California have from time to time been at levels requiring the levy of special taxes at the maximum authorized rates in order to make timely payment of principal of and interest on the outstanding indebtedness of such community facilities districts. For this reason, the District hereby determines that a reduction in the maximum Special Tax rates authorized to be levied on parcels in the District below the levels provided in this Section 5.2(g) would interfere with the timely retirement of the Bonds and Parity Bonds. The District determines it to be necessary in order to preserve the security for the Bonds and Parity Bonds to covenant, and, to the maximum extent that the law permits it to do so, the District hereby does covenant, that it shall not initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in connection therewith, the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that: (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expense Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds. (h)Covenants to Defend. The District covenants that, in the event that any initiative is adopted by the qualified electors in the District which purports to reduce the maximum Special Tax below the levels specified in Section 5.2(g) above or to limit the power of the District to levy the Special Taxes for the purposes set forth in Section 5.2(b) above, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. (i)Limitation on Right to Tender Bonds. The District hereby covenants that it will not adopt any policy pursuant to Section 53344.1 of the Act permitting the tender of Bonds or Parity Bonds in full payment or partial payment of any Special Taxes unless the District shall have first received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in the District having insufficient Net Taxes to pay the principal of and interest on the Bonds and Parity Bonds when due. (j)Continuing Disclosure. The District covenants to comply with the terms of the Continuing Disclosure Certificate and with the terms of any agreement executed by the District with respect to any Parity Bonds to assist the Underwriter in complying with Rule 15c2-12 adopted by the Securities and Exchange Commission; provided, however, that a failure to comply shall not be considered an event of default hereunder and the Owners shall be limited to enforcing the terms thereof in accordance with the terms of the Continuing Disclosure Certificate. (k)Further Assurances. The District shall make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Owners of the Bonds and any Parity Bonds of the rights and benefits provided in this Indenture. 35 ARTICLE VI AMENDMENTS TO INDENTURE Section 6.1.Supplemental Indentures or Orders Not Requiring Owner Consent. The District may from time to time, and at any time, without notice to or consent of any of the Owners, adopt Supplemental Indentures for any of the following purposes: (a)to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Indenture or in any additional resolution or order, provided that such action is not materially adverse to the interests of the Owners; (b)to add to the covenants and agreements of and the limitations and the restrictions upon the District contained in this Indenture other covenants, agreements, limitations and restrictions to be observed by the District which are not contrary to or inconsistent with this Indenture as theretofore in effect or which further secure Bond or Parity Bond payments; (c)to provide for the issuance of any Parity Bonds, and to provide the terms and conditions under which such Parity Bonds may be issued, subject to and in accordance with the provisions of this Indenture; (d)to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, or to comply with the Code or regulations issued thereunder, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Owners of the Bonds or any Parity Bonds then Outstanding; (e)to modify, alter or amend the RMA in any manner, so long as the Trustee receives a certificate of an Independent Financial Consultant stating that such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expense Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such amendment; (f)to modify, alter, amend or supplement this Indenture in any other respect which is not materially adverse to the Owners; or (g)to modify, alter, amend or supplement this Indenture in any other respect, as may be required to fund all or a portion of the Reserve Requirement with a Reserve Policy. Section 6.2.Supplemental Indentures or Orders Requiring Owner Consent. Exclusive of the Supplemental Indentures described in Section 6.1, the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding shall have the right to consent to and approve the adoption by the District of such Supplemental Indentures as shall be deemed necessary or desirable by the District for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture; provided, however, that nothing herein shall permit, or be construed as permitting: (a) an extension of the 36 maturity date of the principal, or the payment date of interest on, any Bond or Parity Bond; (b) a reduction in the principal amount of, or redemption premium on, any Bond or Parity Bond or the rate of interest thereon; (c) a preference or priority of any Bond or Parity Bond over any other Bond or Parity Bond; or (d) a reduction in the aggregate principal amount of the Bonds and Parity Bonds the Owners of which are required to consent to such Supplemental Indenture, without the consent of the Owners of all Bonds and Parity Bonds then Outstanding. If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to the terms of this Section shall require the consent of the Owners, the District shall so notify the Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee shall, at the expense of the District, cause notice of the proposed Supplemental Indenture to be mailed, by first class mail, postage prepaid, to all Owners at their addresses as they appear in the Bond Register. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that a copy thereof is on file at the office of the Trustee for inspection by all Owners. The failure of any Owners to receive such notice shall not affect the validity of such Supplemental Indenture when consented to and approved by the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding as required by this Section. Whenever at any time within one year after the date of the first mailing of such notice, the Trustee shall receive an instrument or instruments purporting to be executed by the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding, which instrument or instruments shall refer to the proposed Supplemental Indenture described in such notice, and shall specifically consent to and approve the adoption thereof by the District substantially in the form of the copy referred to in such notice as on file with the Trustee, such proposed Supplemental Indenture, when duly adopted by the District, shall thereafter become a part of the proceedings for the issuance of the Bonds and any Parity Bonds. In determining whether the Owners of a majority of the aggregate principal amount of the Bonds and Parity Bonds have consented to the adoption of any Supplemental Indenture, Bonds or Parity Bonds which are owned by the District or by any person directly or indirectly controlling or controlled by or under the direct or indirect common control with the District, shall be disregarded and shall be treated as though they were not Outstanding for the purpose of any such determination. Upon the adoption of any Supplemental Indenture and the receipt of consent to any such Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of the Outstanding Bonds and Parity Bonds in instances where such consent is required pursuant to the provisions of this Section, this Indenture shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the District and all Owners of Outstanding Bonds and Parity Bonds shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments. Section 6.3.Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds. After the effective date of any action taken as hereinabove provided, the District may determine that the Bonds or any Parity Bonds may bear a notation, by endorsement in form approved by the District, as to such action, and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date and presentation of such Owner’s Bond or Parity Bond for the purpose at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation as to such action shall be made on such Bonds or Parity Bonds. If the District shall so determine, new Bonds or Parity Bonds so modified as, in the opinion of the District, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date such new Bonds or Parity Bonds shall be exchanged at the office of the Trustee or at such additional offices as the 37 Trustee may select and designate for that purpose, without cost to each Owner of Outstanding Bonds or Parity Bonds, upon surrender of such Outstanding Bonds or Parity Bonds. The Trustee shall have the right to require such opinions of counsel as it deems necessary concerning: (i) the lack of material adverse effect of the amendment on Owners; and (ii) the fact that the amendment will not affect the tax status of interest with respect to the Bonds. ARTICLE VII TRUSTEE Section 7.1.Trustee. Wilmington Trust, National Association shall be the Trustee for the Bonds and any Parity Bonds unless and until another Trustee is appointed by the District hereunder. The Trustee represents that it has (or is a member of a bank holding company system whose bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $100,000,000. The District may, at any time, appoint a successor Trustee satisfying the requirements of Section 7.2 below for the purpose of receiving all money which the District is required to deposit with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Trustee is hereby authorized to and shall mail by first class mail, postage prepaid, or wire transfer in accordance with Section 2.5 above, interest payments to the Owners, to select Bonds and Parity Bonds for redemption, and to maintain the Bond Register. The Trustee is hereby authorized to pay the principal of and premium, if any, on the Bonds and Parity Bonds when the same are duly presented to it for payment at maturity or on call and redemption, to provide for the registration of transfer and exchange of Bonds and Parity Bonds presented to it for such purposes, to provide for the cancellation of Bonds and Parity Bonds all as provided in this Indenture, and to provide for the authentication of Bonds and Parity Bonds, and shall perform all other duties assigned to or imposed on it as provided in this Indenture. The Trustee shall keep accurate records of all funds administered by it and all Bonds and Parity Bonds paid, discharged and cancelled by it. The Trustee is hereby authorized to redeem the Bonds and Parity Bonds when duly presented for payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds and Parity Bonds upon payment thereof in accordance with the provisions of Section 10.1 hereof. The District shall from time to time, subject to any agreement between the District and the Trustee then in force, timely pay to the Trustee following demand therefor compensation for its services, reimburse the Trustee for all its advances and expenditures, including, but not limited to, advances to and fees and expenses of independent accountants or counsel employed by it in the exercise and performance of its powers and duties hereunder, and indemnify and save the Trustee, its officers, directors, employees and agents, harmless against costs, claims, expenses and liabilities, including, without limitation, fees and expenses of its attorneys (not arising from its own gross negligence or willful misconduct) which it may incur in the exercise and performance of its powers and duties hereunder. The foregoing obligation of the District to indemnify the Trustee shall survive the removal or resignation of the Trustee or the discharge of the Bonds and Parity Bonds. Section 7.2.Removal of Trustee. The District may at any time at its sole discretion, upon 30 days’ notice, remove the Trustee initially appointed, and any successor thereto, by delivering to the Trustee a written notice of its decision to remove the Trustee and may appoint a successor or successors thereto; provided that any such successor shall be a bank or trust company having (or whose parent 38 bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $100,000,000, and subject to supervision or examination by federal or state authority. Any removal shall become effective only upon acceptance of appointment by the successor Trustee. If any bank or trust company appointed as a successor 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 the 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. Any removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee and notice of the successor Trustee’s identity and address being sent by the successor Trustee to the Owners. Section 7.3.Resignation of Trustee. The Trustee may at any time resign by giving written notice to the District. Upon receiving such notice of resignation, the District shall promptly appoint a successor Trustee satisfying the criteria in Section 7.2 above by an instrument in writing. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed by the District within thirty (30) days of giving such notice or removal or resignation, then the Trustee, or any Owner may petition, at the expense of the District, a court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint a successor Trustee under the Indenture. Section 7.4.Liability of Trustee. The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements, promises, covenants and agreements of the District, and the Trustee assumes no responsibility or liability for the correctness of the same and makes no representations whatsoever as to the validity or sufficiency of this Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility or liability in respect thereof, other than in connection with its express duties or obligations specifically set forth herein, in the Bonds and any Parity Bonds, or in the certificate of authentication assigned to or imposed upon the Trustee. The Trustee shall not have nor be under any responsibility or duty with respect to the issuance of the Bonds or any Parity Bonds for value. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own gross negligence or willful misconduct. The Trustee shall be conclusively protected in acting upon any notice, resolution, request, consent, order, certificate, report, Bond, Parity Bond or other paper or document signed or presented by the proper party or parties as provided hereunder. The Trustee may consult with counsel, who may be counsel to the District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection to the Trustee in respect of any action taken or suffered hereunder in good faith. The Trustee shall not be bound to recognize any person as the Owner of a Bond or Parity Bond unless and until such Bond or Parity Bond is submitted for inspection, if required, and his title thereto is satisfactorily established to the Trustee, if disputed. Whenever in the administration of its express obligations under this Indenture the Trustee 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 be deemed to be conclusively proved and established by a written certificate of the District, and such certificate shall be full warrant to the Trustee for any action taken or suffered under 39 the provisions of this Indenture upon the faith thereof, but in its discretion the Trustee may but shall not be obligated to accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. It is understood and agreed that no such act shall broaden or imply the Trustee’s acceptance of a broadening of the scope of the Trustee’s duties and obligations hereunder unless the Trustee shall provide written acceptance thereof. The Trustee 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, but its liability shall be limited to the proper accounting for such funds as it actually receives. No provision in this Indenture shall require the Trustee 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 its rights or powers. The Trustee shall not be deemed to have knowledge of any default or event of default until an officer at the Trustee’s corporate trust office responsible for the administration of its duties hereunder shall have actual knowledge thereof or the Trustee shall have received written notice thereof at its corporate trust office. The Trustee shall have no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds. Before taking any action under Article VIII hereof the Trustee may require indemnity and security satisfactory to the Trustee be furnished to it for and from any expenses and liabilities and to protect it against any liability it may incur hereunder. The immunities extended to the Trustee also extend to its directors, officers, employees and agents (including its counsel). The Trustee shall not be liable for any action taken or not taken by it in accordance with the direction of the Owners of 25% (or other percentage provided for herein) in aggregate principal amount of Bonds and Parity Bonds Outstanding relating to the exercise of any right, power or remedy available to the Trustee. In the event of conflicting instructions hereunder, the Trustee shall have the right to decide the appropriate course of action and will be protected in so doing. The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty or in any way expand or impliedly expand the scope of the Trustee’s duties hereunder. The Trustee may execute any of the trusts or powers hereof and perform any of its duties through attorneys, agents and receivers and shall not be answerable for the conduct of the same if appointed by it with reasonable care. The Trustee may become the Owner or pledgee of the Bonds and Parity Bonds with the same rights it would have if it were not Trustee. The Trustee shall perform such duties and only such duties as are specifically set forth in this Indenture and no implied duties or obligations shall be read into this Indenture against the Trustee. 40 The District shall, to the extent permitted by law, indemnify and save the Trustee and its officers, directors, agents, and employees harmless from and against (whether or not litigated) all claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of: (i) the use, maintenance, condition or management of, or from any work or thing done on, the Project; (ii) any breach or default on the part of the District in the performance of any of its obligations under this Indenture and any other agreement made and entered into for purposes of the Bonds and Parity Bonds; (iii) any act of the City, the District or of any of its agents, contractors, servants, employees or licensees with respect to the Project; (iv) any act of any assignee of, or purchaser from, the City, the District or of any of its or their agents, contractors, servants, employees or licensees with respect to the Project; (v) the construction or acquisition of the Project or the expenditure of Project Costs; (vi) the exercise and performance by the Trustee of its powers and duties hereunder or any related document; (vii) the sale of the Bonds and Parity Bonds and the carrying out of any of the transactions contemplated by the Bonds, Parity Bonds or this Indenture; or (viii) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made in light of the circumstances in which they were made, not misleading in any official statement or other disclosure document utilized in connection with the sale or marketing of the Bonds and Parity Bonds. The indemnification set forth in this Section shall extend to the Trustee’s officers, agents, employees, successors and assigns. No indemnification will be made under this Section or elsewhere in this Indenture or other agreements for willful misconduct or negligence by the Trustee, its officers, agents, employees, successors or assigns. The District’sobligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Bonds and Parity Bonds, or the resignation or removal of the Trustee. In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity, and all persons, including, without limitation, the Owners, the District and the City, having any claim against the Trustee arising from this Indenture shall look only to the funds and accounts held by the Trustee hereunder for payment, except as otherwise provided herein. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Bonds. THE TRUSTEE MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE DISTRICT OF THE PROJECT, OR ANY PORTION THEREOF. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages, in connection with or arising out of the Project or this Indenture for the existence, furnishing, functioning or use and possession of the Project. The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include, but not limited to, acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences. The Trustee shall have the right to accept and act upon directions given pursuant to this Indenture and delivered using electronic notice; provided, however, that the District shall provide to the Trustee an incumbency certificate listing each Authorized Representative of the District with the authority to provide such directions and containing specimen signatures of such authorized officers, which incumbency certificate shall be amended whenever a person is to be added or deleted from the 41 listing. If the District elects to give the Trustee directions using electronic notice and the Trustee in its discretion elects to act upon such directions, the Trustee’s understanding of such directions shall be deemed controlling. The District understand and agree that the Trustee cannot determine the identity of the actual sender of such directions and that the Trustee shall conclusively presume that directions that purport to have been sent by an authorized officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Representative of the District. The District shall be responsible for ensuring that only an Authorized Representative of the District shall transmit such directions to the Trustee and that each Authorized Representative of the District treat applicable user and authorization codes, passwords and/or authentication keys with extreme care. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and a compliance with such directions, notwithstanding such directions conflict or are inconsistent with a subsequent written direction. The District agrees (i) to assume all risks arising out of the use of electronic notice to submit directions to the Trustee, including, without limitation, the risk of the Trustee acting on unauthorized directions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting directions to the Trustee and that there may be more secure methods of transmitting directions than the method(s) selected by the District; and (iii) that the security procedures (if any) to be followed in connection with its transmission of directions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances. Section 7.5.Merger or Consolidation. Any company into which the Trustee 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 Trustee may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. ARTICLE VIII EVENTS OF DEFAULT; REMEDIES Section 8.1.Events of Default. Any one or more of the following events shall constitute an “Event of Default”: (a)default in the due and punctual payment of the principal of or redemption premium, if any, on any Bond or Parity Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b)default in the due and punctual payment of the interest on any Bond or Parity Bond when and as the same shall become due and payable; or (c)except as described in subsections (a) or (b), default by the District in the observance of any of the agreements, conditions or covenants on its part contained in this Indenture, the Bonds or any Parity Bonds, which default continues for a period of 30 days after the District has been given notice in writing of such default by the Trustee or the Owners of twenty-five percent (25%) in aggregate principal amount of the Outstanding Bonds and Parity Bonds. 42 The Trustee agrees to give notice to the Owners as soon as practicable upon the occurrence of an Event of Default under subsections (a) or (b) above and within 30 days of the Trustee’s actual knowledge of an Event of Default under subsection (c) above. Section 8.2.Remedies of Owners. Upon the occurrence of an Event of Default, any Owner may pursue any available remedy at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Outstanding Bonds and Parity Bonds, and to enforce any rights of the Trustee under or with respect to this Indenture, including: (a)by mandamus or other suit or proceeding at law or in equity to enforce his rights against the District and any of the members, officers and employees of the District, and to compel the District or any such members, officers or employees to perform and carry out their duties under the Act and their agreements with the Owners as provided in this Indenture; (b)by suit in equity to enjoin any actions or things which are unlawful or violate the rights of the Owners; or (c)by a suit in equity to require the District and its members, officers and employees to account as the trustee of an express trust. If an Event of Default shall have occurred and be continuing and if requested and directed so to do by the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds and Parity Bonds and if indemnified to its satisfaction, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity Bonds. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law. Section 8.3.Application of Revenues and Other Funds After Default. All amounts received by the Trustee pursuant to any right given or action taken by the Owners under the provisions of this Indenture relating to the Bonds and Parity Bonds shall be applied by the Trustee in the following order upon presentation of the several Bonds and Parity Bonds: First, to the payment of the costs, fees and expenses of the Trustee in declaring such Event of Default and in performing its duties and obligations hereunder, including reasonable compensation to its agents, attorneys and counsel; Second, to the payment of the fees, costs and expenses of the Owners in declaring such Event of Default and in carrying out the provisions of this Article VIII, including reasonable compensation to its agents, attorneys and counsel, and to the payment of all other outstanding fees and expenses of the Trustee; and Third, to the payment of the whole amount of interest on and principal of the Bonds and Parity Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds and Parity 43 Bonds; provided, however, that in the event that such amounts shall be insufficient to pay the full amount of such interest and principal, then such amounts shall be applied in the following order of priority: (a)first to the payment of all installments of interest on the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing; (b)second, to the payment of all installments of principal, including Sinking Fund Payments, of the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing; and (c)third, to the payment of interest on overdue installments of principal and interest on the Bonds and Parity Bonds on a pro rata basis based on the total amount then due and owing. Section 8.4.Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its obligations hereunder, whether upon its own discretion or upon the request of the Owners of twenty-five percent (25%) in aggregate principal amount of the Bonds and Parity Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds and Parity Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority inaggregate principal amount of the Outstanding Bonds and Parity Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other such litigation. Any suit, action or proceeding which any Owner of Bonds or Parity Bonds shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners of Bonds and Parity Bonds similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the Bonds and Parity Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the respective Owners of the Bonds and Parity Bonds for the purposes of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Bonds and Parity Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact. Section 8.5.Appointment of Receivers. Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights and of the Owners of the Bonds and Parity Bonds under this Indenture, the Trustee shall be entitled, as a matter of right to which the District expressly agrees, to the appointment of a receiver or receivers of the Net Taxes and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer. Section 8.6.Non-Waiver. Nothing in this Article VIII or in any other provision of this Indenture, or in the Bonds or the Parity Bonds, shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity Bonds to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as herein provided, or to pay the Trustee its fees and expenses as provided in Section 8.3 hereof, out of the Net Taxes and other moneys herein pledged for such payment. 44 A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the Bonds or Parity Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or the Owners by the Act or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners, as the case may be. Section 8.7.Limitations on Rights and Remedies of Owners. No Owner of any Bond or Parity Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless: (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds and Parity Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity and security reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity and security shall have been made to, the Trustee. Such notification, request, tender of indemnity and security and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity Bonds of any remedy hereunder; it being understood and intended that no one or more Owners of Bonds and Parity Bonds shall have any right in any manner whatever by his or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds and Parity Bonds. The right of any Owner of any Bond and Parity Bond to receive payment of the principal of and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture. Section 8.8.Termination of Proceedings. In case any Owner shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the District, the Trustee and the Owners shall be restored to their former positions and rights hereunder, respectively, with regard to the property subject to this Indenture, and all rights, remedies and powers of the Owners shall continue as if no such proceedings had been taken. 45 ARTICLE IX DEFEASANCE AND PARITY BONDS Section 9.1.Defeasance. If the District shall pay or cause to be paid, or there shall otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental Indenture, then the Owner of such Bond or Parity Bond shall cease to be entitled to the pledge of Net Taxes, and, other than as set forth below, all covenants, agreements and other obligations of the District to the Owner of such Bond or Parity Bond under this Indenture and any Supplemental Indenture relating to such Parity Bond shall thereupon cease, terminate and become void and be discharged and satisfied. In the event of a defeasance of all Outstanding Bonds and Parity Bonds pursuant to this Section, the Trustee shall execute and deliver to the District all such instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the District’s general fund all money or securities held by it pursuant to this Indenture which are not required for the payment of the principal of, premium, if any, and interest due on such Bonds and Parity Bonds. Any Outstanding Bond or Parity Bond shall be deemed to have been paid within the meaning expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or more of the following ways: (a)by paying or causing to be paid the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same become due and payable; (b)by depositing with the Trustee, in trust, at or before maturity, money which, together with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and available for such purpose, is fully sufficient to pay the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable; or (c)by depositing with the Trustee or another escrow bank appointed by the District, in trust, federal securities described in subparagraph (1) of the definition of Authorized Investments, in which the District may lawfully invest its money, in such amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable. If paid as provided above, then, at the election of the District, and notwithstanding that any Outstanding Bonds and Parity Bonds shall not have been surrendered for payment, all obligations of the District under this Indenture and any Supplemental Indenture with respect to such Bond or Parity Bond shall cease and terminate, except for the obligation of the Trustee to pay or cause to be paid to the Owners of any such Bond or Parity Bond not so surrendered and paid all sums due thereon, and except for the covenants of the District contained in Section 5.2(f) or any covenants in a Supplemental Indenture relating to compliance with the Code. Notice of such election shall be filed with the Trustee not less than ten days prior to the proposed defeasance date, or such shorter period of time as may be acceptable to the Trustee. In connection with a defeasance under (c) above, there shall be provided to the District a verification report from an independent nationally recognized certified public accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Trustee or the escrow bank to pay and discharge the principal of, premium, if any, and interest on all Outstanding 46 Bonds and Parity Bonds to be defeased in accordance with this Section, as and when the same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds or Parity Bonds being defeased have been legally defeased in accordance with this Indenture and any applicable Supplemental Indenture. Upon a defeasance, the Trustee, upon request of the District, shall release the rights of the Owners of such Bonds and Parity Bonds which have been defeased under this Indenture and any Supplemental Indenture and execute and deliver to the District all such instruments as may be desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder of all Outstanding Bonds and Parity Bonds, the Trustee shall pay over or deliver to the District any funds held by the Trustee at the time of a defeasance, which are not required for the purpose of paying and discharging the principal of or interest on the Bonds and Parity Bonds when due. The Trustee shall, at the written direction of the District, mail, first class, postage prepaid, a notice to the Owners whose Bonds or Parity Bonds have been defeased, in the form directed by the District, stating that the defeasance has occurred. Section 9.2.Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expense Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued hereunder or under any Supplemental Indenture; provided, however, that Parity Bonds may only be issued only for the purposes of refunding all or a portion of the Bonds or Parity Bonds then Outstandingsubject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such Parity Bonds: (a)The District shall be in compliance with all covenants set forth in this Indenture and any Supplemental Indenture then in effect and a certificate of the District to that effect shall have been filed with the Trustee; provided, however, that Parity Bonds may be issued notwithstanding that the District is not in compliance with all such covenants so long as immediately following the issuance of such Parity Bonds the District will be in compliance with all such covenants. (b)The issuance of such Parity Bonds shall have been duly authorized pursuant to the Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for by a Supplemental Indenture duly adopted by the District which shall specify the following: (1)the purpose for which such Parity Bonds are to be issued and the fund or funds into which the proceeds thereof are to be deposited; (2)the authorized principal amount of such Parity Bonds; (3)the date and the maturity date or dates of such Parity Bonds; provided that: (i) each maturity date shall fall on a September 1; (ii) all such Parity Bonds of like maturity shall be identical in all respects, except as to number; (iii) fixed serial maturities or Sinking Fund Payments, or any combination thereof, shall be established to provide for the retirement of all such Parity Bonds on or before their respective maturity dates; and (iv) the maturity of such Parity Bonds shall not exceed the maturity of the Bonds being refunded; 47 (4)the description of the Parity Bonds, the place of payment thereof and the procedure for execution and authentication; (5)the denominations and method of numbering of such Parity Bonds; (6)the amount and due date of each mandatory Sinking Fund Payment, if any, for such Parity Bonds; (7)the amount, if any, to be deposited from the proceeds of such Parity Bonds in the Reserve Account of the Special Tax Fund to increase the amount therein to the Reserve Requirement; (8)the form of such Parity Bonds; and (9)such other provisions as are necessary or appropriate and not inconsistent with this Indenture. (c)The District shall have received the following documents or money or securities, all of such documents dated or certified, as the case may be, as of the date of delivery of such Parity Bonds by the Trustee (unless the Trustee shall be directed by the District to accept any of such documents bearing a prior date): (1)a certified resolution of the City Council, acting as the legislative body of the District, authorizing the issuance of such Parity Bonds; (2)a written request of the District as to the delivery of such Parity Bonds; (3)an opinion of Bond Counsel and/or general counsel to the District to the effect that: (i) the District has the right and power under the Act to execute and deliver the Supplemental Indenture relating to such Parity Bonds, and such Supplemental Indenture has been duly and lawfully executed by the District, and the Indenture and such Supplemental Indenture are in full force and effect and are valid and binding upon the District and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights); (ii) this Indenture creates the valid pledge which it purports to create of the Net Taxes and other amounts as provided in this Indenture, subject to the application thereof to the purposes and on the conditions permitted by this Indenture; and (iii) such Parity Bonds are valid and binding limited obligations of the District, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights) and the terms of this Indenture and the Supplemental Indenture executed and delivered in connection with such Parity Bonds and are entitled to the benefits of this Indenture and such Supplemental Indenture, and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and this Indenture and such Supplemental Indenture; and a further opinion of Bond Counsel to the effect that, assuming compliance by the District with certain tax covenants, the issuance of the Parity Bonds will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and any Parity Bonds theretofore issued on a tax-exempt basis, or the exemption from State of California personal income taxation of interest on any Outstanding Bonds and Parity Bonds theretofore issued; 48 (4)a certificate of the District containing such statements as may be reasonably necessary to show compliance with the requirements of this Indenture; (5)a certificate of an Independent Financial Consultant certifying that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds; and (6)such further documents, money and securities as are required by the provisions of this Indenture and the Supplemental Indenture providing for the issuance of such Parity Bonds. ARTICLE X MISCELLANEOUS Section 10.1. Cancellation of Bonds and Parity Bonds. All Bonds and Parity Bonds surrendered to the Trustee for payment upon maturity or for redemption shall be upon payment therefor, and any Bond or Parity Bond purchased by the District as authorized herein and delivered to the Trustee for such purpose shall be, cancelled forthwith and shall not be reissued. The Trustee shall destroy such Bonds and Parity Bonds, as provided by law, and, upon request of the District, furnish to the District a certificate of such destruction. Section 10.2. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Indenture to be signed or executed by Owners may be in any number of concurrent instruments of similar tenor and may be signed or executed by such Owners in person or by their attorneys appointed by an instrument in writing for that purpose, or by the bank, trust company or other depository for such Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such attorney, and of the ownership of Bonds or Parity Bonds shall be sufficient for the purposes of this Indenture (except as otherwise herein provided), if made in the following manner: (a)The fact and date of the execution by any Owner or his or her attorney of any such instrument, and of any instrument appointing any such attorney, may be proved by a signature guarantee of any bank or trust company located within the United States of America. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such signature guarantee shall also constitute sufficient proof of his authority. (b)As to any Bond or Parity Bond, the person in whose name the same shall be registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of any such Bond or Parity Bond, and the interest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond or Parity Bond and the interest thereon to the extent of the sum or sums to be paid. Neither the District nor the Trustee shall be affected by any notice to the contrary. Nothing contained in this Indenture shall be construed as limiting the Trustee or the District to such proof, it being intended that the Trustee or the District may accept any other evidence of the matters herein stated which the Trustee or the District may deem sufficient. Any request or consent of 49 the Owner of any Bond or Parity Bond shall bind every future Owner of the same Bond or Parity Bond in respect of anything done or suffered to be done by the Trustee or the District in pursuance of such request or consent. Section 10.3. Unclaimed Moneys. Anything in this Indenture to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Outstanding Bonds and Parity Bonds which remain unclaimed for two years after the date when such Outstanding Bonds or Parity Bonds have become due and payable, if such money was held by the Trustee at such date, or for two years after the date of deposit of such money if deposited with the Trustee after the date when such Outstanding Bonds or Parity Bonds become due and payable, shall be repaid by the Trustee to the District, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of such Outstanding Bonds or Parity Bonds; provided, however, that, before being required to make any such payment to the District, the Trustee, at the expense of the District, shall cause to be mailed by first-class mail, postage prepaid, to the registered Owners of such Outstanding Bonds or Parity Bonds at their addresses as they appear on the registration books of the Trustee a notice that said money remains unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the District. Section 10.4. Provisions Constitute Contract. The provisions of this Indenture shall constitute a contract between the District and the Owners and the provisions hereof shall be construed in accordance with the laws of the State of California. In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and, should said suit, action or proceeding be abandoned, or be determined adversely to the Owners or the Trustee, then the District, the Trustee and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. After the issuance and delivery of the Bonds, this Indenture shall be irrepealable, but shall be subject to modifications to the extent and in the manner provided in this Indenture, but to no greater extent and in no other manner. Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the District from making contracts or creating bonded or other indebtedness payable from a pledge of the Net Taxes which is subordinate to the pledge hereunder, or which is payable from the general fund of the District or from taxes or any source other than the Net Taxes and other amounts pledged hereunder. Section 10.6. Further Assurances. The District 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 Indenture, and for the better assuring and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in this Indenture. Section 10.7. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application of any 50 such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Indenture, the Bonds and any Parity Bonds issued pursuant hereto shall remain valid and the Owners shall retain all valid rights and benefits accorded to them under the laws of the State of California. Section 10.8. Notices. Any notices required to be given to the District with respect to the Bonds or this Indenture shall be mailed, first class, postage prepaid, or personally delivered to the Assistant City Manager of the City of Lake Elsinore, 130 South Main Street, California 92530, all notices to the Trustee in its capacity as Trustee shall be mailed, first class, postage prepaid, or personally delivered to the Trustee, Wilmington Trust, National Association, 650 Town Center Drive, Suite 600 Costa Mesa, California 92626. S-1 IN WITNESS WHEREOF, CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) has caused this Indenture to be signed by an Authorized Representative of the District and Wilmington Trust, National Association in token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its corporate name by its officers identified below, all as of the day and year first above written. CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) By: Mayor of the City of Lake Elsinore, acting as the legislative body of City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) ATTEST: City Clerk of the City of Lake Elsinore, acting as the legislative body of City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee By: Authorized Signatory A-1 EXHIBIT A FORM OF SPECIAL TAX BOND UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE DISTRICT OR TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. R-____$___________ UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF RIVERSIDE CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BOND, SERIES 2018 INTEREST RATE:MATURITY DATE:DATED DATE:CUSIP: _____%September 1, 20____________ __, 2018 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: __________________ DOLLARS CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) (the “District”) which was formed by the City of Lake Elsinore (the “City”) and is situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the 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 Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless: (i) the date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on the first Record Date, in which event interest shall be payable from the Dated Date set forth above. A-2 Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on March 1 and September 1, commencing March 1, 2019 (each an “Interest Payment Date”), at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment. The principal of and premium, if any, on this Bond are payable to the Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of the Trustee (as such term is defined in the Indenture), initially Wilmington Trust, National Association (the “Trustee”). Interest on this Bond shall be paid by check of the Trustee mailed, by first class mail, postage prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within the United States of America, to the Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such Owner’s address as it appears on the registration books maintained by the Trustee. This Bond is one of a duly authorized issue of “City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Special Tax Bonds, Series 2018” (the “Bonds”) issued in the aggregate principal amount of $__________ pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Section 53311 et seq.of the California Government Code (the “Act”) for the purpose of financing public improvements, funding a reserve account, and paying certain costs related to the issuance of the Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City, acting in its capacity as the legislative body of the District (the “Legislative Body”), on October 9, 2018, and a Bond Indenture executed in connection therewith dated as of November 1, 2018 (the “Indenture”), by and between the District and the Trustee, and this reference incorporates the Indenture herein, and by acceptance hereof the Owner of this Bond assents to said terms and conditions. The Indenture is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California. Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this Bond are payable solely from the portion of the annual special taxes authorized under the Act to be levied and collected within the District (the “Special Taxes”) and certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any amounts for the payment hereof shall be limited to the Net Taxes pledged and collected or foreclosure proceeds received following a default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund (other than the Administrative Expense Account therein) established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the Indenture it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Bonds. The Bonds may be redeemed at the option of the District from any source of funds on any Interest Payment Date on or after ________ 1, 20__, in whole or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: A-3 Redemption Date Redemption Price ________ 1, 20__ and ________ 1, 20__103% ________ 1, 20__ and ________ 1, 20__102 ________ 1, 20__ and ________ 1, 20__101 ________ 1, 20__ and any Interest Payment Date Thereafter 100 The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established by the Indenture, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows: Term Bonds Maturing September 1, 20__ Sinking Fund Redemption Date (September 1)Sinking Fund Payments $ * _____________ * Maturity. The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established by the Indenture, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows: A-4 Term Bonds Maturing September 1, 20__ Sinking Fund Redemption Date (September 1)Sinking Fund Payments $ * _____________ * Maturity. The Bonds are subject to special mandatory redemption as a whole, or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account plus amounts transferred from the Reserve Account in connection with such transfers, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date: Redemption Date Redemption Price Any Interest Payment Date [from _____ 1, 20__] through March 1, 20__103% September 1, 20__ and March 1, 20__102 September 1, 20__ and March 1, 20__101 September 1, 20__ and any Interest Payment Date thereafter 100 Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 30 nor more than 45 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books; provided, however, so long as the Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. Neither a failure of the Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date, provided that funds for the redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds. This Bond shall be registered in the name of the Owner hereof, as to both principal and interest, and the District and the Trustee may treat the Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary. The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture. This Bond is transferable by the Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same A-5 aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor. The Trustee shall not be required to register transfers or make exchanges of: (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed; or (ii) any Bonds chosen for redemption. The rights and obligations of the District and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Indenture. THE BONDS DO NOT CONSTITUTE GENERAL OBLIGATIONS OF THE CITY OR OF THE DISTRICT. NEITHER THE CITY NOR THE DISTRICT IS OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION. 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 Trustee. 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 do exist, have happened and have been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California. IN WITNESS WHEREOF, City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court)has caused this Bond to be dated the Dated Date, to be signed on behalf of the District by the Mayor of the City by his facsimile signature and attested by the facsimile signature of the City Clerk of the City. Mayor of the City of Lake Elsinore, acting as the legislative body of City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) ATTEST: City Clerk of the City of Lake Elsinore, acting as the legislative body of City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) A-6 [FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Bonds described in the within-defined Indenture. Dated: [November __], 2018 WILMINGTON TRUST, NATIONAL ASSOCIATION as Trustee By: Authorized Signatory [FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. City Clerk of the City [FORM OF ASSIGNMENT] For value received the undersigned do(es) hereby sell, assign and transfer unto whose tax identification number is , the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books of the Trustee with full power of substitution in the premises. Dated: Signature guaranteed: NOTE: Signature(s) must be guaranteed by an eligible guarantor institution. NOTE: The signatures(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. B-1 EXHIBIT B-1 FORM OF REQUISITION FOR DISBURSEMENT OF PROJECT COSTS $__________ CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BONDS, SERIES 2018 Wilmington Trust, National Association (the “Trustee”), is hereby requested to pay from the [City Facilities][Water Facilities] Account of the City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Acquisition and Construction Fund, established by the Bond Indenture, dated as of November 1, 2018, by and between the Trustee and City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) (the “District”), the amount specified to the payee named below for payment of the Project Costs set forth in Attachment No. 1 hereto. Payee: Address: Purpose: Amount:$ The amount is due and payable under purchase order, contract or other authorization and has not formed the basis of any prior request for payment. The conditions for the release of this amount from the [City Facilities][Water Facilities] Account, including those conditions in Section 3.9(b) of the Indenture have been satisfied. There has not been filed with nor served upon the District notice of any lien, right to lien or attachment upon, or stop notice or claim affecting the right to receive payment of the amount specified above which has not been released or will not be released simultaneously with the payment of such amount, other than materialmen’s or mechanic’s liens accruing by mere operation of law. Dated: CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) By: Name: Title: Stradling Yocca Carlson & Rauth Draft of 10/2/18 1 DISTRICT CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate dated as of November 1, 2018 (the “Disclosure Certificate”) is executed and delivered by City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) (the “District”) in connection with the issuance and delivery by the District of its $__________ Special Tax Bonds, Series 2018 (the “Bonds”). The Bonds are being issued pursuant to a resolution adopted on October 9, 2018, by the City Council of the City of Lake Elsinore, acting as the legislative body of the District, and the Bond Indenture, dated as of November 1, 2018, by and between the District and Wilmington Trust, National Association, as trustee. The District covenants as follows: Section 1.Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission. Section 2.Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Annual Report” shall mean any Annual Report provided by the District pursuant to, and as described in, Section 3 and 4 of this Disclosure Certificate. “Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income purposes. “City” means the City of Lake Elsinore, County of Riverside, California. “Disclosure Representative” shall mean the Assistant City Manager of the City, or his or her designee, or such other officer or employee as the District shall designate in writing to the Dissemination Agent from time to time. “Dissemination Agent” shall mean, initially, Spicer Consulting Group, LLC, or any successor Dissemination Agent designated in writing by the District and which has filed with the then current Dissemination Agent a written acceptance of such designation. “District” shall mean City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court). “EMMA” shall mean the Electronic Municipal Market Access system of the MSRB. “Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board and any successor entity designated under the Rule as the repository for filings made pursuant to the Rule. 2 “Official Statement” shall mean that certain Official Statement for the Bonds dated October __, 2018. “Owners” shall mean the registered owners of the Bonds as set forth in the registration books maintained by the Trustee. “Repository” shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the EMMA website of the MSRB, currently located at http://emma.msrb.org. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “State” shall mean the State of California. “Trustee” means Wilmington Trust, National Association or such other entity appointed by the District pursuant to the Indenture to act as the trustee under the Indenture. “Underwriter” shall mean any underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. Section 3.Provision of Annual Reports. (a)The District shall, or, if the Dissemination Agent is other than the District, upon written direction shall cause the Dissemination Agent to, not later than February 15 after the end of the District’s Fiscal Year (June 30) commencing with the report due by February 15, 2019, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the District, if any exist, 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. If the District’s fiscal year changes, the District shall give notice of such change in the same manner as for a Listed Event under Section 5(d). (b)In the event that the Dissemination Agent is an entity other than the District, then the provisions of this Section 3(b) shall apply. Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report, the District shall provide the Annual Report to the Dissemination Agent. If by fifteen (15) Business Days prior to the due date for an Annual Report the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District will be filing the Annual Report in compliance with subsection (a). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the District and shall have no duty or obligation to review such Annual Report. 3 (c)If the Dissemination Agent is unable to verify that an Annual Report has been provided to EMMA by the date required in subsection (a), the Dissemination Agent shall send, in a timely manner, a notice to EMMA, in the form required by EMMA. (d)If the Dissemination Agent is other than the District, the Dissemination Agent shall: (i)determine each year prior to the date for providing the Annual Report the name and address of the repository if other than the MSRB through EMMA; and (ii)promptly after receipt of the Annual Report, file a report with the District certifying that the Annual Report has been provided to EMMA and the date it was provided. (e)Notwithstanding any other provision of this Disclosure Certificate, all filings shall be made in accordance with the MSRB’s EMMA system or in another manner approved under the Rule. Section 4.Content of Annual Reports. The District’s Annual Report shall contain or include by reference the following: (a)Financial Statements. The audited financial statements of the District for the prior fiscal year, if any have been prepared and which, if prepared, shall be 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; provided, however, that the District may, from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the District shall modify the basis upon which its financial statements are prepared, the District shall provide the information referenced in Section 8 below regarding such modification. If the District is preparing audited financial statements and such audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b)Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following: (i)the principal amount of the Bonds outstanding as of the September 2 preceding the filing of the Annual Report; (ii)the balance in each fund under the Indenture as of the September 2 preceding the filing of the Annual Report; (iii)the aggregate assessed valuation of the Taxable Property within the District; (iv)any changes to the RMA for the District approved or submitted to the qualified electors for approval prior to the filing of the Annual Report; (v)a table setting forth the annual Special Tax delinquency rate within the District at June 30 of each fiscal year for which a delinquency exists, listing for each fiscal year, the total Special Tax levy, the delinquent amount and the percent delinquent; 4 (vi)an update of the value-to-lien of the property within the District based on the assessed value and the Special Tax levy for then current fiscal year, which update may be provided in a form similar to Table 2 in the Official Statement; provided that such update need not include overlapping special tax, assessment or general obligation indebtedness; and (vii)the status of any foreclosure actions being pursued by the District with respect to delinquent Special Taxes within the District. 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 District or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB through EMMA. The District 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 District shall give, or cause the Dissemination Agent to give, notice filed with the Repository of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) business days after the event: 1.principal and interest payment delinquencies; 2.unscheduled draws on debt service reserves reflecting financial difficulties; 3.unscheduled draws on credit enhancements reflecting financial difficulties; 4.substitution of credit or liquidity providers, or their failure to perform; 5.adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB); 6.tender offers; 7.defeasances; 8.ratings changes; and 9.bankruptcy, insolvency, receivership or similar proceedings. Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. 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 obligated person, or if such jurisdiction has been assumed by leaving the existing governmental 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 5 court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b)Pursuant to the provisions of this Section 5, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: 1.unless described in paragraph 5(a)(5) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; 2.the consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; 3.appointment of a successor or additional paying agent or the change of the name of a paying agent; 4.nonpayment related defaults; 5.modifications to the rights of Owners of the Bonds; 6.notices of redemption; and 7.release, substitution or sale of property securing repayment of the Bonds. (c)Upon the occurrence of a Listed Event under Section 5(b) above, the District shall as soon as possible determine if such event would be material under applicable federal securities laws. (d)If the District determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the District shall file a notice of such occurrence with the Repository in a timely manner not more than 10 business days after the event. (e)The District hereby agrees that the undertaking set forth in this Disclosure Certificate is the responsibility of the District and that the Dissemination Agent, if other than the District, shall not be responsible for determining whether the District’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule. Section 6.Termination of Reporting Obligation. The District’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. Section 7.Dissemination Agent. The District 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. The Dissemination Agent, if other than the District, shall not be responsible in any manner for the content of any notice or report prepared by the District pursuant to this Disclosure Certificate. 6 If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. The initial Dissemination Agent shall be Spicer Consulting Group, LLC. The Dissemination Agent may resign by providing thirty (30) days written notice to the District and the Trustee. Section 8.Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District 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 is related 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, 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; (b)The undertaking hereunder, as amended or taking into account such waiver, would, in the opinion of 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; and (c)The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the District shall describe such amendment in the next 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 District. In addition, if the amendment related 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 Listed Event under Section 5(a), 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 formed accounting principles. Section 9.Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10.Default. In the event of a failure of the District to comply with any provision of this Disclosure Certificate, the Trustee at the written direction of any Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Bonds, shall, or any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking 7 mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Certificate, but only to the extent funds have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges of the Trustee whatsoever, including, without limitation, fees and expenses of its attorney. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate shall be an action to compel performance. Section 11.Duties, Immunities and Liabilities of Dissemination Agent. Where an entity other than the District is acting as the Dissemination Agent, the Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. Any Dissemination Agent shall be paid (i) compensation by the District for its services provided hereunder in accordance with a schedule of fees to be mutually agreed to; and (ii) all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the District pursuant to this Disclosure Certificate. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Certificate. The Dissemination Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Certificate. Section 12.Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows: District:City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 Attn: Assistant City Manager Underwriter:Stifel, Nicolaus & Company, Incorporated 515 South Figueroa Street, Suite 1800 Los Angeles, CA 90071 Attn: Public Finance Department Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notice or communications should be sent. Section 13.Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Trustee, the Dissemination Agent, the Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. 8 This Disclosure Certificate is executed as of the date and year first set forth above. CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) By: Disclosure Representative $[_________] CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BONDS, SERIES 2018 BOND PURCHASE AGREEMENT [________], 2018 City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) 130 South Main Street Lake Elsinore, California 92530 Ladies and Gentlemen: Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) (the “Community Facilities District”) which upon acceptance will be binding upon the Underwriter and the Community Facilities District. The agreement of the Underwriter to purchase the Bonds (as hereinafter defined) is contingent upon the Community Facilities District satisfying all of the obligations imposed upon them under this Purchase Agreement. This offer is made subject to the Community Facilities District’s acceptance by the execution of this Purchase Agreement and its delivery to the Underwriter at or before 11:59 P.M., local time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Community Facilities District at any time prior to the acceptance hereof by the Community Facilities District. All capitalized terms used herein, which are not otherwise defined, shall have the meaning provided for such terms in the Bond Indenture, dated as of November ,1, 2018 (the “Indenture”), by and between the Community Facilities District and Wilmington Trust, National Association, as trustee (the “Trustee”). 1.Purchase, Sale and Delivery of the Bonds. Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein: (i) the Underwriter hereby agrees to purchase from the Community Facilities District and the Community Facilities District hereby agrees to sell to the Underwriter all (but not less than all) of the $[_________] aggregate principal amount of the City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Special Tax Bonds, Series 2018 (the “Bonds”), dated the Closing Date (as hereinafter defined), bearing interest at the rates and maturing on the dates and in the principal amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be $[_________] (being 100% of the aggregate principal amount thereof, plus [a/an] [net] original issue [premium/discount] of $[_______] and less an Underwriter’s discount of $[_______]). 2 The Underwriter agrees to make a bona fide public offering of all of the Bonds initially at the public offering prices (or yields) set forth in Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth in Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial offering prices. The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from the Net Taxes as provided in the Indenture, the Preliminary Official Statement (as hereinafter defined), and the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Community Facilities District Act”). The issuance of the Bonds has been duly authorized by the City Council of the City of Lake Elsinore (the “City”), as the legislative body for the Community Facilities District, pursuant to a resolution (the “Community Facilities District Resolution of Issuance”) adopted on October 9, 2018. The proceeds of the Bonds will be used to: (i) finance certain public improvements needed with respect to the development of property located within the Community Facilities District, including public improvements to be owned by the City and water and sewer facilities to be owned and operated by the Elsinore Valley Municipal Water District; (ii) fund a reserve account for the Bonds; and (iii) pay costs of issuance for the Bonds. The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from Net Taxes pledged thereto as provided in the Indenture. A.The Community Facilities District hereby acknowledges that the Underwriter is entering into this Purchase Agreement in reliance on the representations, warranties and agreements made by the Community Facilities District herein, and the Community Facilities District shall take all action necessary to enforce its rights hereunder for the benefit of the Underwriter and shall immediately notify the Underwriter if it becomes aware that any representation, warranty or agreement made by the Community Facilities District herein is incorrect in any material respect. The Community Facilities District acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the Community Facilities District and the Underwriter, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and not as the agent or fiduciary of the Community Facilities District, (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Community Facilities District with respect to (a) the offering of the Bonds or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Community Facilities District on other matters) or (b) any other obligations to the Community Facilities District with respect to the offering contemplated hereby, except the obligations expressly set forth in this Purchase Agreement or otherwise imposed by law, (iv) the Underwriter has financial interests that differ from those of the Community Facilities District and (v) the Community Facilities District has consulted their own legal, financial and other advisors to the extent they have deemed appropriate in connection with this transaction. The Community Facilities District acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (“MSRB”). The Community Facilities District 3 acknowledges and represents that it has engaged Urban Futures Incorporated (the “Municipal Advisor”) as its municipal advisor (as defined in Securities and Exchange Commission Rule 15Ba1) and will rely solely on the financial advice of the Municipal Advisor with respect to the Bonds. B.Pursuant to the authorization of the Community Facilities District, the Underwriter has distributed copies of the Preliminary Official Statement dated October [__], 2018 relating to the Bonds, which, together with the cover page, inside cover page and appendices thereto is herein called the “Preliminary Official Statement.” By its acceptance of this Purchase Agreement, the Community Facilities District hereby ratifies the use by the Underwriter of the Preliminary Official Statement, and the Community Facilities District agrees to execute a final official statement relating to the Bonds (the “Official Statement”) which will consist of the Preliminary Official Statement with such changes as may be made thereto, with the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel (“Bond Counsel”), Stradling Yocca Carlson & Rauth, a Professional Corporation, Disclosure Counsel (“Disclosure Counsel”), and the Underwriter, and to provide copies thereof to the Underwriter as set forth herein. The Community Facilities District hereby authorizes and requires the Underwriter to use and promptly distribute, in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official Statement and any supplement or amendment thereto. The Community Facilities District further authorizes the Underwriter to use and distribute, in connection with the offer and sale of the Bonds, the Indenture, the Continuing Disclosure Certificate executed by the Community Facilities District in connection with the Bonds (the “Continuing Disclosure Certificate”), this Purchase Agreement and all information contained herein, and all other documents, certificates and statements furnished by or on behalf of the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement. C.To assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the “Rule”), the Community Facilities District will undertake pursuant to the Continuing Disclosure Certificate, in the form attached to the Official Statement as an appendix, to provide annual reports and notices of certain enumerated events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement. D.Except as the Underwriter and the Community Facilities District may otherwise agree, the Community Facilities District will deliver to the Underwriter, at the offices of Bond Counsel in Newport Beach, California, or at such other location as may be mutually agreed upon by the Underwriter and the Community Facilities District, the documents hereinafter mentioned; and the Community Facilities District will deliver to the Underwriter through the facilities of The Depository Trust Company (“DTC”), the Bonds, in definitive form (all Bonds bearing CUSIP numbers), duly executed by the Community Facilities District and authenticated by the Trustee in the manner provided for in the Indenture and the Community Facilities District Act at 8:00 a.m. California time, on November [__], 2018 (the “Closing Date”), and the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in paragraph (A) of this Section by wire transfer, payable in federal or other immediately available funds (such delivery and payment being herein referred to as the “Closing”). The Bonds shall be in fully registered book-entry form (which may be typewritten) and shall be registered in the name of Cede & Co., as nominee of DTC. 4 2.Representations, Warranties and Covenants of the Community Facilities District. The Community Facilities District represents, warrants and covenants to the Underwriter on behalf of itself and the City that: A.The City is duly organized and validly existing as a general law city under the Constitution and laws of the State of California (the “State”) and has duly authorized the formation of the Community Facilities District pursuant to a resolution duly adopted by the City Council (the “Community Facilities District Formation Resolution” and, together with the Community Facilities District Resolution of Issuance, the “Community Facilities District Resolutions”) and the Community Facilities District Act. The City Council, as the legislative body of the City and the Community Facilities District, has duly adopted the Community Facilities District Formation Resolution, and has caused to be recorded in the real property records of the County of Riverside, a notice of a second amended and restated special tax lien, (the “Notice of Special Tax Lien”) (the Community Facilities District Formation Resolution and Notice of Special Tax Lien being collectively referred to herein as the “Formation Documents”), and has duly adopted a Community Facilities District Resolution of Issuance. Each of the Formation Documents remains in full force and effect as of the date hereof and has not been amended. The Community Facilities District is duly organized and validly existing as a Community Facilities District under the laws of the State. The Community Facilities District has, and at the Closing Date will have, as the case may be, full legal right, power and authority: (i) to execute, deliver and perform its obligations under this Purchase Agreement, the Continuing Disclosure Certificate and the Indenture, and to carry out all transactions contemplated by each of such agreements; (ii) to issue, sell and deliver the Bonds as provided herein; and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents, the Indenture, the Bonds, the Continuing Disclosure Certificate, this Purchase Agreement and the Official Statement. This Purchase Agreement, the Indenture, the Bonds and the Continuing Disclosure Certificate are collectively referred to herein as the “Community Facilities District Documents.” B.The Community Facilities District and the City, as applicable, have each complied, and will at the Closing Date be in compliance in all material respects, with the Formation Documents and the Community Facilities District Documents, and any immaterial noncompliance by the Community Facilities District and the City, if any, will not impair the ability of the Community Facilities District and the City, as applicable, to carry out, give effect to or consummate the transactions contemplated by the foregoing. From and after the date of issuance of the Bonds, the Community Facilities District will continue to comply with the covenants of the Community Facilities District contained in the Community Facilities District Documents. C.The information in the Preliminary Official Statement and in the Official Statement relating to the Community Facilities District and the Bonds (excluding statements therein pertaining to the DTC and its book-entry system and any information provided by the Developer, the Appraiser, the Special Tax Consultant (as all of such terms are defined below) and the Underwriter, as to which no view is expressed), is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, upon delivery and up to and including 25 days after the End of the Underwriting Period (as defined in paragraph (D) below), the Official Statement will be amended and supplemented so as to contain no misstatement of any material fact or omission of any statement necessary to make the statements 5 contained therein, in the light of the circumstances in which such statements were made, not misleading. D.Up to and including 25 days after the End of the Underwriting Period (as defined below), the Community Facilities District will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Community Facilities District will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise materially affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Bonds are delivered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the Community Facilities District at or prior to the Closing Date, and shall specify a date (other than the Closing Date) to be deemed the “End of the Underwriting Period.” E.Except as described in the Preliminary Official Statement, the Community Facilities District is not, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance of its obligations under the Community Facilities District Documents and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Community Facilities District Documents or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement. F.Except as may be required under the “blue sky” or other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders of, or filings or registrations with, any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Community Facilities District of its obligations under the Community Facilities District Documents, and the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, have been or will be obtained at the Closing Date and are or will be in full force and effect at the Closing Date. G.The Community Facilities District Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement. 6 H.The Bonds are payable from the Special Tax of the Community Facilities District to be levied within the Community Facilities District, as set forth in the Indenture, which levy has been duly and validly authorized pursuant to the Community Facilities District Act and the Special Taxes to be levied within the Community Facilities District will be fixed and levied in an amount which, together with other available funds, is required for the payment of the principal of, and interest on, the Bonds when due and payable, all as provided in the Indenture. The Community Facilities District has covenanted to cause the Special Taxes to be levied as set forth in the Indenture. I.The Indenture creates a valid pledge of, first lien upon and security interest in, the Net Taxes, and in the moneys in the Special Tax Fund (other than the Administrative Expense Account) established pursuant to the Indenture, on the terms and conditions set forth in the Indenture. J.Except as disclosed in the Preliminary Official Statement, there are, to the best of the Community Facilities District’s knowledge, no entities with outstanding assessment liens against any of the properties within the Community Facilities District or which are senior to or on a parity with the pledge of the Net Taxes of the Community Facilities District referred to in paragraph (H) hereof. K.The Official Statement as of the date hereof, does not, and as of the Closing Date, will not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (excluding statements therein pertaining to the DTC and its book-entry system and any information provided by the Developer, the Appraiser, the Special Tax Consultant (as all of such terms are defined below) and the Underwriter, as to which no view is expressed). L.The Preliminary Official Statement was deemed final by a duly authorized officer of the Community Facilities District prior to its delivery to the Underwriter, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of the Rule. The Community Facilities District hereby covenants and agrees that, within seven (7) business days from the date hereof, or upon reasonable written notice from the Underwriter within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the Community Facilities District shall cause a final printed form of the Official Statement to be delivered to the Underwriter in sufficient quantity to comply with paragraph (b)(4) of the Rule and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board. M.At the time of acceptance hereof there is and as of the Closing there will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an “Action”) pending (notice of which has been served on the Community Facilities District) or to the best knowledge of the Community Facilities District or the City threatened, in which any such Action: (i) in any way questions the existence of the Community Facilities District or the titles of the officers of the Community Facilities District to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of the Bonds or the payment or collection of Special Taxes or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contests or affects the validity of the Community Facilities District Documents or the consummation of the transactions on the part of the Community Facilities District contemplated thereby; (iii) contests the exemption of interest on the Bonds from federal or State income taxation or contests the powers of the Community Facilities District which may result in any material adverse change relating to the financial condition of the Community Facilities District; or (iv) contests the 7 completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserts that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and as of the time of acceptance hereof there is and, as of the Closing Date, there will be no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence. N.Any certificate signed on behalf of the Community Facilities District by any officer or employee of the Community Facilities District authorized to do so shall be deemed a representation and warranty by the Community Facilities District to the Underwriter on behalf of itself and the Community Facilities District as to the statements made therein. O.At or prior to the Closing the Community Facilities District, will have duly authorized, executed and delivered the Continuing Disclosure Certificate in substantially the form attached as an appendix to the Official Statement. The Community Facilities District has not had any continuing disclosure undertakings outstanding under the Rule in the last five years. P.The Community Facilities District will apply the proceeds of the Bonds in accordance with the Indenture and as described in the Preliminary Official Statement and Official Statement. Q.Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the Community Facilities District will faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Indenture. R.Between the date of this Purchase Agreement and the date of Closing, the Community Facilities District will not offer or issue any bonds, notes or other obligations for borrowed money not previously disclosed to the Underwriter. The Community Facilities District hereby approves the preparation and distribution of the Official Statement, consisting of the Preliminary Official Statement with such changes as are noted thereon and as may be made thereto, with the approval of Bond Counsel, Disclosure Counsel and the Underwriter, from time to time prior to the Closing Date. The Community Facilities District hereby ratifies any prior use of and authorizes the future use by the Underwriter, in connection with the offering and sale of the Bonds, of the Preliminary Official Statement, the Official Statement, this Purchase Agreement and all information contained herein, and all other documents, certificates and written statements furnished by the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement. The execution and delivery of this Purchase Agreement by the Community Facilities District shall constitute a representation by the Community Facilities District to the Underwriter that the representations and warranties contained in this Section 2 with respect to the Community Facilities District are true as of the date hereof. 8 3.Conditions to the Obligations of the Underwriter. The obligation of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the Community Facilities District contained herein, to the accuracy in all material respects of the statements of the officers and other officials of the Community Facilities District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the Community Facilities District of their obligations to be performed hereunder at or prior to the Closing Date and in reliance upon the representations and covenants of Western Pacific Housing, Inc., a Delaware corporation (dba D.R. Horton America’s Builder) (the “Developer”) contained in the certificates delivered as of the Closing Date, and to the following additional conditions: A.At the Closing Date, the Community Facilities District Resolutions and the Community Facilities District Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds, and with the transactions contemplated thereby, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate. B.At the Closing Date, except as described in the Preliminary Official Statement, the Community Facilities District shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance of the conditions precedent to be performed hereunder will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance of the conditions precedent to be performed by the Community Facilities District hereunder. C.At the Closing Date, except as described in the Preliminary Official Statement, the Community Facilities District shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance by the Community Facilities District of its obligations under the Bonds, the Community Facilities District Resolutions, the Indenture, and any other instruments contemplated by any of such documents, and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed hereunder, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise 9 subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Indenture, the Bonds or the performance of the conditions precedent to be performed by the Community Facilities District hereunder. D.The information contained in the Official Statement is, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant hereto, true and correct in all material respects and does not, as of the Closing Date or as of the date of any supplement or amendment thereto, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. E.Between the date hereof and the Closing Date, the market price or marketability, at the initial offering prices set forth on the cover page of the Official Statement, of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the Community Facilities District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following: 1.Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon such interest as would be received by any owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; 2.Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission (the “SEC”), or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended (the “Securities Act”), or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), or that the issuance, offering or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws as amended and then in effect; 3.A general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction; 10 4.The introduction, proposal or enactment of any amendment to the federal or California Constitution or any action by any federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Community Facilities District, its property, income, securities (or interest thereon), the validity or enforceability of Special Taxes, or the ability of the Community Facilities District to issue the Bonds as contemplated by the Indenture and the Official Statement; 5.Any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or in the Official Statement, or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; 6.Any national securities exchange, the Comptroller of the Currency, or any other governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; 7.There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war, (2) any other calamity or crisis in the financial markets of the United States or elsewhere, (3) the sovereign debt rating of the United States is downgraded by any major credit rating agency or a payment default occurs on United States Treasury obligations, or (4) a default with respect to the debt obligations of, or the institution of proceedings under any federal bankruptcy laws by or against, any state of the United States or any city, county or other political subdivision located in the United States having a population of over 500,000; or 8.Except as disclosed in or contemplated by the Official Statement, any material adverse change in the affairs of the City or Community Facilities District shall have occurred; or 9.Any event or circumstance shall exist that either makes untrue or incorrect in any material respect any statement or information in the Official Statement (other than any statement provided by the Underwriter) or is not reflected in the Official Statement but should be reflected therein in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and, in either such event, the Community Facilities District refuses to permit the Official Statement to be supplemented to supply such statement or information, or the effect of the Official Statement as so supplemented is to materially adversely affect the market price or marketability of the Bonds or the ability of the Underwriters to enforce contracts for the sale of the Bonds; or 10.A general banking moratorium shall have been declared by federal or State authorities having jurisdiction and be in force; or 11.A material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or 11 12.Any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a charge to the net capital requirements of, underwriters shall have been established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order; or 13.A decision by a court of the United States shall be rendered, or a stop order, release, regulation or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds, is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act, the Securities Exchange Act of 1934, as amended and the Trust Indenture Act; or 14.Any proceeding shall have been commenced or be threatened in writing by the SEC against the City or the Community Facilities District; or 15.The commencement of any Action as described in items (i) through (iv) of Section 2(M) hereof. F.At or prior to the Closing Date, the Underwriter shall have received a counterpart original or certified copy of the following documents, in each case satisfactory in form and substance to the Underwriter: 1.The Official Statement, executed on behalf of the Community Facilities District by an authorized officer; 2.The Indenture, duly executed by the Community Facilities District and the Trustee; 3.The Community Facilities District Resolutions and the Community Facilities District Documents and the Formation Documents, together with a certificate dated as of the Closing Date of the City Clerk to the effect that the Community Facilities District Resolutions are true, correct and complete copies of the ones duly adopted by the City Council; 4.The Continuing Disclosure Certificate executed by the Community Facilities District; 5.An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the Community Facilities District, of Bond Counsel, to the effect that the Bonds are the valid, legal and binding obligations of the Community Facilities District and that the interest thereon is excluded from gross income for federal income tax purposes and exempt from personal income taxes of the State, in substantially the form included as an appendix to the Official Statement, together with a letter of Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such opinion addressed to the Community Facilities District may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it; 12 6.A supplemental opinion or opinions of Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effect that: (i)this Purchase Agreement and the Continuing Disclosure Certificate has been duly authorized, executed and delivered by the Community Facilities District and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitutes the legal, valid and binding agreement of the Community Facilities District and is enforceable in accordance with its terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on legal remedies against public agencies in the State; (ii)the Bonds are not subject to the registration requirements of the Securities Act, and the Indenture is exempt from qualification under the Trust Indenture Act; (iii)the information contained in the Official Statement on the cover and under the captions “THE BONDS” (other than the caption “Debt Service Schedule”), “SOURCES OF PAYMENT FOR THE BONDS,” “TAX EXEMPTION” AND “LEGAL OPINION” and in Appendices C and E to the Official Statement, are accurate insofar as such statements purport to summarize certain provisions of the Bonds, the Indenture and Bond Counsel’s final approving opinion. 7.The letter of Disclosure Counsel, dated the Closing Date and addressed to the Community Facilities District and to the Underwriter, to the effect that, without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the Community Facilities District, the Special Tax Consultant and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Official Statement as of its date and as of the Closing Date contained or contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any financial statements or other financial, statistical or engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or expressions of opinion, any information about valuation, appraisals, absorption, archeological or environmental matters, or any information with respect to the City, or about DTC or the book-entry-only system); 8.A certificate dated the Closing Date and signed by an authorized representative of the Community Facilities District or an authorized designee, on behalf of the Community Facilities District to the effect that: (i) the representations and warranties made by the Community Facilities District contained herein are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best knowledge of such officer, no event has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (iii) the Community Facilities District has complied with all the agreements and satisfied all the conditions on its part to be satisfied under this Purchase Agreement, the Community Facilities 13 District Resolutions, the Community Facilities District Documents and the Official Statement at or prior to the Closing Date; 9.An opinion of the City Attorney of the City, dated the date of Closing and addressed to the Underwriter and the City, to the effect that: (i)The City is a municipal corporation and general law city, duly organized and existing under the Constitution and laws of the State; (ii)The Community Facilities District Resolutions have been duly adopted at meetings of the City Council, which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Community Facilities District Resolutions are in full force and effect and have not been modified, amended, rescinded or repealed since the respective dates of their adoption; (iii)The Community Facilities District Documents and the Official Statement have been duly authorized, executed and delivered by the City and the Community Facilities District Documents constitute the legal, valid and binding obligations of the Community Facilities District enforceable against the Community Facilities District in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, to the application of equitable principles where equitable remedies are sought and to the exercise of judicial discretion in appropriate cases; (iv)Except as may be stated in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending (notice of which has been served on the City or the Community Facilities District) or, to such counsel’s knowledge, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the City, or the titles of its members and officers to their respective offices; or (b) affect the validity of the Community Facilities District Documents or restrain or enjoin the repayment of the Bonds or in any way contest or affect the validity of the Community Facilities District Documents or contest the authority of the District or the City to enter into or perform its obligations under any of the Community Facilities District Documents, questions the right of the Community Facilities District to use Special Taxes levied within the Community Facilities District for the repayment of the Bonds or affects in any manner the right or ability of the Community Facilities District to collect or pledge the Special Taxes levied within the Community Facilities District for the repayment of the Bonds; 10.A certificate dated the Closing Date from Kitty Siino & Associates, Inc. (the “Appraiser”), addressed to the Community Facilities District and the Underwriter to the effect that the statements in the Official Statement provided by the Appraiser concerning Special Taxes in the Community Facilities District and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; 11.A certificate dated the Closing Date from Spicer Consulting Group, LLC (the “Special Tax Consultant”) addressed to the Community Facilities District and the Underwriter to the effect that: (i) the Special Tax if collected in the maximum amounts permitted 14 pursuant to the Rate and Method of Apportionment of Special Taxes of the Community Facilities District as of the Closing Date would generate at least 110% of the annual debt service payable with respect to the Bonds plus budgeted administrative expenses in each year, based on such assumptions and qualifications as shall be acceptable to the Underwriter; and (ii) the statements in the Official Statement provided by the Special Tax Consultant concerning Special Taxes in the Community Facilities District and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; 12.Certified copies of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution of the Indenture and the authentication of the Bonds; 13.A certificate of the Trustee, addressed to the Underwriter, and the Community Facilities District dated the Closing Date, to the effect that: (i) the Trustee is authorized to carry out corporate trust powers, and have full power and authority to perform its duties under the Indenture; (ii) the Trustee is duly authorized to execute and deliver the Indenture, to accept the obligations created by the Indenture and to authenticate the Bonds pursuant to the terms of the Indenture; (iii) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Trustee of the other transactions contemplated to be performed by the Trustee in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Indenture; and (iv) to the best of its knowledge, compliance with the terms of the Indenture will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties; 14.An opinion of counsel to the Trustee dated the Closing Date, addressed to the Underwriter, and the Community Facilities District to the effect that the Trustee is a national banking association duly organized and validly existing under the laws of the United States having full power and being qualified to enter into, accept and agree to the provisions of the Indenture, and that such documents have been duly authorized, executed and delivered by the Trustee, and, assuming due execution and delivery by the other parties thereto, constitutes the legal, valid and binding obligation of the Trustee, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by the application of equitable principles if equitable remedies are sought; 15.A certificate of the Community Facilities District dated the Closing Date, in a form acceptable to Bond Counsel and the Underwriter, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; 16.A Letter of Representations from the Developer, dated the date of printing the Preliminary Official Statement, substantially in the form attached hereto as Exhibit C; 15 17.An opinion of counsel to the Developer, dated the date of the Closing, addressed to the Underwriter and the Community Facilities District, in form and substance acceptable to the Underwriter and Bond Counsel; 18.A Closing Certificate of the Developer, dated the date of the Closing, substantially in the form attached hereto as Exhibit D or as such Closing Certificate may be modified with the approval of the Underwriter and Disclosure Counsel; 19.The Continuing Disclosure Agreement of the Developer substantially in the form attached to the Preliminary Official Statement as an appendix; 20.An opinion of Kutak Rock LLP, counsel to the Underwriter (“Underwriter’s Counsel”), dated the date of Closing and addressed to the Underwriter in form and substance acceptable to the Underwriter; and 21.Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the material representations and warranties of the Community Facilities District contained herein, and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Community Facilities District at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the Community Facilities District in connection with the transactions contemplated hereby and by the Indenture and the Official Statement. If the Community Facilities District shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Community Facilities District nor the Underwriter shall be under any further obligation hereunder, except that the respective obligations of the Underwriter and the Community Facilities District set forth in Section 5 hereof shall continue in full force and effect. 4.Establishment of Issue Price. A.The Underwriter agrees to assist the Community Facilities District in establishing the issue price of the Bonds and shall execute and deliver to the Community Facilities District at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Community Facilities District and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the Community Facilities District under this section to establish the issue price of the Bonds may be taken on behalf of the Community Facilities District by the Community Facilities District’s Municipal Advisor identified herein and any notice or report to be provided to the Community Facilities District may be provided to the Community Facilities District’s Municipal Advisor. B.Except as otherwise set forth in Exhibit A attached hereto, the Community Facilities District will treat the first price at which 10% of each maturity of the Bonds (the “10% test”), identified under the column “10% Test Used” in Exhibit A, is sold to the public as the issue 16 price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Community Facilities District the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Community Facilities District the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public. C.The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, identified under the column “Hold the Offering Price Rule Used,” as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement) and (ii) the 10% test has not been satisfied and for which the Community Facilities District and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Community Facilities District to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1)the close of the fifth (5th) business day after the sale date; or (2)the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. The Underwriter shall promptly advise the Community Facilities District when it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. D.The Underwriter confirms that: (i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable: (A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be reasonable periodic intervals or otherwise upon request of the Underwriter and 17 (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter, (B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker- dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public. (ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. E.The Community Facilities District acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering- price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. F.The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section. Further, for purposes of this section: (i)“public” means any person other than an underwriter or a related party; (ii)“underwriter” means (A) any person that agrees pursuant to a written contract with the Community Facilities District (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public); 18 (iii)a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and (iv)“sale date” means the date of execution of this Purchase Agreement by all parties. 5.Expenses. Whether or not the transactions contemplated by this Purchase Agreement are consummated, the Underwriter shall be under no obligation to pay, and the Community Facilities District shall pay only from the proceeds of the Bonds, or any other legally available funds of the City, or the Community Facilities District, but only as the Community Facilities District and such other party providing such services may agree, all expenses and costs of the Community Facilities District incident to the performance of its obligations in connection with the authorization, execution, sale and delivery of the Bonds to the Underwriter, including, without limitation, printing costs, initial fees of the Trustee, including fees and disbursements of their counsel, if any, fees and disbursements of Bond Counsel, Disclosure Counsel and other professional advisors employed by the City, costs of preparation, printing, signing, transportation, delivery and safekeeping of the Bonds and for expenses (included in the expense component of the spread) incurred by the Underwriter on behalf of the City’s employees which are incidental to implementing this Purchase Agreement, including, but not limited to, meals, transportation, lodging, and entertainment of those employees. The Underwriter shall pay all out-of-pocket expenses of the Underwriter, including, without limitation, advertising expenses, the California Debt and Investment Advisory Commission fee, CUSIP Services Bureau charges, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds, including fees and disbursements of Underwriter’s Counsel. Any meals in connection with or adjacent to meetings, rating agency presentations, pricing activities or other transaction-related activities shall be considered an expense of the transaction and included in the expense component of the Underwriter’s discount. 6.Notices. Any notice of other communication to be given to the Community Facilities District or the Community Facilities District under this Purchase Agreement may be given by delivering the same in writing to the City of Lake Elsinore, 130 South Main Street, Lake Elsinore, California 92530, Attention: Assistant City Manager; any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, 515 South Figueroa Street, Suite 1800, Los Angeles, California 90071, Attention: Public Finance Department. 7.Parties In Interest. This Purchase Agreement is made solely for the benefit of the Community Facilities District and Underwriter (including any successors or assignees of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. 19 8.Survival of Representations and Warranties. The representations and warranties of the Community Facilities District under this Purchase Agreement shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter, and shall survive the delivery and payment for the Bonds and the termination of this Purchase Agreement. 9.Execution in Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 10.Effective. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Community Facilities District and shall be valid and enforceable as of the time of such acceptance. 11.No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understanding among the parties hereto in relation to the sale of the Bonds by the Community Facilities District. 12.Governing Law. This Purchase Agreement shall be governed by the laws of the State of California. S-1 13.Effective Date. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Community Facilities District and shall be valid and enforceable as of the time of such acceptance. Very truly yours, STIFEL, NICOLAUS & COMPANY, INCORPORATED By: Its:Authorized Officer The foregoing is hereby agreed to and accepted as of the date first above written: CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) By: Authorized Officer Time of Execution: _____________ p.m. California time [EXECUTION PAGE OF BOND PURCHASE AGREEMENT] A-1 EXHIBIT A $[_________] CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BONDS, SERIES 2018 Maturity (September 1) Principal Amount Interest Rate Yield Price 10% Test Satisfied* 10% Test Not Satisfied Subject to Hold-The- Offering- Price Rule 20__$%% _________________ (T) Term Bond. (C) Priced to optional call at [___]% on September 1, 20[__]. * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement. B-1 EXHIBIT B $[_________] CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BONDS, SERIES 2018 FORM OF ISSUE PRICE CERTIFICATE The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (“Stifel”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”). 1.Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A. 2.Initial Offering Price of the Hold-the-Offering-Price Maturities. (a)Stifel offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B. (b)As set forth in the Bond Purchase Agreement, dated [_________], 2018, by and between Stifel and the City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) (the “Community Facilities District”), Stifel has agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-the- Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period. 3.Defined Terms. (a)General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.” (b)Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (c)Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date, or (ii) the date on which Stifel has sold at least 10% of such Hold-the-Offering-Price B-2 Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the- Offering-Price Maturity. (d)Issuer means the City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court). (e)Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities. (f)Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g)Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is [_________], 2018. (h)Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Stradling Yocca Carlson & Rauth, a Professional Corporation in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. STIFEL, NICOLAUS & COMPANY, INCORPORATED By: Name: By: Name: Dated: November [__], 2018 B-3 SCHEDULE A SALE PRICES OF THE GENERAL RULE MATURITIES AND INITIAL OFFERING PRICES OF THE HOLD-THE-OFFERING-PRICE MATURITIES (To be attached) B-4 SCHEDULE B PRICING WIRE OR EQUIVALENT COMMUNICATION C-1 EXHIBIT C CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BONDS, SERIES 2018 LETTER OF REPRESENTATIONS – D.R. HORTON City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Lake Elsinore, California Stifel, Nicolaus & Company, Incorporated Los Angeles, California Ladies and Gentlemen: Reference is made to the City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Special Tax Bonds, Series 2018 (the “Bonds”) and to the Bond Purchase Agreement to be entered into in connection therewith (the “Bond Purchase Agreement”). This Letter of Representations (the “Letter of Representations”) is delivered pursuant to and in satisfaction of Section 3(F)(16) of the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Bond Purchase Agreement. The undersigned certifies that he is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of Western Pacific Housing, Inc., a Delaware corporation (dba D.R. Horton America’s Builder) (the “Developer”), and the undersigned, on behalf of the Developer, further certifies as follows: 1.The Developer has been duly organized and validly exists in good standing under the laws of the State of Delaware, is qualified to transact interstate business in the State of California, is in good standing in the State of California, and has all requisite right, power and authority (i) to execute and deliver this Letter of Representations and to execute and deliver the Developer Continuing Disclosure Agreement at Closing, (ii) to complete the development (i.e., construction of homes) on its property in the City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) (the “Community Facilities District”) as described in the Preliminary Official Statement and (iii) to perform its obligations under the Developer Continuing Disclosure Agreement. 2. As set forth in the Preliminary Official Statement, title to a certain portion of the property within the Community Facilities District is held in the name of the Developer (herein, the “Property”). The undersigned, on behalf of the Developer, makes the representations herein with respect to all such Property. Except as otherwise described in the Preliminary Official Statement, the Developer is and the Developer’s current expectations are that the Developer shall remain the party responsible for the development of the Property. The Developer has not entered into an agreement for development or management of the Property by any other entity, except such subcontracts, consultant agreements and similar agreements for land development activities associated with the Developer’s development plan as are entered into in the ordinary course of C-2 business. 3. Except as set forth in the Preliminary Official Statement, no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, regulatory agency, or public board or body is pending against the Developer (with proper service of process to the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned,1 is pending against any current Affiliate2 (with proper service of process to such Affiliate having been accomplished) or to the Actual Knowledge of the Undersigned is threatened in writing against the Developer or any such Affiliate (a) to restrain or enjoin the collection of Special Taxes or other sums pledged or to be pledged to pay the principal of and interest on the Bonds (e.g., the Reserve Fund established under the Indenture), (b) to restrain or enjoin the development of the Property as described in the Preliminary Official Statement, (c) in any way contesting or affecting the validity of the Special Taxes, or (d) which is reasonably likely to materially and adversely affect the Developer’s ability to complete the development and sale of the Property as described in the Preliminary Official Statement or to pay the Special Taxes due with respect to the Property. 4. As of the date of the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the information contained therein solely with respect to the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) as set forth under the section of the Preliminary Official Statement captioned “PROPERTY OWNERSHIP AND THE DEVELOPMENT” (excluding therefrom in all cases information regarding the Appraisal Report, market value ratios and annual special tax ratios, and information which is identified as having been provided by a source other than the Developer), is true and correct in all material respects and did not contain any untrue statement of a material fact or omit 1 “Actual Knowledge of the Undersigned” means the knowledge that the individual signing on behalf of the Developer currently has as of the date of this Letter of Representations or has obtained through (i) interviews with such current officers and responsible employees of the Developer and its Affiliates as the undersigned has determined are reasonably likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in this Letter of Representations, and/or (ii) review of documents that were reasonably available to the undersigned and which the undersigned has reasonably deemed necessary for the undersigned to obtain knowledge of the matters set forth in this Letter of Representations. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Developer’s current business and operations. 2 “Affiliate” means, with respect to the Developer, any other Person (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Developer, and (ii) for whom information, including financial information or operating data, concerning such Person is material to potential investors in their evaluation of the Community Facilities District and investment decision regarding the Bonds (i.e., information relevant to (a) the Developer’s development plans with respect to the Property and ability to pay its Special Taxes on the Property prior to delinquency, or (b) such Person’s assets or funds that would materially affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay its Special Taxes on the Property). “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof. For purposes hereof, the term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. C-3 to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 5. The Developer agrees to execute at Closing the Developer Continuing Disclosure Agreement substantially in the form attached an appendix to the Preliminary Official Statement, with such additional changes as may be agreed to by the Developer. 6. To the Actual Knowledge of the Undersigned, execution and delivery of the Developer Continuing Disclosure Agreement, and the performance by the Developer of its obligations under the Developer Continuing Disclosure Agreement, will not conflict with or constitute a breach of or default under any loans, lines of credit, agreements, or other contractual or financial obligations of the Developer, or any applicable law, regulation, judgment or decree 7. Except as described in the Preliminary Official Statement, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Affiliates, that are secured by an interest in the Property. Neither the Developer nor, to the Actual Knowledge of the Undersigned, any of its Affiliates is currently in material default on any loans, lines of credit or other obligation related to the development of the Property or any other project which default is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement to perform its obligations under the Developer Continuing Disclosure Agreement, or to pay the Special Taxes due with respect to the Property prior to delinquency. 8. To the Actual Knowledge of the Undersigned, the Developer is not aware that any of the Property has a current liability with respect to the presence of a substance presently classified as hazardous under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 or applicable California law or is adversely affected by the presence of endangered or threatened species or habitat for endangered or threatened species. 9. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Affiliates which it controls will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, that in any way seeks to challenge or overturn the formation of the Community Facilities District, to challenge the adoption of the ordinance of the Community Facilities District levying Special Taxes within the Community Facilities District, to invalidate the Community Facilities District or any of the Bonds or any refunding bonds related thereto, or to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating thereto. The foregoing covenant shall not prevent the Developer in any way from bringing any other action, suit or proceeding including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes pursuant to which Special Taxes are levied, (b) an action or suit with respect to the application or use of the Special Taxes levied and collected or (c) an action or suit to enforce the obligations of the City and/or the Community Facilities District under the Community Facilities District Resolutions, the Indenture, the Developer Continuing Disclosure Agreement or any other agreements among the Developer, the Community Facilities District or to which the Developer is a beneficiary. C-4 10. The Developer consents to the issuance of the Bonds. The Developer acknowledges and agrees that the proceeds of the Bonds will be used as described in the Preliminary Official Statement. 11. The Developer intends to comply with the provision of the Mello-Roos Community Facilities District Act of 1982, as amended relating to the Notice of Special Tax described in Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof. 12. To the Actual Knowledge of the Undersigned, the Developer is able to pay its bills as they become due and no legal proceedings are pending against the Developer (with proper service of process having been accomplished) or, to the Actual Knowledge of the Undersigned, threatened in writing in which the Developer may be adjudicated as bankrupt or discharged from any and all of its debts or obligations, or granted an extension of time to pay its debts or obligations, or be allowed to reorganize or readjust its debts, or be subject to control or supervision of the Federal Deposit Insurance Corporation. 13. To the Actual Knowledge of the Undersigned, Affiliates of the Developer are able to pay their bills as they become due and no legal proceedings are pending against any Affiliate of the Developer (with proper service of process having been accomplished) or to the Actual Knowledge of the Undersigned, threatened in writing in which the Affiliates of the Developer may be adjudicated as bankrupt or discharged from any or all of their debts or obligations, or granted an extension of time to pay their debt or obligations, or be allowed to reorganize or readjust their debts or obligations, or be subject to control or supervision of the Federal Deposit Insurance Corporation. 14. As a subsidiary of a large, nation-wide developer of residential projects, D.R. Horton, Inc., a Delaware corporation, the Developer cannot represent with assurance that neither it nor any Affiliate has ever been delinquent in the payment of ad valorem property taxes, special taxes or special assessments. However, to the Actual Knowledge of the Undersigned, during the last five years, neither the Developer nor any Affiliate has, during the period of its ownership, been delinquent to any material extent in the payment of any ad valorem property tax, special assessment or special tax on property included within the boundaries of a community facilities district or an assessment district in California that (a) caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being commenced against the delinquent Developer or Affiliate. 15. The Developer has not filed for the reassessment of the assessed value of portions of the Property, other than in connection with the sale of homes to individual homebuyers. 16. To the Actual Knowledge of the Undersigned, there are no claims, disputes, suits, actions or contingent liabilities by and among the Developer, its Affiliates or any contractors working on the development of the Property which is reasonably likely to materially and adversely affect the development of the Property as described in the Preliminary Official Statement or the payment of the Special Taxes due with respect to the Property prior to delinquency. 17. Based upon the current development plans, including, without limitation, the current budget and subject to economic conditions and risks generally inherent in the development of C-5 real property, including, but not limited to, the risks described in the Preliminary Official Statement under the section entitled “SPECIAL RISK FACTORS,” the Developer presently anticipates that it will have sufficient funds to complete the development of the Property as described in the Preliminary Official Statement and to pay Special Taxes levied against the Property when due and does not anticipate that the Community Facilities District will be required to resort to a draw on the Reserve Fund for payment of principal of or interest on the Bonds due to the Developer’s nonpayment of Special Taxes. However, neither the Developer nor any of its Affiliates are obligated to make any additional capital contribution or loan to the Developer at any time, and the Developer reserves the right to change its respective development plan and financing plan for the Property at any time without notice. 18. An appraisal of the taxable properties within the Community Facilities District, dated August 24, 2018 (the “Appraisal Report”), with a date of value of August 15, 2018 (the “Date of Value”) was prepared by Kitty Siino & Associates, Inc. (the “Appraiser”). To the Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Appraiser and contained in the sections of the Appraisal Report and Supplement highlighted in yellow or circled in Exhibit B attached hereto, was true and correct in all material respects as of the Date of Value with respect to such highlighted information from the Appraisal Report. 19. Solely as to the limited information described in Paragraph 4 above concerning the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contract arrangements of the Developer and its Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates), as set forth under the section of the Preliminary Official Statement captioned “PROPERTY OWNERSHIP AND THE DEVELOPMENT” (excluding therefrom in all cases information regarding the Appraisal Report, market value ratios and annual special tax ratios, and information which is identified as having been provided by a source other than the Developer), the Developer agrees to indemnify and hold harmless, to the extent permitted by law, the Community Facilities District and the City and their officials and employees, and each Person, if any, who controls any of the foregoing within the meaning of Section 15 of the Securities Act of 1933, as amended, or of Section 20 of the Securities Exchange Act of 1934, as amended (each, an “Indemnified Party” and, collectively, the “Indemnified Parties”), against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Party may become subject under any statute or at law or in equity or otherwise and shall reimburse any such Indemnified Party for any reasonable legal or other expense incurred by it in connection with investigating any such claim against it and defending any such action, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact or the omission or alleged omission of a material fact by the Developer in the above-referenced information in the Preliminary Official Statement, as of its date, necessary to make the statements made by the Developer contained therein, in light of the circumstances under which they were made not misleading. This indemnity provision shall not be construed as a limitation on any other liability which the Developer may otherwise have to any Indemnified Party, provided that in no event shall the Developer be obligated for double indemnification, or for the negligence and willful misconduct of an Indemnified Party. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Indemnified Party in C-6 respect of which indemnification may be sought pursuant to the above paragraph, such Indemnified Party shall promptly notify the Developer in writing; provided that the failure to notify the Developer shall not relieve it from any liability that it may have hereunder except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Developer shall not relieve it from any liability that it may have to an Indemnified Party otherwise than under the above paragraph. If any such proceeding shall be brought or asserted against an Indemnified Party and it shall have notified the Developer thereof, the Developer shall retain counsel reasonably satisfactory to the Indemnified Party (who shall not, without the consent of the Indemnified Party, be counsel to the Developer) to represent the Indemnified Party in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Developer and the Indemnified Party shall have mutually agreed to the contrary; (ii) the Developer has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Party; (iii) the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Developer; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Developer and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. It is understood and agreed that the Developer shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Parties, and that all such fees and expenses, to the extent reasonable, shall be paid or reimbursed as they are incurred. Any such separate firm shall be designated in writing by such Indemnified Parties. The Developer shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Developer agrees to indemnify each Indemnified Party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Party shall have requested that the Developer reimburse the Indemnified Party for fees and expenses of counsel as contemplated by this paragraph, the Developer shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 60 days after receipt by the Developer of such request and (ii) the Developer shall not have reimbursed the Indemnified Party in accordance with such request prior to the date of such settlement (provided that the foregoing shall not be applicable to any failure to reimburse if the Developer is disputing such payment in good faith and shall have paid any amounts not in dispute). The Developer shall not, without the written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnification could have been sought hereunder by such Indemnified Party, unless such settlement (x) includes an unconditional release of such Indemnified Party, in form and substance reasonably satisfactory to such Indemnified Party, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party. 20. If between the date hereof and the Closing Date any event relating to or affecting the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the C-7 Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) shall occur of which the Developer has actual knowledge which would cause the information under the sections of the Preliminary Official Statement indicated in Paragraph 4 hereof, to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Developer shall notify the Community Facilities District and the Underwriter and if in the opinion of counsel to the Community Facilities District or the Underwriter such event requires the preparation and publication of a supplement or amendment to the Preliminary Official Statement, the Developer shall reasonably cooperate with the Community Facilities District in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the Community Facilities District and to the Underwriter. 21. The Developer agrees to deliver a Closing Certificate dated the date of issuance of the Bonds at the time of issuance of the Bonds in substantially the form attached as Exhibit A. 22. On behalf of the Developer, I have reviewed the contents of this Letter of Representations and have met with counsel to the Developer for the purpose of discussing the meaning of the contents of this Letter of Representations. The Developer acknowledges and understands that a variety of state and federal securities laws, including, but not limited to the Securities Act of 1933, as amended, and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, as amended, may apply to the Developer and that under some circumstances, certification as to the matters set forth in this Letter of Representations, without additional disclosures or other action, may not fully discharge all duties and obligations of the Developer under such securities laws. WESTERN PACIFIC HOUSING, INC. By: Name: Title: [EXECUTION PAGE OF LETTER OF REPRESENTATIONS – D.R. HORTON] D-1 EXHIBIT D $[_________] CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) SPECIAL TAX BONDS, SERIES 2018 CLOSING CERTIFICATE – D.R. HORTON [Closing Date], 2018 City of Lake Elsinore Community Facilities District No. 2007-4 (Makenna Court) Lake Elsinore, California Stifel, Nicolaus & Company, Incorporated Los Angeles, California Ladies and Gentlemen: Reference is made to the above-captioned bonds (the “Bonds”) and to the Bond Purchase Agreement, dated [________], 2018 (the “Bond Purchase Agreement”), entered into in connection therewith. This certificate is delivered pursuant to the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Letter of Representations (the “Letter of Representations”), dated [________], 2018, delivered by Western Pacific Housing, Inc., a Delaware corporation (dba D.R. Horton America’s Builder) (the “Developer”), which is attached hereto as Exhibit A. The undersigned certifies that he is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows: 1. The Developer has received the Official Statement relating to the Bonds. To the Actual Knowledge of the Undersigned, each statement, representation and warranty made in the Letter of Representations is true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the final Official Statement. 2. To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information described in Paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in Paragraph 4 of the Letter of Representations) relating to the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates), which should be disclosed in the Official Statement for the D-2 purposes for which it is to be used in order to make such statements and information contained in the Official Statement not misleading in any material respect. 3.The Developer has duly executed and delivered the Developer Continuing Disclosure Agreement, and the Developer Continuing Disclosure Agreement constitutes the legal, valid and binding obligation of the Developer, enforceable against the Developer in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance, and other similar laws relating to or affecting the rights of creditors and certain equitable, legal, or statutory principles affecting the enforcement of contractual rights generally, regardless of whether such enforcement is considered in a proceeding in equity or at law. 4.For the period through 25 days after the “End of the Underwriting Period” as defined in the Bond Purchase Agreement, if any event relating to or affecting the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) shall occur as a result of which it is necessary, in the opinion of the Underwriter or counsel to the Community Facilities District, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it was delivered to a purchaser, the Developer shall reasonably cooperate with the Community Facilities District and the Underwriter in the preparation and publication of a supplement or amendment to the Official Statement, in form and substance satisfactory to the Underwriter and counsel to the Community Facilities District which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. WESTERN PACIFIC HOUSING, INC. By: Name: Title: [EXECUTION PAGE OF CLOSING CERTIFICATE – D.R. HORTON] Stradling Yocca Carlson & Rauth Draft of 9/25/18 CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) FUNDING AGREEMENT THIS AGREEMENT is made and entered into by and between CITY OF LAKE ELSINORE (the “City”), acting for and on behalf of itself and CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) (the “Community Facilities District” or “CFD”), and WESTERN PACIFIC HOUSING, INC., a Delaware corporation (the “Developer”), each individually a “Party” and collectively the “Parties.” WHEREAS, the City has formed the CFD pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), authorized special taxes and issuance of bonded indebtedness to finance certain public improvements to be owned, operated or maintained by the City and the Elsinore Valley Municipal Water District and incidental expenses in accordance with the Act; and WHEREAS, in order to proceed in a timely way with development of the property within the Community Facilities District which is attached as Exhibit “A”(the “Property”), Developer desires to fund through the Community Facilities District (i) improvements included in the City’s fee programs (the “City Improvements”), as more particularly set forth and described in the Description of Cost Estimates attached hereto as Exhibit “B”and (ii) if applicable, any improvements unrelated to the City Improvements described and governed by the terms contained in Exhibit “E”hereto (the “Miscellaneous Improvements”) (collectively the “Improvements”); and WHEREAS, the City is authorized by the Act to form the CFD and to issue bonds to fund the Improvements; and WHEREAS, the City Council has adopted the City’s policies and procedures concerning the use of special district financing programs to finance City facilities (the “Policy”); and WHEREAS, the purpose of this Agreement is to constitute a formal understanding between Developer and the City(pursuant to the requirements of Government Code Section 53313.51 and other provisions of the Act and the Policy) concerning financial and other obligations and responsibilities related to the Improvements to be financed by the Community Facilities District to the extent funds are available, and to set forth the conditions upon which (1) the Community Facilities District will fund the Improvements and (2) the Community Facilities District will also fund any Miscellaneous Improvements, if applicable, described in Exhibit “E.” NOW, THEREFORE, it is mutually agreed between the respective parties as follows: SECTION 1.DEVELOPER DEPOSIT At Developer’s request, the City undertook certain change proceedings with respect to the Community Facilities District. The Developer has advanced to the City a sum of money related to the costs of such change proceedings, all of which shall be eligible for reimbursement from the CFD. The 2 City will provide to Developer on request a summary of how the advances have been spent and the unexpended balance remaining. The amounts advanced by Developer and, to the extent determined reasonable and appropriate by the City, expenses incurred by Developer for engineering consultant costs in connection with the change proceedings of the Community Facilities District and the issuance of bonds, will be reimbursable to Developer, without interest, from the proceeds of bonds (the “Bonds”) issued by the Community Facilities District. In the event that Bonds are not issued to provide a source of reimbursement to Developer, the Cityshall not have any liability to Developer to reimburse it for any of the amounts previously advanced by Developer and expended by the City. Prior to the issuance of the Bonds, the Citywill request a final advance for any unpaid expenses incurred during preparatory technical, financial and legal work; and following payment of such expenses, the City shall promptly release the balance, if any, of the advance to Developer. Should the City’s expenses exceed the remaining balance, the City will bill Developer for the difference, which Developer agrees to pay within 10 days following receipt of such billing, subject to the conditions of paragraph one of this section. SECTION 2.SALE OF BONDS 2.1 CityPolicy and Requirements for the Issuance of Bonds. The City Council has adopted the Policy, setting forth the City’s policies and procedures concerning the use of special district financing programs to finance the City Improvements. Pursuant to the Policy, the total annual amount of the special taxes to be collected with respect to a parcel within the CFD and all other taxes and assessments which will be collected with respect to such parcel must not exceed two percent (2%) of the expected assessed value of such parcel within the Community Facilities District upon the completion of all expected structural improvements to such parcel. The parties hereby agree that, unless waived by the City, at the time of issuance of the Bonds, the following requirements shall be met: (1) the ratio of the value of all parcels of property for which the Bonds are being issued to the amount of outstanding community facilities district or assessment district bonds attributable to such parcels (the “Value-to-Lien Ratio”) may not be less than four-to-one (4:1) and (2) at least 50% of the proposed residential units within the Community Facilities District shall have been completed and conveyed to individual homeowners. The fair market value of the property within the Community Facilities District for purposes of determining the foregoing ratio will be determined based on the assessed value of the property or the appraised value of the property based on the appraisal made by an appraiser selected by the Citywith a valuation date within three (3) months of the issuance of the Bonds. Subject to satisfaction of the Policy and the requirements of this Agreement, the City shall use its best efforts to issue and sell the Bonds in one or more series in an amount sufficient to fund the Improvements in accordance with the schedule for development of the Property. 2.2 Security for Payment of Special Taxes. (a)Concurrently with the issuance and sale of each series of the Bonds, the owner of any land within the Community Facilities District, together with land owned by any affiliate (collectively, an “Account Party”), for which the expected levy of the Special Tax for Facilities (as defined in the Second Amended and Restated Rate and Method of Apportionment of Special Tax for the Community Facilities District (the “Rate and Method), such Special Tax for Facilities referred to herein as the “Special Tax” or “Special Taxes”) in the fiscal year following the fiscal year in which the Bonds are issued are equal to or exceed 20% of the total expected Special Tax levy for such fiscal year, shall 3 deliver to the City either (i) a renewable, irrevocable instrument of credit from a financial institution (rated “A” or better) or (ii) cash in-lieu thereof (a “Security”). The Security shall be in an amount equal to 100% of the expected Special Tax levy on the property owned by such Account Party in the fiscal year following the fiscal year in which the Bonds are issued (the “Stated Amount”). The Security shall be maintained by the Account Party in each fiscal year until terminated in accordance with Section 2.2(c) below. While the Security is still required, the Stated Amount of such Security shall be reduced as set forth in a “Certificate of Reduction or Termination (as defined in Section 2.2(c) below). The Security shall name the City, or its designee, as a beneficiary and shall provide that the City, or its designee, may draw an amount equal to any delinquencies in payment of semiannual installments of the Special Taxes levied on property owned by the Account Party in the Community Facilities District. The total amount to be drawn under the Security shall not exceed an amount equal to the Special Taxes owed by the Account Party with respect to property within the Community Facilities District that is delinquent at the time the draw is made. The amount drawn on the Security shall be applied in the same manner and for the same purposes as the delinquent Special Taxes would have been applied; provided, however the payment of a draw under the Security will not be deemed to cure the delinquency in payment of the Special Taxes. If, subsequent to a draw on the Security and prior to the satisfaction of any reimbursements due to the institution providing the Security (the “Security Provider”) pursuant to this Agreement, the City receives payment of all or a portion of the delinquent Special Taxes or the proceeds of a sale of delinquent real property pursuant to foreclosure proceedings (“Delinquency Proceeds”) for a parcel for which the Security has been drawn, the Security Provider shall be reimbursed for such draws to the extent of Delinquency Proceeds net of the City’s costs of collection, provided that the Security is or has been concurrently reinstated to, or a Substitute Security (as defined below) provided for, the then applicable Stated Amount. The Security Provider is intended by the Parties to be a third party beneficiary of this Section 2.2. (b)The Security shall be renewed, or a substitute Security reasonably satisfactory to the City (a “Substitute Security”) provided, not less than thirty (30) calendar days prior to the expiration of the Security or Substitute Security then in effect. If the Account Party provides a Substitute Security to the City, then the City or its designee, shall return any existing Security on the effective date of the Substitute Security to the Security Provider. If the Security is not renewed within thirty (30) days prior to its expiration date and the requirements for release or termination of the Security as set forth in Section 2.2(c) below have not then been met, the full amount of the Security may be drawn by the City and deposited in an account established under the Indenture (as hereinafter defined) or in such account established with a financial institution selected by the City. Thereafter, amounts in such account shall be held as security, and if Special Taxes owed by the Account Party with respect to property within the Community Facilities District are not paid prior to delinquency, then such amounts in such account may be applied by the City to pay the delinquent Special Taxes owed by the Account Party with respect to such property on the same terms and conditions applicable hereunder to draws on the Security. At such time as the Security is renewed, or a Substitute Security is accepted by the City, or the requirement for the Security has been terminated pursuant to this section, the City or its designee, shall release all amounts in the Security account to the Security Provider within ten (10) calendar days from the date of renewal or acceptance. 4 (c)Following the sale or transfer by the Account Party of any property to a person other than the Account Party, or upon the prepayment of the Special Tax obligation for a parcel owned by the Account Party, the Account Party shall notify the Community Facilities District of such event, in writing, and, if requested by the Account Party, the Stated Amount of the Security shall be reduced and be recalculated in accordance with this Section 2.2; provided, however, that City shall be required to recalculate such amount and reduce the Security a maximum of two times each calendar year and any costs associated with the recalculation and reduction shall be borne by the Account Party. The Security shall be terminated when (i) the expected levy on the land owned by the Account Party in the Community Facilities District is responsible for less than 20% of the Special Tax levy in the current fiscal year, (ii) the Account Party has paid all Special Taxes in the current fiscal year and the property owned by the Account Party in the Community Facilities District is expected to be responsible for less than 20% of the Special Tax in the next fiscal year or (iii) the Account Party has paid all Special Taxes in the current fiscal year and in the following fiscal year, the District will not levy the Special Tax on property within the Community Facilities District owned by the Account Party. Reduction or termination of a Security shall occur automatically upon submission to the Security Provider by the Cityof a “Certificate of Reduction or Termination.” The City shall deliver to the Security Provider, such Certificate of Reduction or Termination promptly upon receiving from the Account Party a certification which shall be made under penalty of perjury and which shall indicate (i) the legal description of all land owned by the Account Party, and either (ii) a recalculation of the new Stated Amount that the Account Party proposes be applicable to the Security or (iii) if termination of the Security is requested, a statement that one of the requirements set forth in (i) through (iii) of the preceding paragraph have been satisfied. The Account Party shall notify the City of any events that will result in a reduction of the Stated Amount of the Security and shall provide the City with verification of said events. The Account Party may provide the City with a Substitute Security in the reduced amount, and the City shall release and return to the Security Provider the Security then in effect. The Parties expressly acknowledge that the Account Party’s failure to so notify the City or to reduce the Security at the times prescribed herein shall in no way effect or invalidate sale or transfer of property, or recordation of maps on property. (d)If property is sold or transferred by an Account Party with the result that the land owned by the transferee or any of its affiliates (“Transferee”) is responsible for twenty percent (20%) or more of the Special Tax in the current fiscal year, a Security on the same terms specified herein will be furnished by Transferee with respect to all land owned by such Transferee in the Community Facilities District. Any applicable purchase and sale agreement and/or escrow instructions shall notify the Transferee of this Security requirement and obligate the Transferee to provide such Security, if applicable. The Security of the Account Party will not be reduced to reflect the sale or transfer of land until a Security is furnished by the Transferee and accepted by the City. The issuing financial institution and the form and terms of said Security will be subject to reasonable prior approval by the City. All terms provided in this Section 2.2 are applicable to the Transferee by replacing the term “Account Party” at each place where it occurs in each section with the term “Transferee.” Each provider of a Security for a Transferee shall be an express third party beneficiary of the provisions of this Section 2.2. Any costs related to the holding or maintaining the Security, including any fees of a fiscal agent, trustee or other depository shall be borne by the Account Party. 5 2.3 Major Landowner Initial and Continuing Disclosure. An owner of land which is responsible for twenty percent (20%) or more of the Special Tax in the fiscal year in which the Bonds are issued or in the fiscal year following the fiscal year in which the Bonds are issued (a “Major Landowner”) will be required to provide all information regarding the development of its property, including the financing plan for such development, which is necessary to ensure that the official statement for such Bonds complies with the requirements of Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”) and all other applicable federal and state securities laws. Additionally, Developer acknowledges that, if it is a Major Landowner at the time of issuance of the Bonds, it will be necessary that Developer enter into a continuing disclosure agreement to provide such continuing disclosure pertaining to the development of the land owned by Developer within the Community Facilities District as necessary to assist the underwriter in complying with the continuing disclosure requirements of the Rule and/or to assist in the marketing of the Bonds. 2.4 Bond Issuance Parameters. The terms and conditions upon which each series of the Bonds shall be issued and sold, the method of sale of the Bonds and the pricing of the Bonds shall be determined solely by the City in its reasonable discretion in conformance with the requirements of Government Code Section 53313.5, the Act, the Policy, and this Agreement. The Bonds shall be issued with a term not to exceed 40 years and annual debt service on the Bonds shall be permitted to escalate by two percent (2%) per year consistent with the annual escalation of the Special Tax pursuant to the Rate and Method. The proceeds of the Bonds shall be used in the following priority to (1) fund a reserve fund for the payment of principal and interest with respect to the Bonds in an amount equal to the least of (i) ten percent (10%) of the total bond issue, (ii) maximum annual debt service on Bonds, or (iii) 125% of average annual debt service; (2) fund up to eighteen (18) months of capitalized interest; (3) pay for costs of issuance of the Bonds including, without limitation, underwriter’s discount, bond counsel and disclosure counsel fees, appraisal and special tax consultant fees, printing, and fiscal agent fees; (4) pay for the costs of forming the Community Facilities District and change proceedings for the Community Facilities District; and (5) pay for the actual costs of the Improvements. The Community Facilities District shall maintain records relating to the disbursements of proceeds of the sale of the Bonds. The Indenture or Resolution (hereinafter “Indenture”) for the Bonds shall establish an acquisition and construction fund or improvement fund (herein, the “Improvement Fund”) into which shall be deposited initially the proceeds of the Bonds net of the amount of proceeds required to fund items (1) through (4) in the second preceding sentence. The Indenture shall also establish separate accounts of the Improvement Fund designated the “City Improvements Account”, and any Miscellaneous Improvement Accounts described in Exhibit “E” if applicable, into which shall be deposited such portions of the Improvement Fund as directed by the City and in writing at or subsequent to the closing of the sale of the Bonds consistent with the following priorities: (a)An amount sufficient to fund the reasonable, current estimated cost of the City Improvements anticipated to be funded out of the Bonds being issued shall be deposited in the City Improvements Account; (b)If applicable, an amount sufficient to fund the reasonable, current estimated cost of any Miscellaneous Improvements anticipated to be funded out of the Bonds being issued shall be deposited in the applicable Miscellaneous Account(s), if any, described in Exhibit “E”hereto. The Indenture shall provide that amounts remaining in the Improvement Fund after funding all proposed Improvements or sooner, as specified by the City, shall be deposited in the special tax fund or bond service fund and be applied to pay debt service on the Bonds and/or to call Bonds in advance of maturity. 6 SECTION 3.ALLOCATION OF SPECIAL TAXES Prior to the issuance of Bonds, the City Council of the City, acting as the legislative body of the Community Facilities District, shall levy Special Taxes at the assigned special tax rate on all parcels classified as Developed Property pursuant to the Rate and Method. Such Special Taxes collected by the City shall first be applied to fund annual administrative expenses of the Community Facilities District and then to fund Improvements in the same manner as the proceeds of Bonds as set forth in Section 5 and Section 6 below. Upon sale and delivery of the Bonds, the City shall annually levy the Special Tax as provided for in documents pursuant to which the Bonds were issued. Following the issuance of the Bonds, the City shall have no obligation to levy Special Taxes to reimburse the Developer for the costs of any Improvements not paid for from Bond proceeds. The entire amount of any Special Tax levied by the Community Facilities District to repay the Bonds and recover costs and expenses allowable pursuant to Government Code Section 53313.5, shall be allocated to the Community Facilities District. SECTION 4.NOTICE OF SPECIAL TAX Developer, or Developer’s successors or assigns, shall provide written notice to all potential purchasers of lots advising of the special tax obligation applicable to the Property in the form required by Section 53341.5 of the Government Code. A sample copy as prepared by Developer is attached as Exhibit “C.” SECTION 5.CITY IMPROVEMENTS The Developer may be required pursuant to the conditions of development or the fee ordinance to pay certain City fees (the “City Fees”) relating to the Improvements prior to the availability of proceeds of the Bonds to pay for such Improvements. In the event such City Fees are paid prior to the availability of Bond proceeds, the amounts paid to the City shall be deemed to be deposits (each a “Deposit”) that are subject to refund by the City to the Developer in accordance with this Agreement. The City shall place each Deposit in a capital facilities account(s). If the Developer has made any Deposits to the City, then following deposit of Bond proceeds in the City Improvements Account, the City shall return to the Developer, from the capital account in which the Deposits were deposited the Deposits not previously returned, without interest or other earnings thereon. The City shall be so obligated to return such Deposits only to the extent that an equivalent amount of the Deposits to be returned is deposited in the City Improvements Account from Bond proceeds. Bond proceeds used to finance Improvements which relate to the City Fees shall be allocated first for return of all Deposits prior to being allocated to the payment of City Fees not previously deposited by the Developer. Any Deposits that have not been returned to the Developer at the time it is determined that there will be no further Bond proceeds available (i.e. the final series of Bonds to finance the City Improvements have been issued) shall be retained by the City and may be used for the purposes for which the City Fee was required, and the unrefunded Deposits shall constitute full and final payment for such City Fees, without any increase of any kind. Any City Fees paid (as Deposits) by the Developer shall be made with the understanding that such Deposits will be returned to the Developer if, and when, Bond proceeds have been deposited to the City Improvements Account. The City shall expend any amounts disbursed to it from the City Improvements Account on capital facilities. The payment of Deposits prior to the availability of the Bond proceeds shall not be construed as a dedication or gift of the City Fees, or a waiver of the return 7 of the Deposits, it being the intention that the City Fees be paid by Bond proceeds to the extent of the Bond proceeds. SECTION 6.MISCELLANEOUS IMPROVEMENTS. Improvements unrelated to the City Improvements, if applicable, will be supplemented by the terms contained in an addendum which will appear as Exhibit “E”hereto. The amounts deposited in the applicable Miscellaneous Improvement Account(s), if any, will be disbursed for the acquisition or construction of Miscellaneous Improvements in accordance with the provisions in the applicable Joint Community Facilities Agreement(s), if any. Any amounts in the applicable Miscellaneous Improvement Account(s) shall be disbursed at the written direction of the City upon Developer’s submittal of an addendum which will appear as the applicable entity’s Certificate and the Disbursement Request Form provided for in the Joint Community Facilities Agreement(s). Upon receipt of the Disbursement Request Form, the City shall submit a written requisition for payment of the requested amount to trustee for the Bonds pay the amount requested to the applicable entity. SECTION 7.INDEPENDENT CONTRACTOR In performing this Agreement, Developer is an independent contractor and not the agent of the City. The Cityshall not have any responsibility for payment to any contractor or supplier of Developer. 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. SECTION 8.INDEMNIFICATION Developer shall assume the defense of, indemnify and hold harmless, the City, its officers, employees and agents, and the Community Facilities District, its officers, employees and agents, 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 the Developer’s performance of its obligations under this Agreement, the issuance of the Bonds, the construction of the Improvements, the failure of the Developer to provide notice of the special tax to be levied by the Community Facilities District pursuant to Section 53341.5 of the Act (but only if the Developer is required by law to provide such notice), or arising out of any alleged misstatements of fact or alleged omission of a material fact made by the Developer, its officers, directors, employees or agents to the City, the Community Facilities District, the underwriter of the Bonds and its counsel, the appraiser, the special tax consultant, the market absorption consultant or bond counsel regarding the Developer, its proposed developments, its property ownership, and any contractual arrangement it may enter into in a disclosure document describing the Community Facilities District and the risks relating to the Bonds. No provision of this Agreement shall in any way limit the extent of Developer’s responsibility for payment of damages resulting from the operations of Developer and its contractors; provided, however that Developer shall not be required to assume the defense or indemnify and hold harmless the City, its officers, employees or agents, or the Community Facilities District, its officers, employees or agents, as to actions, damages, claims, losses or expenses resulting from negligence or willful misconduct of such person or entity. SECTION 9.CONFLICT WITH OTHER AGREEMENTS Except as specifically provided herein, nothing contained herein shall be construed as releasing Developer from any condition of development or requirement imposed by any other agreement with 8 City. In the event of a conflicting provision, such other agreement shall prevail unless such conflicting provision is specifically waived or modified in writing by City. SECTION 10. TERMINATION The provisions of this Agreement related to the financing of the Improvements shall terminate and be of no further force or effect if the first series of Bonds are not sold within ten years from the date of this Agreement unless extended by agreement of all the parties. If the City is unable to sell the first series of Bonds after diligent, commercially reasonable efforts to do so, this Agreement shall terminate and be of no further force and effect. SECTION 11. 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. Any notice to the Community Facilities District or the City shall be addressed to City of Lake Elsinore, 130 South Main Street, Lake Elsinore, CA 92530, Attention: Assistant City Manager. Any notice to Developer shall be addressed to Western Pacific Housing, Inc., 2280 Wardlow Circle, Suite 100, Corona, CA 92880, Attention: Barbara Murakami. Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party hereto. SECTION 12. GENERAL PROVISIONS (a)Amendment. This Agreement may be amended at any time but only in writing signed by each party hereto. (b)Entire Agreement. This Agreement, and the agreements referenced herein, contains the entire understanding and 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. There are no oral or written representations, understanding, undertakings or agreements which are not contained or expressly referred to herein, and any such representations, understandings or agreements are superseded by this Agreement. This Agreement shall be binding upon, and enforceable by and against the Community Facilities District. (c)Exhibits. All exhibits attached hereto are incorporated into this Agreement by reference. (d)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. (e)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. 9 (f)No Third Party Beneficiaries. Except as provided explicitly in this Agreement, 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 the City, the Community Facilities District, and Developer (and their respective successors and assigns), any rights, remedies, obligations or liabilities under or by reason of this Agreement. (g)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. (h)Assignment. Developer may assign all or any of its rights pursuant to this Agreement to a purchaser of all or any portion of the Property. Such a purchaser and assignee shall, as a condition to taking an assignment of such rights, enter into an assignment and assumption agreement with the City and Developer, in a form reasonably acceptable to Developer and the City, whereby such rights assigned are specified and such purchaser agrees, except as may be otherwise specifically provided therein, to assume the obligations of Developer pursuant to this Agreement and to be bound thereby. (i)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. (j)Construction of Agreement. This Agreement has been reviewed by legal counsel for both the City and Developer and shall be deemed for all purposes to have been jointly drafted by the City and Developer. No presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this Agreement. (k)Attorneys’ Fees. In the event of any action or proceeding, including an arbitration or a reference pursuant to Section 638, et seq., of the Code of Civil Procedure brought by any Party against any other under this Agreement, the prevailing Party shall be entitled to recover its actual attorneys’ fees and all fees, costs and expenses incurred for prosecution, defense, consultation, or advice in such action or proceeding. In addition to the foregoing, the prevailing Party shall be entitled to its actual attorneys’ fees and all fees, costs and expenses incurred in any post-judgment proceedings to collect or enforce the judgment. This provision is separate and several and shall survive the merger of this Agreement into any judgment on this Agreement. (l)Venue and Forum. Any action at law or in equity arising under this Agreement brought by any Party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Riverside, State of California, and the Parties waive all provisions of law providing for the filing, removal or change of venue to any other Court. (m)Entire Agreement. Except as provided in an addendum, which if applicable, will appear as Exhibit “E”hereto, this Agreement sets forth and contains the entire understanding and agreement of the parties. There are no oral or written representations, understandings, undertaking or agreements, which are not contained or expressly referred to herein, and any such representations, understandings or agreements are superceded by this Agreement. No evidence of any such representations, understandings or agreements shall be admissible in any proceeding of any kind or nature relating to the terms or conditions of this Agreement, its interpretation or breach. 10 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] S-1 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written below. Dated: October 9, 2018 CITY OF LAKE ELSINORE, a political subdivision of the State of California By: Assistant City Manager ATTEST: By: Susan M. Domen, MMC, City Clerk APPROVED AS TO FORM: CITY ATTORNEY OF THE CITY OF LAKE ELSINORE By: David Mann, City Attorney [SIGNATURES CONTINUED ON NEXT PAGE.] S-2 [SIGNATURE PAGE CONTINUED] WESTERN PACIFIC HOUSING, INC., a Delaware corporation By: Barbara Murakami, Senior Vice President, Forward Planning & Entitlements LIST OF EXHIBITS EXHIBIT A - DESCRIPTION OF PROPERTY EXHIBIT B - DESCRIPTION OF COST ESTIMATES EXHIBIT C - NOTICE OF SPECIAL TAX (as prepared by Developer) EXHIBIT D - DISBURSEMENT REQUEST FORM EXHIBIT E - ADDENDUM A-1 EXHIBIT A DESCRIPTION OF PROPERTY LEGAL DESCRIPTION Real property in the City of Lake Elsinore, County of Riverside, State of California, described as follows: Assessor’s Parcel Nos: 379-151-001 through 379-151-018 379-150-053 through 379-150-058 379-500-001 through 379-500-024 379-501-001 through 379-501-033 B-1 EXHIBIT B DESCRIPTION OF COST ESTIMATES The Improvements consist of the City Improvements, as described below. Any other types of Improvements will be described in an addendum to this Agreement appearing as Exhibit “E.” I.CITY IMPROVEMENTS. City facilities included in the City’s development fee programs used to finance expansion projects, exclusive of in-tract facilities constructed by a property owner, but including and not limited to the following. Estimated Cost of the City Improvements Description Estimated Cost Drainage Fee $128,222 City Hall/Public Works Facilities Fee 65,529 Community Center Facilities Fee 44,145 Marina Facilities Fee 63,099 Animal Shelter Facilities Fee 28,188 Library Facilities Fee 12,150 Fire Facilities Fee 60,831 Traffic Fair Share Fee 9,350 Fair Share Traffic COA No. 52 63,250 Fair Share Traffic COA No. 63 93,500 Park Fee 3,200 Traffic Impact Fee 16,428 Total Fees $587,892 C-1 EXHIBIT C NOTICE OF SPECIAL TAX NOTICE OF SPECIAL TAX COMMUNITY FACILITIES DISTRICT 2007-4 OF THE CITY OF LAKE ELSINORE (MAKENNA COURT) COUNTY OF RIVERSIDE, CALIFORNIA D-1 EXHIBIT D CFD NO. 2007-4 (MAKENNA COURT) OF THE CITY OF LAKE ELSINORE DISBURSEMENT REQUEST FORM 1.City of Lake Elsinore Community Facilities District No. 2007-4 (MaKenna Court) of (the “CFD”) is hereby requested to pay from the ________________________ Account, or any applicable account or sub-account thereof, established by the CFD in connection with its [20__] Special Tax Bonds (the “Bonds”) to City of Lake Elsinore (the “City”) as payee, the sum set forth below : $_____________________ (the Requested Amount”) 2.The Requested Amount represents the payment of City Fees for ___ lot(s) within the boundaries of the CFD (the “Property”). (Tract No. __________, Lot Nos. ________________). 3.The Requested Amount is due and payable, has not formed the basis of any prior request or disbursement. 4.The Requested Amount shall be payable to _______________ (the “Developer”), pursuant to the wiring instructions attached hereto. 5.The Requested Amount is authorized and payable pursuant to the terms of the certain Funding Agreement (the “Agreement”) between the City, acting for and on behalf of itself and the CFD and Developer. D-2 6.Capitalized undefined terms used herein shall have the meaning ascribed to them in the Agreement. Dated:DEVELOPER: WESTERN PACIFIC HOUSING, INC., a Delaware corporation By: Name: Title: Dated:CITY OF LAKE ELSINORE By: Its: [ATTACH WIRING INSTRUCTIONS] E-1 EXHIBIT E ADDENDUM DESCRIPTION AND COST ESTIMATES OF THE MISCELLANEOUS IMPROVEMENTS I.ELSINORE VALLEY MUNICIPAL WATER DISTRICT IMPROVEMENTS. Water and sewer facilities including the acquisition of capacity in the sewer system and/or water system of the Elsinore Valley Municipal Water District (the “Water District”) which are included in the Water District’s water and sewer capacity and connection fee programs, exclusive of in-tract facilities constructed by a property owner, 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 and appurtenant work relating to the foregoing. Estimated Cost of the Water District Improvements Description Estimated Cost Water Capacity Charge (¾” Meter)$737,452 ¾” Meter Hardware Fee 42,025 Water Capacity Charge (¾” Irrigation Meter)22,250 Sewer Capacity Charge 725,841 Total Fees $1,527,568 JOINT COMMUNITY FACILITIES AGREEMENT among CITY OF LAKE ELSINORE and ELSINORE VALLEY MUNICIPAL WATER DISTRICT and WESTERN PACIFIC HOUSING, INC. a California Corporation relating to CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-4 (MAKENNA COURT) JOINT COMMUNITY FACILITIES AGREEMENT THIS JOINT COMMUNITY FACILITIES AGREEMENT (the “Agreement”) is dated as of the 1st day of November, 2018, by and among the CITY OF LAKE ELSINORE, a political subdivision of the State of California (the “City”), the ELSINORE VALLEY MUNICIPAL WATER DISTRICT, a municipal corporation (the “Water District”), and WESTERN PACIFIC HOUSING, INC., a Delaware corporation (the “Company”), and relates to City of Lake Elsinore Community Facilities District No. 2007-4 (MaKenna Court) (the “District”) for the purpose of financing certain facilities to be owned and operated by the Water District, consisting of various water and sewer improvements described in Exhibit B hereto (the “Water District Facilities”). R E C I T A L S : A.The Company is the developer of the land described in Exhibit A hereto (the “Property”) which is located in the City of Lake Elsinore, County of Riverside, and consists of all the property located within the District. B.The Company as the developer of the Property intends to obtain, or has obtained, the necessary development approvals to construct approximately 81 residential units on the Property and to provide the required infrastructure for such units and improvements. The required infrastructure includes the Water District Facilities. C.The City Council of the City (the “City Council”) has formed the District 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”) and has primary responsibility for administration of the District. D.The provision of the Water District Facilities is necessitated by the development of the Property and the parties hereto find and determine that the residents residing within the boundaries of the Water District, the City and the District will be benefited by the construction and/or acquisition of the Water District Facilities and that this Agreement is beneficial to the interests of such residents. E.The parties hereto intend to have the District assist in financing the construction and/or acquisition of the Water District Facilities by disbursing proceeds of bonds issued by the District. F.The Water District is authorized by Section 53313.5 of the Act to assist in the financing of the acquisition and/or construction of the Water District Facilities. This Agreement constitutes a joint community facilities agreement, within the meaning of Section 53316.2 of the Act, by and among the Water District, the Company and the City, pursuant to which the District, will be authorized to finance the construction and/or acquisition of the Water District Facilities. As authorized by Section 53316.6 of the Act, responsibility for constructing, providing for and operating the Water District Facilities is delegated to the Water District to the extent set forth herein. I.The parties hereto intend to have the District assist in financing the Water District Facilities by transferring to the Water District a portion of the bond proceeds of the District, in accordance with the terms of this Agreement and pursuant to the Act. 3 AGREEMENT NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereto agree as follows: 1.Recitals. Each of the above recitals is incorporated herein and is true and correct. 2.Sale of Bonds and Use of Proceeds. The purpose of this Agreement is to provide a mechanism by which the Company may request the District to issue bonds to provide funds to finance the Water District Facilities. In the event that bond proceeds are not available to finance the Water District Facilities, then the Company shall make alternate arrangements with the Water District to finance the Water District Facilities. The City Council of the City acting as the legislative body of the District may, in its sole discretion, finance the design, construction and acquisition of the Water District Facilities by issuing bonds (the “Bonds”). To the extent that the District determines, in its sole discretion, that Bond proceeds are available to finance the Water District Facilities, it shall reserve an amount (the “Water District Facilities Amount”) for such purpose. The Company and the Water District acknowledge that the timing of the disbursement of the Water District Facilities Amount to the Water District shall be in all respects subject to the sole discretion and approval of the City. In no event will an act, or an omission or failure to act, by the City or the District with respect to the disbursement or nondisbursement of the Water District Facilities Amount subject the District or the City to pecuniary liability hereunder. The Bonds shall be issued only if, in its sole discretion, the City Council determines that all requirements of state and federal law and all City policies have been satisfied or have been waived by the City. In no event shall the Company or the Water District have a right to compel the issuance of the Bonds or the disbursement of Bond proceeds to fund the Water District Facilities Amount. 3.Disbursements. (a)Bond proceeds of the District designated for the Water District Facilities shall be held by the District in a special fund (the “Water District Facilities Account of the Acquisition and Construction Fund”) which shall be invested by the City and earn and accumulate its own interest. In the event that the District has deposited Bond proceeds to the Water District Facilities Account of the Acquisition and Construction Fund to fund all or a portion of the Water District Facilities Amount, the City shall notify the Water District and the Company, in writing, as to the amount of Bond proceeds so deposited. All interest earnings on amounts in the District’s Water District Facilities Account of the Acquisition and Construction Fund shall remain in the Water District Facilities Account and will be available for disbursement for the Water District Facilities as described below. (b)The City shall make disbursements from the Water District Facilities Account of the Acquisition and Construction Fund in accordance with the terms of this Agreement and neither the City nor the District shall be responsible to the Water District for costs incurred by the Water District as a result of withheld or delayed payments. 4 (c)The Water District agrees that it will request a disbursement of Bond proceeds only for costs related to the Water District Facilities that are eligible for financing under the Act. The Water District agrees that prior to requesting payment from the District it shall review and approve all costs included in its request and will have already paid such costs of Water District Facilities from its own funds or will disburse such amounts to pay the costs of the Water District Facilities within five banking days of receipt of funds from the District. In the event that the Water District does not disburse any Bond proceeds received for disbursement to third parties within five banking days of receipt, it will trace and remit to the District from which such Bond proceeds were received all earnings, if any, earned by the Water District in excess of the yield on the Bonds, from the date of receipt of such Bond proceeds by the Water District to the date of expenditure by the Water District of such Bond proceeds for capital costs of the Water District Facilities. Such remittance, if any, shall occur on the earlier of the date of expenditure of such Bond proceeds or each anniversary date of the transfer of such Bond proceeds from the District to the Water District. The Water District agrees that in processing the above disbursements it will comply with all legal requirements for the expenditure of Bond proceeds under the Act and the Internal Revenue Code of 1986 and any amendments thereto. As a condition to receiving any proceeds of the Bonds, the Water District agrees that it shall provide to the District, a certificate confirming the representations contained in Section 3 hereof and such other matters as the District may reasonably request upon which the District and its bond counsel may rely in connection with the issuance of such Bonds and their conclusion that interest on such Bonds is not included in gross income for federal income tax purposes. (d)The Water District agrees to maintain adequate internal controls over its payment function and to maintain accounting records in accordance with generally accepted accounting procedures. The Water District will, upon request, provide to the District and the City its annual financial report certified by an independent certified public accountant and any other documents deemed necessary by the District and the City for purposes of calculating the District’s arbitrage rebate obligations. The District and the City shall have the right to conduct their own audit of the Water District’s records related to the expenditure of the Water District Facilities Amount at reasonable times during normal business hours. (e)The Water District shall submit a request for payment along with adequate supporting documentation to the District which shall be in the form attached hereto as Exhibit C, which shall be signed by the Director of Public Works, his or her or written designee, and which shall be for the exact amount to be reimbursed to the Water District, which costs shall in no event exceed the amount remaining on deposit in the Water District Facilities Account of the Acquisition and Construction Fund. Upon receipt of an approved payment request completed in accordance with the terms of this Agreement, the City shall wire transfer such portion of requested funds as are then available for release pursuant to the documents pursuant to which the Bonds are issued to the Water District’s bank account, as directed by the Water District. (f)If five (5) years following the issuance of the Bonds, 85% or more of the amount deposited into the Water District Facilities Account of the Acquisition and Construction Fund from proceeds of such Bonds have not been expended for federal tax law purposes, the District may in its sole discretion transfer such funds to the City Facilities Account of the Acquisition and Construction Fund to be used to pay for the costs of eligible public facilities or to the redemption fund to redeem Bonds; provided, however that such funds may be retained in the Water District Facilities Account of the Acquisition and Construction Fund beyond such five year period upon the written request of the 5 Water District, and delivery by the Water District of an opinion of bond counsel that such extension will not affect the exclusion from gross income of interest on such Bonds issued on a tax-exempt basis. 4.Construction and Ownership of Facilities. The Water District will complete the design of the Water District Facilities and the plans and specifications for construction of the Water District Facilities and will be responsible for constructing and inspecting the Water District Facilities. The Water District covenants and agrees that with respect to the Water District Facilities it will comply with all statutory provisions applicable to the design and construction of public works projects. The Water District Facilities shall be and remain the property of the Water District. 5.Indemnification. The City shall assume the defense of, indemnify and save harmless, the Water District, its 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 subjected or put, by reason of, or resulting from, any act or omission of the City with respect to this Agreement and the issuance of the Bonds. No provision of this Agreement shall in any way limit the extent of the City’s responsibility for payment of damages resulting from the operations of the City and its contractors; provided, however, that the City shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their agents or employees. The Water District shall assume the defense of, indemnify and save harmless, the City, its 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 subjected or put, by reason of, or resulting from, any act or omission of the Water District with respect to this Agreement, and the design, engineering and construction of the Water District Facilities. No provision of this Agreement shall in any way limit the extent of the Water District’s responsibility for payment of damages resulting from the operations of the Water District and its contractors; provided, however, that the Water District shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their agents or employees. 6.Allocation of Special Taxes. The City Council, as the legislative body of the District, shall annually levy a special tax as provided for in the formation proceedings of the District. The entire amount of any special tax levied by the District to repay Bonds, or to fund other obligations, shall be allocated at the discretion of the District. 7.Amendment. This Agreement may be amended at any time but only in writing signed by each party hereto. 8.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. 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 hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows: 6 City/District:City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 Attn: Assistant City Manager Elsinore Valley Municipal Water District: Elsinore Valley Municipal Water District P.O. Box 3000 31315 Chaney Street Lake Elsinore, CA 92531 Attn: Director of Strategic Programs Company:Western Pacific Housing, Inc. 2280 Wardlow Circle, Suite 100 Corona, CA 92880 Attn: Barbara Murakami Each party may change its address for delivery of notice by delivering written notice of such change of address to the other parties hereto. 10.Exhibits. All exhibits attached hereto are incorporated into this Agreement by reference. 11.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. 12.Governing Law and Venue. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California. In the event of any legal action to enforce or interpret this Agreement, the sole and exclusive venue shall be a court of competent jurisdiction located in the County of Riverside, California, and the parties hereto agree to and do hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure Section 394. Furthermore, the parties specifically agree to waive any and all rights to request that an action be transferred for trial to another county. 13.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. 14.No Third Party Beneficiaries. No person or entity other than the District when and if formed 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 the Water District, the City, the District and the Company (and their respective successors and assigns), any rights, remedies, obligations or liabilities under or by reason of this Agreement. 7 15.Assignment. The Company may assign all or any of its rights pursuant to this Agreement to a purchaser of all or any portion of the Developer Property. Such a purchaser and assignee shall, as a condition to taking an assignment of such rights, enter into an assignment and assumption agreement with the City and Company, in a form reasonably acceptable to Company and the City, whereby such rights assigned are specified and such purchaser agrees, except as may be otherwise specifically provided therein, to assume the obligations of the Company pursuant to this Agreement and to be bound thereby. 16.Termination. This Agreement shall terminate on August 15, 2022, if Bonds have not been issued prior to such date, unless extended by all the parties hereto. 17.Singular and Plural; Gender. As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine. 18.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. 8 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and first year written above. CITY OF LAKE ELSINORE, a political subdivision of the State of California By: Assistant City Manager ATTEST: By: Susan M. Domen, CMC, City Clerk APPROVED AS TO FORM: CITY ATTORNEY OF THE CITY OF LAKE ELSINORE By: Barbara Z. Leibold, City Attorney ELSINORE VALLEY MUNICIPAL WATER DISTRICT By: John Vega, General Manager ATTEST: By: Terese Quintanar, Board Secretary APPROVED AS TO FORM: By: John Brown, General Counsel 9 WESTERN PACIFIC HOUSING, INC., a Delaware corporation By: Its:Barbara M. Murakami, Vice President A-1 EXHIBIT A DESCRIPTION OF PROPERTY Real property in the City of Lake Elsinore, County of Riverside, State of California, described as follows: Tract Map No. 33486 which includes Assessor’s Parcel Nos: 379-150-048-5 379-150-002-3 379-150-041-8 379-150-042-9 379-150-043-0 379-150-050-6 B-1 EXHIBIT B DESCRIPTION OF WATER DISTRICT FACILITIES The proposed types of public facilities and expenses to be financed by the District include: The construction, purchase, modification, expansion, rehabilitation and/or improvement of water and sewer facilities including the acquisition of capacity in the sewer system and/or water system of the Elsinore Valley Municipal Water District which are included in Elsinore Valley Municipal Water District’s water and sewer capacity and connection fee programs (the “Facilities”), and all appurtenances and appurtenant work in connection with the foregoing Facilities, including the cost of engineering, planning, designing, materials testing, coordination, construction staking, construction management and supervision for such Facilities, and to finance the incidental expenses to be incurred, including: a.The cost of engineering, planning and designing the Facilities; b.All costs, including costs of the property owner petitioning to form the District, associated with the creation of the District, the issuance of the bonds, the determination of the amount of special taxes to be levied and costs otherwise incurred in order to carry out the authorized purposes of the District; and c.Any other expenses incidental to the construction, acquisition, modification, rehabilitation, completion and inspection of the Facilities. C-1 EXHIBIT C DISBURSEMENT REQUEST FORM 1.Community Facilities District No. 2007-4 of the City of Lake Elsinore (MaKenna Court) (“CFD No. 2007-4”) is hereby requested to pay from the Water District Facilities Account of the Acquisition and Construction Fund established by the City Council of the City of Lake Elsinore (the “City”) in connection with its CFD No. 2007-4 Series 2018 Special Tax Bonds (the “Bonds”), to the Elsinore Valley Municipal Water District (the “Water District”), as Payee, the sum set forth below in payment of project costs described below. 2.The undersigned certifies that the amount requested has been expended or encumbered for the purposes of constructing and completing Water District Facilities. The amount requested is due and payable under, or is encumbered for the purpose of funding, a purchase order, contract or other authorization with respect to the project costs described below and has not formed the basis of a prior request or payment. In the event that the Water District does not disburse any Bond proceeds received for disbursement to third parties within five banking days of receipt, the Water District agrees to trace and remit to CFD No. 2007-4 all earnings, if any, in excess of the yield on the Bonds accruing from the investment of such Bond proceeds, from the date of receipt by the Water District of such amounts to the date of expenditure of such amounts by payment thereof to a third party for the costs set forth below. Such remittance, if any, shall be made each year on the earlier of the expenditure of such amounts or the anniversary date of the transfer of the requested amounts by CFD No. 2007-4 to the Water District. 3.Description of Water District Facilities Costs: 4.Amount requested:$______________. 5.The amount set forth is authorized and payable pursuant to the terms of the Joint Community Facilities Agreement among the City, Western Pacific Housing, Inc. and the Elsinore Valley Municipal Water District dated as of November 1, 2018 (the “Agreement”). Capitalized terms not defined herein shall have the meaning set forth in the Agreement. 6.Total payments to the Water District for the Water District Facilities from CFD No. 2007-4, including the amounts to be paid under paragraph 4 above, will not exceed the maximum amount to be disbursed for Water District Facilities under the Agreement. C-2 Executed by an authorized representative of the Elsinore Valley Municipal Water District. By: Name: Title: Date: Request No. CONCURRED BY: ___________ AP PRAISAL REPORT COMMUNITY FACILITIES DISTRICT NO. 2007-4 (McKenna Court) OF THE CITY OF LAKE ELSINORE City of Lake Elsinore, Riverside County, California (Appraisers’ File No. 2018-1182) Prepared For City of Lake Elsinore 130 S. Main Street Lake Elsinore, CA 92530 Prepared By Kitty Siino & Associates, Inc. 115 East Second Street, Suite 100 Tustin, California 92780 KITTY SIINO & ASSOCIATES, INC. REAL ESTATE APPRAISERS & CONSULTANTS September 28, 2018 Mr. Jason Simpson, Assistant City Manager City of Lake Elsinore 130 S. Main Street Lake Elsinore, CA 92530 Reference: Appraisal Report – Community Facilities District No. 2007-4 of the City of Lake Elsinore (McKenna Court) NWS of Machado Street at Audrey Drive City of Lake Elsinore, California Dear Mr. Simpson: At the request and authorization of the City of Lake Elsinore, we have completed an Appraisal Report of Community Facilities District No. 2007-4 of the City of Lake Elsinore (“Lake Elsinore CFD No. 2007-4”). Lake Elsinore CFD No. 2007-4 consists of Tract Map 33486, which is currently being developed into 81 single family detached homes. The neighborhood is being developed by D.R. Horton as part of their “Express Homes” line and is called McKenna Pointe. McKenna Pointe is currently selling homes. The community is not part of a masterplan. The lots range in condition from completed, individually owned homes to finished lots under builder ownership. The valuation methods used in this report include the Sales Comparison Approach, a Discounted Cash Flow Analysis and a mass appraisal technique as defined within this report. The fee simple estate of the subject property has been valued subject to the Lake Elsinore CFD No. 2007-4 special tax lien. This report is written with the hypothetical condition that the subject property is enhanced by the improvements and/or fee credits to be funded by bonds issued by Lake Elsinore CFD No. 2007-4. As a result of our investigation, the concluded Minimum Market Value (as defined within this report) for the subject property is shown below. Value Conclusions for Lake Elsinore CFD No. 2007-4: D.R. Horton (17 Lots) $ 2,036,574 D.R. Horton (18 Houses) $ 5,026,757 Total D.R. Horton Ownership $ 7,063,331 Individual Owners $17,766,450 Aggregate Value Lake Elsinore CFD No. 2007-4 $24,829,781 115 East Second Street, Suite 100, Tustin, California 92780 (714) 544-9978 - Phone, (714) 544-9985 – Fax, E-Mail: kssiino@msn.com Mr. Jason Simpson City of Lake Elsinore September 28, 2018 Page Two The above values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of August 15, 2018. Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. This Appraisal Report is intended to comply with both the Uniform Standards of Professional Appraisal Practice (“USPAP” January 2018) and with the Appraisal Standards of the California Debt and Investment Advisory Commission (“CDIAC”). The appraiser is not responsible for unauthorized use of this report. This letter of transmittal is part of the attached report, which sets forth the data and analyses upon which our opinion of value is, in part, predicated. Respectfully submitted, KITTY SIINO & ASSOCIATES, INC. Kitty S. Siino, MAI California State Certified General Real Estate Appraiser (AG004793) TABLE OF CONTENTS Assumptions and Limiting Conditions............................................................................... i Hypothetical Condition .................................................................................................... iii Extraordinary Assumption ............................................................................................... iii Aerial Photo of Lake Elsinore CFD No. 2007-4 ............................................................... iv Purpose of the Appraisal ................................................................................................ 1 The Subject Property ...................................................................................................... 1 Intended Use of the Report ............................................................................................ 1 Definitions ...................................................................................................................... 2 Property Rights Appraised ............................................................................................. 4 Effective Date of Value ................................................................................................... 4 Date of Report ................................................................................................................ 4 Scope of Appraisal ........................................................................................................ 4 Regional Area Map.......................................................................................................... 7 County of Riverside Area Description ............................................................................. 8 Lake Elsinore Area Map ................................................................................................ 15 City of Lake Elsinore Description .................................................................................. 16 Immediate Surroundings ............................................................................................... 20 Community Facilities District No. 2007-4 ....................................................................... 21 Subject Property Description ......................................................................................... 23 Riverside County Housing Market ................................................................................. 29 Highest and Best Use Analysis ..................................................................................... 38 Valuation Analysis and Conclusions ............................................................................. 42 Appraisal Report Summary ........................................................................................... 56 Appraiser’s Certification ............................................................................................... 57 ADDENDA CFD Boundary Map for City of Lake Elsinore CFD No. 2007-4 Tract Map 33486 Discounted Cash Flow Analysis Residential Land Sales Map and Summary Chart Improved Residential Sales Map and Summary Chart Appraiser’s Qualifications _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page i ASSUMPTIONS AND LIMITING CONDITIONS 1. This report is an Appraisal Report that is intended to comply with the reporting requirements set forth under Standard Rule 2 of the Uniform Standards of Professional Appraisal Practice. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report. 2. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report. 3. The property is appraised subject to the special tax lien of Lake Elsinore CFD No. 2007-4. 4. Responsible ownership and competent property management are assumed unless otherwise stated in this report. 5. The information furnished by others is believed to be reliable, however, no warranty is given for its accuracy. 6. All engineering is assumed to be correct. Any plot plans and illustrative material used in this report are included only to assist the reader in visualizing the property and may not be to scale. 7. It is assumed that there are no hidden or unapparent conditions of the property, subsoil or structures that would render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them. 8. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless otherwise stated in this report. 9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined and considered in this appraisal report. 10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based. 11. Any sketch included in this report may show approximate dimensions and is included only to assist the reader in visualizing the properties. Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee regarding accuracy is expressed or implied unless otherwise stated in this report. No survey has been made for the purpose of this report. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page ii 12. It is assumed that the utilization of the land and improvements are within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report. 13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert relating to asbestos, urea-formaldehyde foam insulation or other potentially hazardous materials that may affect the value of the property. The appraiser’s value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions or for any expertise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process. 14. Proposed improvements, if any, are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications. 15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings, if any, must not be used in conjunction with any other appraisal and are invalid if so used. 16. The Americans with Disabilities Act (“ADA”) became effective on January 26, 1992. The appraiser has made no specific compliance survey and analysis of the property to determine whether they conform to the various detailed requirements of the ADA, nor is the appraiser a qualified expert regarding the requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect upon the value of the property. Since the appraiser has no direct evidence relating to this issue, a possible noncompliance with requirements of the ADA in estimating the value has not been considered. 17. It is assumed there are no environmental concerns that would slow or thwart development of the subject property and that the soils are adequate to support the highest and best use conclusion. 18. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper qualification and only in its entirety. Permission is given for this appraisal to be published as a part of the Official Statement or similar document in association with the Lake Elsinore CFD No. 2007-4 Special Tax Bonds. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page iii HYPOTHETICAL CONDITION 1. It is assumed that all improvements and benefits to the subject properties, which are to be funded by the Lake Elsinore CFD No. 2007-4 Special Tax Bond proceeds, are completed and in place. EXTRAORDINARY ASSUMPTION 1. It is an extraordinary assumption of this report that the remaining development costs and fees are true and correct. We have received a listing of the remaining land development costs and development fees for the subject property provided by D.R. Horton. We have reviewed these costs and they appear reasonable, however, we are not experts in the cost estimating field and are relying on these costs in the valuation. If actual remaining costs differ, it may change the D.R. Horton owned value conclusion. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page iv _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 1 PURPOSE OF THE APPRAISAL The purpose of this appraisal report is to estimate the value of the fee simple interest of the subject property, subject to the special tax lien of the Lake Elsinore CFD No. 2007-4 Special Tax Bonds. THE SUBJECT PROPERTY The subject property consists of 81 proposed single-family homes within Tract Map 33486. There are 46 homes completed and closed to individuals, 2 models (none in escrow), 16 homes over 95 percent complete (14 in escrow), six homes under construction (one in escrow) and 11 remaining finished lots (none in escrow). Sales began in the subject property in October 2017 with 61 sales to date (including 46 closed homes). Below shows a summary of each neighborhood and the status of each lot. Description No. Lots Ownership Condition/Status McKenna Pointe Lots: 1-4, 7-18, 21, 49-68, 71-72, 75-81 46 Individuals Complete Houses / Closed Lots: 37-38 2 D.R. Horton Model Homes (0 in escrow) Lots: 5-6, 19-20, 22-29, 69-70, 73-74 16 D.R. Horton Homes over 95% complete (14 in escrow) Lots 30-31 and 45-48 6 D.R. Horton Homes U/C (1 in escrow) Lots: 32-36, 39-44 11 D.R. Horton Finished Lots (0 in escrow) Total McKenna Pointe 81 INTENDED USE OF THE REPORT It is the appraiser’s understanding that the client, the City of Lake Elsinore, will utilize this report in disclosure documents associated with selling bonds for Lake Elsinore CFD No. 2007-4 and that this report is to be included in the Official Statement or similar document to be distributed in connection with the offering of the bonds. It is the appraiser’s understanding that there are no other intended uses of this report. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 2 DEFINITIONS Market Value The term “Market Value” as used in this report is defined as: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 2. both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”1 Inherent in the Market Value definition is exposure time or the time the property would have had to have been exposed on the open market prior to the appraisal in order to sell at the concluded values. In the case at hand and considering current market conditions the exposure time for the developer owned property in its entirety or for an individually owned home is under twelve months. Minimum Market Value The term “Minimum Market Value” as used in this report is defined as: “The base market value of a home. That is, most buyers purchase some upgrades, options and/or lot premiums when purchasing a new home. The sales price for the new home typically includes the base price for the plan, plus any upgrades, options or lot premiums, less concessions, if any, which were given or paid for by the builder. The concluded minimum market value is for the base value of the plan only, not taking into consideration any upgrades, options or premiums.” 1 The Appraisal of Real Estate, 13th Edition _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 3 Mass Appraisal The term “Mass Appraisal” as used in this report is defined as: “The process of valuing a universe of properties as of a given date using standard methodology employing common data and allowing for statistical testing”2 In the case at hand, the statistical testing included reviewing all original builder sales, reviewing the Multiple Listing Service for re-sales and current escrows (if any) and determining the actual range of sales and escrow prices for each plan type which is utilized in the valuation process. Hypothetical Condition The Term “Hypothetical Condition” is defined by USPAP as: “That which is contrary to what exists but is supposed for the purpose of the analysis” The Hypothetical Condition within this report is that subject property is enhanced by the improvements and/or fee credits to be funded by bonds issued by Lake Elsinore CFD No. 2007-4. Extraordinary Assumptions The term “extraordinary assumption” is defined by USPAP as: “An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusion” The extraordinary assumption in this report is that the reported remaining costs as received from the developer are true and accurate. We have reviewed the costs and they appear reasonable, however, we are not experts in the field of cost estimating. It should be noted that these costs were relied upon in the valuation of the subject property. 2 USPAP 2016-2017 Edition _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 4 PROPERTY RIGHTS APPRAISED The property rights being appraised are of a fee simple interest, subject to easements of record and Lake Elsinore CFD No. 2007-4. The definition of “fee simple estate” is defined by USPAP as: “absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.” EFFECTIVE DATE OF VALUE The subject property is valued as of August 15, 2018. DATE OF REPORT The date of this report is September 28, 2018. SCOPE OF APPRAISAL As previously stated, the purpose of this appraisal is to report the appraiser’s best estimate of the market value for the subject properties. This appraisal will be presented in the following format: • County of Riverside Description • City of Lake Elsinore Description • Immediate Surroundings Description • Brief Description of Lake Elsinore CFD No. 2007-4 • Subject Property Description • Riverside County Housing Market Discussion • Highest and Best Use Analysis • Valuation Procedure, Analysis and Conclusions • Appraisal Report Summary The subject property consists of 81 proposed single family detached homes. There are 46 homes completed and closed to individuals, 2 models (none in escrow), 16 homes over 95 percent complete (14 in escrow), six homes under construction (one in escrow) and 11 remaining finished lots (none in escrow). Closings began in the subject property in January 2018 with 61 sales to date (including 46 closed homes). _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 5 In valuing the subject property, the value estimates will be based upon the highest and best use conclusion using the Sales Comparison Approach. The Sales Comparison Approach to value is defined as: “…a set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, then applying appropriate units of comparison and making adjustments to the sale prices of the comparables based on the elements of comparison. The sales comparison approach may be used to value improved properties, vacant land, or land being considered as though vacant; it is the most common and preferred method of land valuation when an adequate supply of comparable sales is available.”3 In the Sales Comparison Approach, market value is estimated by comparing properties similar to the subject property that have recently been sold, are listed for sale, or are under contract. Neither a cost or income approach was utilized as they were not considered necessary to arrive at credible results. The due diligence of this appraisal assignment included the following: 1. Compiled demographic information and related that data to the subject properties to perform a feasibility/demand analysis. 2. Gathered and analyzed information on the subject marketplace, reviewed several real estate brokerage publications on historical and projected growth in the subject market and researched the micro and macroeconomics within Riverside County and the Lake Elsinore area. 3. Inspected the subject property between July 15, 2018 and August 15, 2018. 4. Had the property flown for an aerial photograph on July 29, 2018. 5. Interviewed representatives from the builder to obtain available information on the subject property. 6. Reviewed a Preliminary Title Report on the subject property. 7. Reviewed a Soils Report on the property. 8. Searched the area for relevant comparable new home residential projects, including sales prices and concessions and interviewed representatives from each comparable neighborhood. 3Dictionary of Real Estate Appraisal, 4th Edition, 2002 _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 6 9. Reviewed the market area for relevant comparable residential land sales and interviewed buyers, sellers or a broker representative, when available, regarding the sales. 10. Reviewed sales brochures and sales information on the subject neighborhood. 11. Reviewed actual developer sales information on all closed homes and current escrows. 12. Reviewed Multiple Listing Service (“MLS”) information on re-sales and current listings of existing homes within Lake Elsinore CFD No. 2007-4. 13. Inspected the subject property for any for-sale or property listing signs that may not be listed on the MLS yet. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 7 Riverside County Regional Area Map (Red Star is approximate subject location) _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 8 COUNTY OF RIVERSIDE AREA DESCRIPTION Location The subject property is located in the southern portion of Riverside County (the “County”) in the northwestern portion of the City of Lake Elsinore, on the northwest side of Machado Street, southwest of Interstate 15 and northwest of Highway 74. The County encompasses approximately 7,300 square miles, which includes large expanses of undeveloped deserts, valleys, canyons and mountains. The County is the major recipient of outward urban pressure from Orange and Los Angeles Counties as well as northerly growth from San Diego County. Although located at the periphery of most urban activity in Southern California, Riverside County, in particular the south and westerly region, is clearly perceived by most observers as a major growth area well into the foreseeable future. Because of mountain ranges limiting road access into Los Angeles and Orange Counties, Riverside and San Bernardino Counties belong to the same Metropolitan Statistical Area (“MSA”). This MSA is designated as (and commonly referred to as) the Inland Empire. Transportation The subject property is situated 1.65 miles southwest of I-15 from the Nichols Road on/off ramps to I-15 or about three miles southeast of the Lake Street on/off ramps. I-15 travels in a northerly/southerly direction and provides access to Barstow and Nevada to the north and San Diego to the south. Highway 74 is approximately three-quarters of a mile southeast and provides access to the west into Orange County on what is also known as Ortega Highway. Interstate 215 is approximately twelve miles east, travels in a northerly/southerly direction within the County, branching off from I-15 and heading generally north where it parallels I-15 to the east and merges back into I-15 approximately 37 miles north of the subject in San Bernardino County. In addition, the 60 Freeway runs in an east west direction approximately 22 miles north of the subject providing access into Los Angeles County to the west and merges with Interstate 10 to the east which provides access across California. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 9 The County is served by Amtrak and Metrolink as well as several rail freight lines. The Ontario International Airport provides regional air service and is located approximately 30 miles north of the subject property while Orange County Airport is located about 28 miles west and San Diego International Airport is located about 65 miles south. In addition, the County has extensive trucking corridors along the previously referred to interstates, highways and state freeways. Population The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, the January 1, 2018 County population was 2.415 million. This represents a one-year increase of 1.4 percent. This compares to an average annual growth rate over the past eight years of 1.24 percent and an average annual growth rate of approximately 2.5 percent for the previous eighteen-year period. Current State projections for Riverside County suggest the population is anticipated to reach approximately 2.857 million by 2030, indicating an average annual increase of 1.4 percent for the next twelve years. The current growth of 1.4 percent is higher than the previous eight-year annual average of 1.24 percent, however lower than the previous 18 years average (2.5 percent) likely due to the Great Recession. The future growth is predicted assuming a more stable market than was seen prior to the Great Recession. Economy As with the rest of the nation, the Inland Empire experienced a strong multi-year recession, now known as the Great Recession, between 2007 and mid-2012. The MSA, which had strong employment over the ten previous years saw unemployment rates increase significantly between 2007 and 2010. Unemployment has declined substantially since that time and has been near all-time lows for the past three years. The seasonally adjusted unemployment rate for the MSA was estimated at 4.7 percent (per the June 2018 Employment Development Department). This compares to the July 2010 MSA unemployment rate of 15.1 percent at the height of the Great Recession. As of June 2018, Riverside County had a 4.8 percent unemployment rate while San Bernardino County had a 4.6 percent rate. The current MSA unemployment rate of 4.7 percent is similar to _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 10 the California statewide unemployment rate of 4.5 percent and slightly higher than the June 2018 National unemployment rate of 4.2 percent. Below is a table comparing Riverside County’s unemployment rate to the unemployment rates of the surrounding counties. Jurisdiction As of Unemployment Rate Los Angeles County 6/18 4.5% Riverside County 6/18 4.8% San Bernardino County 6/18 4.6% Orange County 6/18 3.3% San Diego County 6/18 3.7% Source: State of California E.D.D. Over the past 20 years, the Riverside County economy has had significant cycles with home prices almost doubling from 1995 to 2005, then falling by over 50 percent during the Great Recession taking prices back to 2002 levels. Home values appeared to hit bottom in 2009 then remained essentially flat for two to three years with the majority of the Riverside County housing market seeing an improvement beginning in mid-2012 with significant growth in sales and pricing since that time bringing prices back up to or near their previous peak in most parts of Southern California. The Federal Government attempted to correct the struggling economy during the Great Recession by implementing several economic stimulus packages. The longest stimulus resulted from the Federal Reserve Board (“Board”) keeping interest rates below historical averages dropping rates to near zero in December 2008 until December 2015 when the economy was deemed strong enough to begin raising interest rates. Since 2016 they have been slowly increasing the Federal Funds Rate with a quarter percent rate hike in both 2015 and 2016, a three-quarter percent increase in 2017, and two one-quarter percent increases thus far in 2018 bringing the current Rate to 2.0 percent. According to the most recent Federal Open Market Committee meeting they anticipate raising rates two additional times in 2018 for a total of four one-quarter percent hikes. The rate increases are in response to inflation being below the Fed’s target of two percent and the Country’s low unemployment rate, the lowest in the past 18 years. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 11 The University of California, Riverside is now reporting an Inland Empire Business Activity Index which draws on employment and other data which shows the region’s business activity expanding 2.2 percent in the first quarter of 2018 compared to a 2.3 percent expansion over the same time period in the nation. When comparing the past year however, the Inland Empire has outperformed the nation with business activity growing by 3.8 percent compared to the U.S. GDP growing at 2.9 percent. The University’s report states the Inland Empire is the fastest growing job market in all of Southern California with job gains in every sector. They are predicting business activity to expand between 2.5 and 3.5 percent in 2018; however, they do anticipate that eventually growth will be constrained due to labor shortages driven by the state’s high cost of living. According to the most recent UCLA Anderson Forecast (June 13, 2018), the overall economy appears to be growing at a steady pace, but there are potential threats that could affect both the U.S. and California’s economies. These threats include the risk of trade war, the potential for withdrawal from NAFTA along with more global issues such as Italian politics and how it will affect the Euro and the recent Mexican elections. The Forecast notes that the era of ultra-low interest rates has now passed and the national economy is at full employment. While real GDP growth is anticipated to reach three percent for the remainder of 2018, they predict it will dip to two percent in 2019 and one percent in 2020. This dip is due to the current strong job growth which averaged 200,000 jobs per month in 2017 for the nation however, this growth is not sustainable in a full- employment economy. A fully employed economy has difficulty growing without substantial increases in productivity. Coupled with the full employment is an increasing federal budget deficit, a result of the U.S. consuming more than it produces and needing to borrow to fund the increasing federal budget deficit. This is a direct consequence of a very low national savings rate. Business investment in 2018 and 2019 is predicted to increase and continue driving the economy due to the reduction in corporate tax rates. The National Forecast states that housing activity has been the great disappointment of the economic recovery and expansion that began in 2009. While housing starts have more than doubled since their lows of 2009-2011, they remain below the long-term average and nowhere near the earlier boom periods. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 12 The UCLA Forecast for California, written by Senior Analyst Jerry Nickelsburg, states California employment hit another record high in April 2018. It is anticipated that California’s average unemployment rate will remain higher than the U.S. rate and be at 4.3 percent in 2020 (currently at 4.2 percent) due to a younger and more entrepreneurial workforce. Personal income in California is anticipated to grow at 2.5 percent in 2018, 3.6 percent in 2019 and 2.9 percent in 2020. Affordable housing in the State is now the subject of considerable discussion. There are complex ties among the state’s employment growth, the attractiveness of California and the building, zoning and environmental restrictions affecting housing supply. The California Forecast calls for a continued rise in housing prices; however, the impact on economic growth is not as great as one would expect. According to John Husing’s Inland Empire Economic Partnership’s Quarterly Economic Report dated July 2018, the Inland Empire’s forecast is being driven by national forces. The President’s use of tariffs to impact international trade raises the possibility of significant local economic disruptions. The Inland Empire’s employment is heavily dependent on handling imported goods through its logistics sector which has added 84,193 new jobs between 2011- 2018 (based on current estimates for 2018). This powerful local job growth could be adversely affected if trade wars ensue. The Inland Empire is on track to add 50,728 jobs in 2018, an increase of 3.5 percent. This will mark the sixth year in a row that local employment will have increased by over 45,000 annually. This brings the total number of jobs to 16.1 percent above the pre-recession high in 2007 of 1,306,342 or to 1,516,744. The Great Recession cost the Inland Empire 140,650 jobs between 2008 and 2010 but the gain between 2011 to 2018 has been more than double the loss, up 351,052. The logistics industry (wholesale trade, trucking and warehousing) has been the primary driver of the inland economy in recent years. The fact e-commerce continues to expand at a 15-16 percent compounded annual rate throughout 2010 – 2018 has forced retailers to begin aggressively embracing and staffing large, regional fulfillment centers. The Inland Empire’s location and access from the Port of Long Beach along with land availability has made it the top area in Southern California for building fulfillment centers which typically cover over one-million square feet. The growth in 2018 is predicted _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 13 to be down slightly due to the difficulty in finding entitled sites for new buildings rather than a slow-down in demand. One of the main reasons the MSA was been slow to pull out of the recession relates to housing. Both Riverside and San Bernardino Counties saw a considerably steeper rise and then subsequent fall of housing prices than almost anywhere else in the State. Inland Empire median existing housing prices went from $388,000 at the peak of the market in 2006 to $155,100 in 2009. The June 2018 MSA median price is $360,000 per the California Association of Realtors, still below the previous peak. Foreclosures and short sales, which constituted a large number of housing sales from 2009 through 2013, have decreased significantly to the point where they are no longer affecting prices. As a final indicator of overall economic activity for the region we have reviewed the rise or fall of TEUs (Twenty-foot Equivalent Units – i.e., containers) being processed in the local ports. This is especially important for the inland communities as it represents much of the growth in development of West Coast distribution centers and warehouses linked to supply-chain nodes in the Pacific Rim. The chart below shows TEU activity at the Port of Long Beach. The activity resulted in a flattening of TEUs during 2006 and 2007, decreases occurring in 2008 and 2009, and an increase in 2010 followed by stabilization until 2013. Generally, there has been increases with the exception of a slight dip in 2016 with 2017 hitting an all-time high. Current estimates are for 2018 to show a 14 percent growth over 2017 which is a significant increase. 6.71 7.29 7.31 6.48 5.07 6.26 6.06 6.04 6.73 6.82 7.19 6.78 7.55 4.50 5.50 6.50 7.50 8.50 2004 2006 2008 2010 2012 2014 2016 2018in millionsYear Port of Long Beach TEUs _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 14 Government The County is overseen by a Board of Supervisors as the governing body of the County, certain County special districts and the County Housing Authority. The Board enacts ordinances and resolutions, adopts the annual budget, approves contracts and appropriates funds, determines land use zoning for unincorporated areas and appoints certain County officers and members of various boards and commissions. The Board of Supervisors are elected from five different districts within the County. Education The subject area is served by the Lake Elsinore Unified School District, which operates eleven elementary schools, two K-8 schools, four middle schools, three high schools, one continuation school, one adult school and one alternative school. Higher education is available within an hour’s drive at the University of California campuses at Riverside and Irvine or California State University campuses in San Bernardino, San Marcos, Fullerton and Pomona along with several additional private colleges. The closest community college is Mt. San Jacinto College. Conclusion Population in the County has increased over the past 30 years with predictions for continued population growth. The nation’s economy is showing strong growth with the Inland Empire’s job growth leading the state and out-performing the nation. After the Great Recession, the Inland Empire’s housing market saw a resurgence beginning the second half of 2012 with prices increasing since that time. The past two years has seen the Inland Empire’s real estate market gain strength in both sales and strong price appreciation. The economy typically has cycles and most signs are suggesting the U.S. economy is on an upswing along with the Inland Empire. However, unlike previous recovering economies, housing growth has been slower to comeback in the Inland Empire area. In conclusion, the County is expected to continue to grow in population due to its Southern California location, the availability of land and the relatively lower land prices in comparison to adjacent Orange, Los Angeles and San Diego Counties. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 15 Lake Elsinore Area Map (Red Star is approximate subject location) _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 16 CITY OF LAKE ELSINORE DESCRIPTION The subject property is located in the northwesterly portion of the City of Lake Elsinore (“City”). Lake Elsinore is approximately half way between the cities of Los Angeles and San Diego, about 25 miles east of the Pacific Ocean. Downtown Riverside, which houses the County seat, is approximately 20 miles north. The City is situated along I-15 at the intersection of State Route 74 and encompasses an estimated 41 square miles. It is generally surrounded by unincorporated County lands to the north and east, the City of Wildomar to the south and the Ortega Mountains and the Cleveland National Forest to the west. History The Luiseno Native Americans are the earliest known inhabitants of the Elsinore Valley prior to when settlers came in the early 1800s due to the natural springs which were said to have healing qualities. In the 1850s, the area housed a stagecoach stop for the Butterfield Overland Mail route between the Temecula station (20 miles south) and the Temescal Station (10 miles north). The rich and fertile farm lands and natural resources of clay, coal, sand and gravel within the Elsinore Valley kept people in the area. At incorporation in 1888 the City was originally in San Diego County however became part of Riverside County upon its creation in 1893. The City was named Elsinore after a city in Denmark which is featured in the Shakespeare play, Hamlet. In the 1920s and 1930s, the area became a Hollywood getaway with many stars building homes in the hills surrounding the Lake. Lake Elsinore (the “Lake”) was originally known as Laguna Grande and is the largest natural lake in Southern California. The Lake is situated at the lowest point within the 750- mile San Jacinto River watershed with headwaters from the western slopes of San Jacinto Peak and Lake Hemet. Lake Elsinore levels are at 1,244 feet above sea level with a volume of 30,000-acre feet that use to change substantially prior to federal grants to prevent the flooding and ebbing of the lake. The largest flooding came in the 1930s when the Lake rose from 8,000-acre feet to 92,000-acre feet. In 1951, the Lake dried up and remained dry for about 10 years. In 1981 and 1983, the El Nino rains again flooded the _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 17 area and in 1984 the City was successful in obtaining Federal grants for the major project to regulate the Lake and end the cycle of flooding and drying. Now at 1,255 feet, the Lake spills into the outflow channel known as the Temescal Wash, flowing northwest along I- 15 to Temescal Creek which dumps into the Santa Ana River near the city of Corona and flows to Orange County and out into the Pacific Ocean. Population The City had enjoyed rapid population growth in the mid-2000’s, which altered the appearance of the City from a small lakeside town of 3,800 people in 1976, to a bedroom community of upper middle-class professionals. From 2000 to 2008 the City was known as the 12th fastest growing city in the State going from 28,928 residents in 2000 to 51,821 residents in 2010 which suggests an average annual increase of 6.0 percent. Between 2010 and 2018 the city increased to 63,365 residents (average annual increase of 2.54 percent), however the past year’s growth rate was 1.4 percent, similar to the growth of the County. The continued growth in the City is due to the more affordable housing with convenient access along the I-15 corridor providing access to the employment centers in Riverside, Orange, Los Angeles and San Diego Counties. The population has a very diverse racial make-up with the median age estimated at 30.7 years old. There are three master planned communities currently selling homes in the City: Summerly, Alberhill Ranch and Canyon Hills. Summerly consists of a total of 700 acres and is proposed for about 1,500 residential units and is approximately 50 percent complete. Alberhill Ranch is currently proposed for around 1,000 residential units and is about 30 percent built-out. Canyon Hills is proposed for approximately 4,300 residential units and is approximately 95 percent built out. Economy The City of Lake Elsinore has enjoyed industrial and commercial development along the I-15 Corridor including the Lake Elsinore Outlet Center which was opened in the 1990s as one of the first Outlet Malls in Southern California. The City has been promoting its economic platform by becoming more business friendly. The 2016 estimated median household income (most recent data per Census.gov) is $63,306 as compared to $57,972 _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 18 for the County and $63,783 for the State. Per the City of Lake Elsinore’s 2017 Comprehensive Annual Financial Report, the top employers were as reported below. Summary of Major Employers Employer No. of Employees Lake Elsinore Unified School District 2,644 M & M Framing 500 Stater Bros (3 locations) 319 Lake Elsinore Hotel & Casino 275 Costco 259 Walmart 234 Riverside County (Dept. of Social Services) 173 EVMWD 154 Home Depot 150 Target 150 Entertainment While the area was a get-away from the movie industry in the 1920s, the area also began emerging as an entertainment/sports area when it hosted Olympic teams for training along with high speed boat racing on the Lake. In 1964 the Skylark Airport (located approximately six miles southeast of the subject) emerged as a world class skydiving drop zone due to the thermals from the surrounding mountains. This is still one of the most prominent drop zones in Southern California. The Lake Elsinore Motorsports Park for off- road racing is located less than six miles southeast of the subject lands. In 1991, the Lake Elsinore Outlet Center opened boasting 100 outlets while in 1994 Diamond Stadium was constructed which is the home of the Lake Elsinore Storm, an affiliate of minor league baseball. Diamond Stadium is located about five miles southeast of the subject, adjacent to the master planned community of Summerly. Transportation Interstate 15 is the major access for the City with State Route 91 approximately 15 miles north and I-215 about 12 miles east. I-15 provides access to State borders to the north in Nevada and to the south where it merges with I-5 before going into Mexico. State Route 91 (16 miles north on I-15) provides freeway access into Orange and Los Angeles Counties to the west and to San Bernardino County to the east. I-215 provides northerly _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 19 access connecting to State Route 60 which provides access to the west into Los Angeles and to the east where it merges with I-10 and provides access to the State border with Arizona. The nearest freeway intersection to the subject property is the Nichols Road exit (less than two miles northeast), however the more direct route from I-15 is via Lake Street. The closest highway to the subject is State Route 74, which is a winding road through the Ortega Mountains (also known as Ortega Highway west of Lake Elsinore) that provides a more direct access into South Orange County. State Route 74 is located one-half mile south of the subject. Conclusion In summary, the City of Lake Elsinore has experienced above average growth over the past 18 years. Future growth of the City should continue at a similar rate than what has previously occurred. Lake Elsinore’s housing market is currently healthy and the subject’s community of McKenna Pointe is being well received in the marketplace at this time. The City’s abundant recreation, expanding employment opportunities, location, reasonable land prices and the availability of land for development combine to make the City a prime area for future growth. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 20 IMMEDIATE SURROUNDINGS The subject property consists of McKenna Pointe by D.R. Horton whose borders are the same as City of Lake Elsinore CFD No. 2007-4. Access into the community is considered to be good via I-15, exit Nichols Road, west about 1.5 miles to Lake Street, south on Lake Street a little over a mile to Lake Shore Drive, southeast on Lake Shore Drive one mile to Machado Street and southwest on Machado to Audrey Drive, the entrance to McKenna Pointe. Additional access is via I-15, exit Lake Avenue, south approximately two and one- half miles to Lake Shore Drive, southeast one mile to Machado Street and southwest to McKenna Pointe. McKenna Pointe is adjacent to existing residential homes to the north and west. The southern corner of the community abuts the New Song Christian Community Church, and the northeastern corner abuts larger, more rural residential lots and Machado Storage. Bordering the southeast of the community is Machado Street, beyond which are additional existing residential homes. Slightly south of McKenna Pointe and across Machado Street is Machado Park, which includes two tennis courts, a playground, BBQ areas and grassy areas. The park is adjacent to Machado Elementary school. While the immediate surroundings are primarily existing residential, there is shopping less than a mile from the subject. The closest retail center is on the corner of Machado Street and Lakeshore Drive, only 1,000 feet from the subject. This smaller retail center is anchored by a Rite Aid. However, continuing down Lakeshore another 2,000 feet leads to a much larger retail center with a Stater Brothers Market, Albertsons, Domino’s Pizza, Chevron gas station and more. The Lake lies one mile southeast of the subject property. Lake Elsinore is the largest natural lake in Southern California and offers several activities including boating, swimming, water skiing, fishing along with an RV Park and Marina. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 21 CITY OF LAKE ELSINORE CFD NO. 2007-4 (McKenna Court) On August 28, 2007 the City Council of the City of Lake Elsinore (“Council”) adopted Resolution No. 2007-156 stating its intention to form City of Lake Elsinore Community Facilities District No. 2007-4 At that time the Council also adopted Resolution No 2007- 157 stating its intention to incur bonded indebtedness within the District in the amount not to exceed $4,000,000 to finance the facilities and improvements associated with CFD 2007-4. In addition, pursuant to Resolution No. 2007-156 the Council stated its intention to finance parks, open space and storm drain maintenance services (Services) within the District through the levy of a services special tax in accordance with the Rate and Method. On October 9, 2007 a public hearing was conducted by the Council and Resolution Nos. 2007-177 (Resolution of Formation) and 2007-178 (Resolution to Incur Bonded Indebtedness) were adopted along with Resolution No. 2007-179 which declared the results of the special election and directed the recording of a Notice of Special Tax Lien within CFD No. 2007-4. Subsequent to the formation of the District, the District received a petition signed by the owner of the property within the District requesting that the District (1) approve a new Rate and Method of apportionment for CFD No. 2007-4; (2) increase the amount of bonded indebtedness authorized to be incurred by the District from $4,000,000 to $6,000,000 to finance the improvements and incidental expenses and (3) include the services authorized to be provided by the District. On July 25, 2017 the Council approved the Second Amended and Restated Rate and Method for CFD No. 2007-4. During formation CFD No. 2007-4 was named (McKenna Court) however the builder, D.R. Horton named the community McKenna Pointe. We have reviewed the Community Facilities District Report for the City of Lake Elsinore 2007-4 (“District”), prepared by Harris & Associates and dated September 27, 2007 (“CFD Report”). Per the CFD Report the CFD was formed to finance the acquisition and/or construction of road improvements, City improvements, City fees, fees of the Elsinore Valley Municipal Water District, and fees of the Lake Elsinore Unified School District. The Second Change Proceedings Amendment states the subject is proposed for 81 single family detached residential units and encompasses 20.63 gross acres of which 15.82 acres were expected to be developed for residential uses. According to the CFD Report _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 22 the proposed facilities for CFD No. 2007-4 in more detail include all or a portion of design, construction, indirect costs and administration relating to the following improvements associated with Tract Map 33486: Storm Drain Improvements, Traffic Signal Improvements, and Street Improvements along with City capital improvement fees imposed pursuant to City fee programs, fees of the Elsinore Valley Municipal Water District, and fees of the Lake Elsinore Unified School District. In addition to the improvements above, the CFD is anticipated to cover the on-going costs for maintenance of the public parks, open space and storm drain improvements (Services). Per the latest Authorized Facilities List the estimated fee amount (all may not be covered by Lake Elsinore CFD No. 2007-4) are as follows: City of Lake Elsinore Impact Fees $ 587,892 Elsinore Valley MWD Fees $1,527,568 Deposit for CFD $ 35,000 Total Authorized Facilities $2,150,460 The current estimated proceeds to be generated from the sale of the Lake Elsinore CFD No. 2007-4 Bonds per the latest CFD Bond Sizing (dated September 19, 2018), the Construction Proceeds include $2,150,460 for City of Lake Elsinore Impact Fees and Elsinore Valley Municipal Water District Fees, along with incidental expenses of $440,250 (including a Debt Service Reserve Fund, Costs of Issuance and a Contingency) for a total Bond Amount of $2,590,710 (all amounts are subject to change). A copy of the Lake Elsinore CFD No. 2007-4 boundary map is located in the Addenda for your review. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 23 SUBJECT PROPERTY DESCRIPTION The subject property consists of 81 proposed single-family homes, constituting McKenna Pointe and being developed by D.R. Horton. The property is shown on the map and described below. Location: Northwest side of Machado Street at Audrey Drive, City of Lake Elsinore, Riverside County. Legal Property Description: Lots 1-81 of Tract Map 33486 in the City of Lake Elsinore, County of Riverside, State of California. Property Owner: Western Pacific Housing Inc, (related entity to D.R. Horton) as to Lots 5-6, 19-20, 22-48, 69-70 and 73-74 of Tract 33486; and, Individual Owners as to Lots 1-4, 7-18, 21, 49-68, 71-72, 75-81 of Tract 33486. Assessors Parcel Nos.: 379-151-001 through -018, 379-150-053 through -058, 379-500-001 through -024, 379-501-001 through -033 On the following page are the Assessor’s Parcel Maps showing the subject property. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 24 Property Taxes: The Riverside County Assessor’s rolls are closed at this time. We have reviewed a sample tax bill for 2017/2018 on Assessor Parcel Number 379-151-014 (2,709 square foot model home). The total taxes for the 2018/19 year are projected to be $6,879.64 which includes $2,376.60 for Lake Elsinore CFD 2007-4 facilities; $318.60 for Lake Elsinore CFD 2007-4 services (the subject CFD) and $740.88 for Lake Elsinore CFD 2015-1 (safety services). The total taxes result in a 2.14 overall tax rate, however this is on assessed value. Based on our concluded minimum market value for this plan ($406,350) the overall taxes result in a 1.69 percent tax rate. It appears there may be a supplemental tax invoice associated with this house. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 25 Three-Year Sales History: Western Pacific Housing, Inc., a Delaware Corporation (a related entity to D.R. Horton) purchased the subject property on April 13, 2017 for $5,700,000 per public record. D.R. Horton began selling houses to individual homebuyers in October 2017 and closing homes in January 2018. Forty-six homes have closed to individuals between January 10, 2018 and August 15, 2018. Size and Shape: McKenna Pointe is irregular in shape and contains 21.55 acres per recorded Tract Map 33486. Per the Second Change Proceedings Amendment the acreage is estimated at 20.63 gross acres with 15.82 acres being next taxable acres. The difference in the gross acres per the Amendment and the Tract Map acreage appears to be setback area within the surrounding streets. Zoning: LDR (Low Density Residential) per the City of Lake Elsinore’s Lakeview District Land Use Map. Per the Zoning Map, the subject is zoned LMDR (Low Medium Density Residential) which allows for a single residence with a minimum lot size of 7,200 square feet per the Current Zoning documents. Entitlements: The subject property is covered by Tract Map 33486 which was recorded on July 20, 2017. This divided the subject into 81 single family detached lots with a minimum lot size of 7,200 square feet. A copy of Tract Map 33486 is included in the addenda of this report. Topography: The original topography appears to have been relatively flat, and the subject property is at street level of the surrounding streets. The lands have been developed into single family detached lots. Drainage appears to be going in to an engineered storm drain system within the existing streets. Soils Review: We have reviewed a Geotechnical Investigation for McKenna Pointe, Tract 33486 prepared for D.R. Horton Los Angeles Holding Company, Inc. by GeoTek Inc., of Corona which is dated February 3, 2017 (revised June 26, 2017). The report concludes that site development is feasible from a geotechnical perspective, provided that the recommendations presented in this report are incorporated into the design and construction phases of the project. It is an assumption of this report that the soils are adequate to support the highest and best use conclusion. This is evidenced by City inspectors being on-site throughout development of the site and by existing residences completed on the site. Environmental Review: We have not received a Phase I environmental report on Tract 33486. It is an assumption of this report that there are no _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 26 environmental issues which would slow or thwart development of this site. Easements and Encumbrances: We have reviewed a Preliminary Title Report covering Tract 33486 prepared by Lawyers Title of Irvine, California and dated August 31, 2017. The exceptions identified in the Title Report are as follows: Section A – The following exceptions will appear in policies when providing standard coverage as outlined below: Item 1 refers to taxes or assessments that are not shown as existing liens by the records and proceedings by a public agency that may result in taxes or assessments. Item No. 2 pertains to any facts, rights, interests or claims that are not shown by the public records but that could be ascertained by an inspection of the land. Item No. 3 refers to any easements, liens or encumbrances not shown by public records. Item 4 refers to any encroachment, encumbrance, violation, variation or adverse circumstance affecting the title that would be disclosed by an accurate and complete land survey of the land and not shown on public records. Item No. 5 refers to unpatented mining claims, reservation or exceptions in patents or in acts authorizing the issuance thereof, water rights not shown on public records. Item No. 6 refers to any lien or right to a lien for services, labor of material not shown by the public records. Section B – at the date hereof, exceptions to coverage in addition to Section A would be as follows: Item A refers to property taxes. Item B pertains to the lien of supplemental or escaped assessments of property taxes, if any. Item No. C is in regards to the subject CFD 2007-4. Item No. D is in regards to CFD No. 2015-1 (Lake Elsinore Safety services). Item No. 1 pertains to water rights. Item Nos. 2, 3 and 4 refer to easements for streets and public utilities. Item No. 5 refers to a water rights grant deed that was executed by Western Pacific Housing, Inc. and Elsinore Valley Municipal Water District on June 7, 2017. Item No. 6 states no known matters otherwise appropriate to be shown have been deleted from the report. It is an assumption of this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than Lake Elsinore CFD No. 2007-4 and CFD No. 2015-1. Streets/Access: Access to the subject project is via I-15 to either Lake Street or Nichols Road from I-15 exits. From Lake Street exit, south to Lakeshore Drive, east to Machado Street, then south to Audrey Drive to turn north into McKenna Pointe. From Nichols Road exit, west to Terra Cotta Road to Lakeshore, south to Machado Street and west to Audrey Drive. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 27 I-15 is a major north/south freeway providing access to international borders both north and south. I-15 is the main access into the City of Lake Elsinore from the north and south. Lake Street has on/off ramps at I-15 and provides access into the northern portion of Lake Elsinore. It is one of three major freeway exits closest to the Property. (Nichols Road and Highway 74 are the other closest freeway arterials). Nichols Road provides access to the Outlets at Lake Elinore (along I-15) and recently was completed west into the Alberhill community and northern portions of the City. Machado Street is a main street in the northern portion of the City that provides the most direct access to the community via Audrey Drive. Terra Cotta Road is a connector street between Nichols Road and Lakeshore Drive and also provides access into the community from the back side (the northwestern portion) via Courtney Lane. Internal streets within the subject include: Courtney Lane, Clement Street, Audrey Drive, Mandy Court, Kym Court, and McKenna Court. Current Condition: McKenna Pointe has been developed into 81 single family detached lots. The models for the project are located on McKenna Court. There are 46 homes completed and closed to individuals, 18 homes that are over 95% complete (two which are models and 14 which are in escrow), six houses under construction (under 95 percent complete - one in escrow) and 11 remaining finished lots (0 in escrow). Home Owner Association: There is no homeowners association within McKenna Pointe. Costs to Complete: The subject lots are in a generally physically finished condition however there are some remaining hard costs which total $601,629 and some remaining fees which total $455,424 which still need to be paid resulting in an estimated $1,057,053 remaining costs to complete the subject property to true finished lots. There are 35 remaining builder owned lots (both developed and undeveloped) at this time. Dividing the $1,057,053 into 35 lots suggests an average of $30,201.51 per unit in remaining costs. These remaining costs will be taken into consideration under the valuation section later within this report. Improvement Description: McKenna Pointe includes 81 proposed homes being built by D.R. Horton as part of their “Express” line. These homes feature Spanish, _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 28 Traditional, and Tuscan architecture. All of the home exteriors include dual-pane Low-E tempered vinyl windows, Therma-Tru fiberglass entry doors, roll-up garage doors with automatic opener, concrete walks and driveway, and diamond wall insulated stucco system with light lace finish. Fire resistant roofs include insets for solar panels which homebuyers have the option to lease or purchase. Interiors include LED recessed lighting, raised six-panel interior doors, carpet/vinyl flooring throughout, and interior laundry rooms with wire shelving. These homes also include a Quiet Cool whole house fan and Honeywell Programmable digital thermostat in addition to a tankless water heater. The master suites include walk- in closets and en-suite master baths with cultured marble countertops. Gourmet kitchens include laminate countertops, white or black Frigidaire appliances, Thermofoil cabinetry, and pantries. All homes appear to be in excellent condition with no visible depreciation. All floorplans have two-car attached garages. Residence 2709 offers a Multi-Gen suite on the first floor that includes its own private entry. We have reviewed sales information from the builder and which included the homes closing from January 10, 2018 through August 15, 2018. Sales prices ranged from $359,000 to $451,510. Per public record, there have been no re-sales and per our inspection there were no homes listed for sale. Base asking prices currently range from $367,490 to $420,990. The houses which are over 95 percent completed are detailed below. Residence Room Count Floors/ Parking Sq. Ft. Ind. Own Bldr. Own 1 3+Den / 2 1 / 2 2,052 10 6 2 4+Den / 3 1 / 2 2,319 15 2* 3 4+Loft / 3 2 / 2 2,508 9 6 4 4+Loft / 3.5 2 / 2 2,709 12 4* Totals 46 18 *One of both Residence 2 (2319) and 4 (2709) builder-owned plans is a model. In addition to the above detailed houses there are six houses under construction and 11 finished lots. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 29 RIVERSIDE COUNTY HOUSING MARKET In analyzing the area’s housing market, population growth and economic conditions need to first be considered. Population The County population grew at a 1.4 percent increase over the past year. This compares to the 2.5 percent average annual percentage increase over the previous eighteen years. The slowdown in population growth is primarily due to the sluggish national economy. This slowdown is similar to other Southern California counties during this time period. Predictions are for the County to grow at an average annual rate of 1.4 percent over the next twelve years. This equates to an increase of approximately 35,000 residents per year suggesting the need for about 10,000 homes per year within the County, however current annual supply is in the 5,000-home range. Economic Conditions Over the past twenty-five years the Inland Empire has seen various cycles in the housing market. The Great Recession impacted the Inland Empire significantly and resulted in a longer recovery period than in other areas of Southern California. The rise and then fall of housing prices in the Inland Empire between 2004 and 2009 was considerably steeper than almost anywhere in the state. Unfortunately, this means that the people who bought near the peak of the market likely faced significant negative equity. After essentially remaining flat for a few years, housing prices began to increase in late 2012. The price appreciation in the housing market since then helped alleviate the negative equity situation in the Inland Empire. Economic growth in the Inland Empire was strong between 2002 and 2007. Job losses occurred between 2007 and 2009, with a leveling out in 2010, a slight upturn in 2011, and generally increases since that time. The unemployment rate for the MSA was 4.7 percent in June 2018, significantly lower than the high of 15.1 percent in July 2010. The current rate is similar to both California’s unemployment rate of 4.5 percent and slightly higher than the June 2018 National rate of 4.2 percent. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 30 The housing market was a significant factor in strengthening the impact of the Great Recession. Due to increased interest rates and rising home prices between June 2004 and mid-2006, the market reaction was to create non-conventional financing alternatives such as sub-prime and non-conventional mortgages to artificially maintain the boom housing market of 2004 and 2005. By 2007, the housing market saw a shake-up due to the problems in the sub-prime and non-conventional mortgage markets. In March 2007, the Federal Government initiated efforts to stop or limit sub-prime mortgages. Unfortunately, the damage had already been done with sub-prime mortgages playing a role in the 2008 shake out of Wall Street and contributing significantly to the U.S. economic downturn. Due to stricter income verification on new loans and the lack of available credit, coupled with job losses and declining home prices, sales of new homes slowed for the next few years. With the exception of a small increase in 2010, primarily due to government offered homebuyer credits, prices/sales essentially remained flat until mid-2012 when prices began a steady climb. There were several factors adding to the past six years of price appreciation including limited supply and constrained lending. The main factor in prices rising is an imbalance in supply and demand. Near the bottom of this past real estate cycle it was not financially feasible to develop land and build a house in portions of Riverside County. Thus, land development slowed, significantly restricting supply. Home ownership across the U.S. saw a significant decline. Historically, since the 1970s, home ownership generally was between 64 and 66 percent until around 2000 when it began growing with a peak at 69.2 percent in fourth quarter 2004 prior to the Great Recession. After falling to a low of 62.9 percent in second quarter 2016 it has been climbing with the current rate at 64.2 percent. Riverside County has experienced a steep change in home sales volume over the past 18 years, however has remained pretty steady the past eight years. In 2001 the number of monthly home sales in the County was between 3,500 and 4,000 homes. In 2006 the monthly sales number grew to between 5,500 and 6,000 homes. Since 2011 the number of monthly home sales in the County has generally been between 3,000 and 3,500 sales. The December 2017 approval of the Tax Cuts and Job Act (“TCJA”) by the Federal Government is causing concern that home sales may slow once again. The two largest _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 31 changes for homes owners is the limitation at $10,000 for the deduction for state income tax and local taxes (“SALT”), along with a limitation on the mortgage deduction for loans that exceed $750,000. While this amount does not affect most people looking at subject- type homes in the Inland Empire (generally in the under $500,000 range), the SALT deduction may limit their tax deductions. It is still too early to tell how much the TCJA will actually affect the new home market, however it is thought that it won’t affect the Inland Empire as much as the California coastal cities where mortgages are generally larger due to higher home costs and therefore may be affected more. Home loan mortgage rates were playing a large part in the housing market. The Federal Reserve had held mortgage rates at all-time lows for the past few years in an attempt to assist the housing market. Low rates appeared to help for quite a while however first- time buyers are now having a hard time entering the housing market. The Board has kept interest rates below historical averages dropping rates to zero in December 2008 until the December 2015 Board meeting when interest rates were raised one quarter of a percent. In 2017 the Board increased its benchmark interest rate three times, one quarter point each time. Thus far in 2018 there have been two one-quarter point increases with two more anticipated by year end. This signifies the possibility for robust growth nationally. Unlike the 2008 to 2015 decisions to maintain the rates at zero, regular hikes are anticipated for the foreseeable future. The current quoted average U.S. rate for a 30-year fixed mortgage per FRED (Federal Reserve Economic Data) as of August 16, 2018 is 4.53 percent. This is up from an average of 3.99 percent over 2017 and 3.65 percent over 2016. These increases are also putting pressure on homebuyers. Residential Land Development While there had been little land development going on in most of the Inland Empire during the years 2008-2011, the second half of 2012 saw a resurgence. From 2013 to 2018, there has been a general incline in amount of actively selling projects and pricing, which has prompted an increase in land development activity. The increase in housing prices coupled with the limited availability of supply has made land development feasible once again for homebuilders, however master plan developers are sparse. Currently there is _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 32 only is one master planned community consistently supplying lots to home builders in Lake Elsinore at Summerly. Spencer’s Crossing in the French Valley is still supplying lots to builders along with Audie Murphy Ranch in Menifee. All of these projects represent a rejuvenation of the Inland Empire’s growth since the end of the recession. It is interesting to note that land developers of large specific plans which offer developed or partially developed lots to builders appear to be few and far between. The reason is thought to be two-fold: less profit for the middle developer due to higher land prices; and, the significant amount of red-tape to get a large-scale project approved in Southern California. Our search for land sales resulted in eight sales since late-2017 which are considered to be comparable to the subject property (listing located in Addenda). New Home Sales and Pricing We have researched new single-family homes within the subject real estate market in order to reflect residential trends. While overall new home sales in Riverside County were down 2.1 percent year over year (from 5,178 new home sales in 2016 to 5,069 sales in 2017), this slight downturn is not considered significant, as the general trend for new home sales in Riverside County appears to be rising. In the second quarter of 2018 there were 1,356 new homes sales compared to 1,235 in the second quarter of 2017, an increase of 9.8 percent, however it should be noted there was a decrease of 11.4 percent when comparing first quarter 2018 to first quarter 2017 new home sales. It should be noted these sales numbers and prices pertain to new home sales while later in this section we discuss existing home sales. On the following page is a graph showing Riverside County new home sales (both attached and detached single family residences) between 2005 and 2017. It is interesting to note that average annual home sales are still at a level that is approximately one-third of the average annual sales between 2005 and 2006. It is thought the downturn between 2016 and 2018 is due to limited availability rather than limited demand. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 33 New single-family detached home pricing in the Inland Empire has also seen changes, however, not as drastic as the changes in sales numbers. The median new home price changed from $437,200 in the third quarter of 2006 to $275,000 in the first quarter of 2009 (decrease of 37 percent) while the current new home median price is $453,451 per John Husing, an area economist’s second quarter 2018 information. This reflects an increase of almost 65 percent from the bottom of the cycle and an increase of 3.7 percent over the previous peak. New home sale prices typically fluctuate based on the land value more than the cost of building the home, however due to the global tariff discussion and recent inflation, costs of building supplies have risen significantly. While finishes and sizes of homes can change, the basic costs on a per square foot basis typically did not fluctuate as much as land values, however significant inflationary increases in construction costs have added to the appreciation in the past year. One major cause of slow sales of new homes in the area is thought to be the FHA Loan Limits. During the recession, the FHA Loan Limits were increased in order to make financing via the Federal Housing Authority easier. However, in January 2015 the FHA loan limits were reduced in Riverside County to $356,500. The 2018 FHA Loan Limits within Riverside County increased to a single-family home limit at $405,950. This is a step in the right direction from the 2015 limit, but still not completely in tune with the Riverside County housing market. A three percent down payment (minimum allowed with FHA financing) suggests the maximum price paid for a home purchased through FHA financing would be in the $418,000 range. With the Inland Empire’s second quarter 2018 median 24,467 15,575 9,824 4,947 4,346 3,575 3,233 3,639 4,449 4,500 4,899 5,178 5,069 0 5,000 10,000 15,000 20,000 25,000 30,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Number of SalesRiverside County New SFD Sales _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 34 new home price at $453,451 it is obvious that there is a slight disconnect. The subject property features base prices from $367,490 to $420,990, generally under the FHA loan limits which is considered to be favorable for the project. Within Riverside County the current median detached home price (existing – not new) is $380,000, within the FHA home loan limits, which reflects an increase of 7.0 percent from one year prior (CoreLogic). The subject property is a single family detached community with prices generally under the FHA loan limits which has possibly contributed to the good sales rate within the project. Existing Home Sales and Pricing The median existing detached home price in Riverside County of $380,000 (as of June 2018 per CoreLogic) is up over 100 percent from the low in second quarter 2009 ($155,100) and up 7.0 percent from the previous year. It should be noted that the median existing home price in Riverside County is still down approximately 2.1 percent from the median price at the peak in 2006 ($388,000). Thus, even though the housing market is recovering, it is still below the previous cycle’s peak. According to CoreLogic, within Southern California (Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties), the median price paid for a home (both new and existing) in June 2018 ($536,250) is up 7.3 percent year over year from $500,000 in June 2017. The current median existing home price in overall Southern California is above to the peak in mid-2007 when the median price was $505,000 and up more than 100 percent from the low point of the cycle which was a $247,000 median price in April 235 278 367 388 370 200 155 180 172 221 275 277 310 332 365 380 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 2003 2005 2007 2009 2011 2013 2015 2017Home PriceYear Riverside County Median Existing Home Prices ($ in thousands) _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 35 2009. However, when adjusted for inflation, the June 2018 median sales price is 9.5 percent below the 2007 peak. Home sales in Southern California were down 11.8 percent overall in Southern California in June 2018 based on a year-over-year change. Shown below is a table comparing June 2017 to June 2018 for both new and existing home sales and pricing in Southern California by county and for Southern California as a whole. Sales numbers are still below historical numbers however this is due to fewer homes for sale and higher prices rather than fewer buyers on the market. This limited supply is putting pressure on prices which is seen in the table below. Southern California (New and Used) Home Sales County No. Sold June 17 No. Sold June 18 Percent Change Median June 17 Median June 18 Percent Change Los Angeles 8,715 7,569 -13.5% $569,250 $615,000 8.0% Orange 3,804 3,482 -8.5% $697,000 $739,000 6.0% Riverside 4,428 3,917 -11.5% $355,000 $380,000 7.0% San Bernardino 3,259 2,881 -11.6% $320,000 $334,000 4.4% San Diego 4,336 3,917 -9.4% $545,000 $575,000 5.5% Ventura 1,160 930 -19.8% $565,000 $615,000 8.8% SoCal 25,738 22,706 -11.8% $500,000 $536,250 7.3% Source: CoreLogic June 2018 Data Brief (most recent Data Brief) Based on June 2018 median new and existing homes prices, in comparison to the majority of the surrounding counties, Riverside County has a definite price advantage. The “Riverside County Advantage” (price difference between Riverside and surrounding counties) is $195,000 as compared to San Diego County, $235,000 as compared to Ventura and Los Angeles Counties, and $359,000 as compared to Orange County. That is, in June 2018, the median priced home in Riverside County was $359,000 less (or over 48 percent less) than the median priced home in Orange County ($739,000). However, San Bernardino County has a $46,000 price advantage over Riverside County. As the price advantage widens, homebuyers are more open to commuting to further out areas. In a separate attempt to capture the increase in home prices, the resale activity of existing homes in the subject area (per CoreLogic) has been reviewed. The number of sales and sale prices of existing homes within market areas in the immediate area of the subject are shown in the table below. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 36 Community Name Zip Code Border To Subject Sales of SFD Homes June 2018 June 2018 Price Median SFR June 2018 PSF Median SFR Price % Change from June 2017 Lake Elsinore 92530 Subject 62 $345,000 $198 3.0% Lake Elsinore 92532 East 36 $390,000 $152 2.5% Wildomar 92595 South 41 $403,000 $196 3.3% Canyon Lake 92587 East 32 $418,000 $216 6.5% Menifee 92584 East 76 $380,000 $175 1.2% Corona 92883 North 45 $524,000 $216 4.8% Murrieta 92562 South 105 $443,000 $199 4.4% Source: CoreLogic Southern California Home Resale Activity June 2018 The median home price of a detached home in the subject’s zip code is $345,000, at the low-end of the range of the surrounding area, and is also below the Riverside County median sales price average in June 2018 of $380,000. The above price increases relate to CoreLogic’s overall Riverside County increase of 7.0 percent year over year from June 2017 to June 2018. McKenna Pointe Sales and Pricing McKenna Pointe began selling homes in October 2017 with the first closing occurring in January 2018. There has been a total of 61 sales with 46 closed to date (as of August 15th, 2018). The sales rate equates to an overall average of over 5 homes per month. McKenna Pointe’s sales rates is considered excellent for the subject market. Per D.R. Horton, actual sales prices range from $359,000 to $435,625 with an average sales price of $392,912. When comparing actual sales prices to current escrow pricing there appears to have been a slight price appreciation as the 15 current escrows have an average price of $397,482. This increase is partially due to base prices increasing from $355,990 to $391,990 (at opening in October 2017) to the current base pricing of $367,490 to $420,990. Our search for competitive new home neighborhoods resulted in eight active single-family detached home projects (one being the subject property), which are listed in the Addenda. Summary Riverside County saw a substantial increase in both sales and pricing between mid-2012 and late 2013. It appears the significant appreciation of homes slowed to a more normal _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 37 sustainable rate in 2014 through mid-2016 with a more significant increase in the past two years. New home sales are slower than historical numbers but this is thought to be due to increasing prices, tightened lending and limited supply. The Lake Elsinore new home market is performing well, with good sales rates within most projects in the area and the subject property is enjoying a good sales rate. Lake Elsinore has seen an increase in pricing consistent with most of Southern California over the past year. While loans can be difficult to obtain, rates, while rising, are still near historical lows. It is generally thought the new tax laws are keeping some buyers on the sidelines. Despite some uncertainty still clouding the current housing market, most observers agree that the Riverside County housing market is still gaining strength and healthy population growth is occurring in the County. It is believed that as population continues to increase, housing growth will also continue. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 38 HIGHEST AND BEST USE ANALYSIS The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report, the highest and best use is defined as: "the reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity”4 Alternatively, highest and best use is the probable use of land or improved property – specific with respect to the user and timing of the use – that is adequately supported and results in the highest present value. Proper application of this analysis requires the subject properties to first be considered “As If Vacant” in order to identify the “ideal” improvements in terms of use, size and timing of development. The existing improvements (if any) are then compared to the “ideal” improvements to determine if the use should be continued, altered or demolished preparatory to redevelopment of the site with a more productive or ideal use. “As If Vacant” In the following analysis, we have considered the site’s probable uses, or those uses which are physically possible; the legality of use, or those uses which are allowed by zoning or deed restrictions; the financially feasible uses, or those uses which generate a positive return on investment; and the maximally productive uses, or those probable permissible uses which combine to give the owner of the land the highest net return on value in the foreseeable future. Physically Possible Uses The subject property consists of a 21.55-acre parcel of land per the recorded tract map. The site is located in the northern portion of the City of Lake Elsinore in southwest Riverside County. The property is located along the northwest side of Machado Street, south of Lakeshore Drive. The site was generally level at street grade with surrounding 4 The Appraisal of Real Estate, 11th Edition _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 39 streets in place, however some not constructed to their maximum width. The site has been graded into 81 single family detached lots. The site is surrounded by existing housing, a church and some rural housing. Lake Elsinore is located within one mile to the southeast. A soils report covering the property was reviewed. A Phase I Environmental Assessment was not reviewed, however the development which has occurred suggest there are not environmental issues with the site due to City approvals. It is an assumption of this report that the soils are adequate to support the highest and best use conclusion and that there are no environmental issues which would slow or thwart development of the site. This is evidenced by City approvals along with City inspectors on site during construction. An engineered drainage system has been designed to alleviate any potential flooding problems and to control project water runoff. All standard utilities serve the subject property. The site has good access via I-15 to Lake Street, south to Lakeshore Drive, east to Machado Street and south to the subject. There is neighborhood shopping within one mile of the subject site at the intersection of Lakeshore and Riverside Drives with a supermarket anchored shopping center. Based on the physical analysis, the size, access and topography make the subject property physically suited for numerous types of development; however, the grading and development that has occurred on the site along with the surrounding uses, suggests single-family residential use. Legality of Use The subject property is located within the City of Lake Elsinore, the entity responsible for land use and zoning regulation. Per the City General Plan and Zoning Map the subject property is shown in the Lake View District and designated LDR for low density residential development. Per the current City of Lake Elsinore Zoning Map, the subject property is designated for LMDR, or low medium density residential allowing for minimum 7,200 square foot lots. In addition, Tract Map 33486 is recorded on the property subdividing the site into 81 single family detached lots. The approved mapping is consistent with the current zoning on the property. Based on the legality of use analysis, the type of development for which the subject properties can be utilized is narrowed to residential use. This is consistent with the findings of the physically possible uses. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 40 Feasibility of Development The third and fourth considerations in the highest and best use analysis are economic in nature, i.e., the use that can be expected to be most profitable. As discussed under the Riverside County Housing Market section earlier within this report, the Riverside residential market has shown good absorption and increases in pricing over the past few years. Within Lake Elsinore CFD No. 2007-4 there have been 61 home sales and 46 of those have closed to individuals. All structures appear to be in excellent condition with no physical depreciation apparent. Within the new home market in Lake Elsinore and Menifee we found eight projects to be most comparable to the subject however there are additional new homes projects in the market area. The Lake Elsinore housing market is priced similar to the adjacent cities of Wildomar and Menifee, however lower than Murrieta and Temecula (adjoining north San Diego County) and lower than Corona (location nearer in to job centers). Population growth is still occurring in the area and will continue to create the need for housing. Based on the above analysis, the highest and best use for the subject property appears to be for single-family detached residential development at the right price points. Maximum Productivity The current housing market is still giving some mixed messages. While population is still growing, home sales have slowed and are still well below historic average rates with prices rising. High prices, limited financing choices and limited credit availability are making it hard for first time buyers to enter the housing market in many areas. However, the limited availability of homes for sale, population growth and low interest rates all point to demand for new housing in the subject area with upward pressure still being placed on prices. Based on the current active projects and new development in the area coupled with population growth projected in the subject marketplace, it is our opinion that the subject property is feasible for residential development. Highest and Best Use Conclusion – “As If Vacant” The final determinant of highest and best use, as vacant, is the interaction of the previously discussed factors (i.e., physical, legal, financial feasibility and maximum _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 41 productivity considerations). Based upon the foregoing analysis, it is our opinion that the highest and best use for the subject property “As if Vacant” is for residential development. Highest and Best Use – “As Improved” The subject property consists of McKenna Pointe by D.R. Horton. McKenna Pointe opened for sale in October 2017 and has sold 61 homes with 46 closed to date. The project has an absorption rate of over five homes per month which is considered good for the area. Actual sales prices of homes within McKenna Pointe range from $359,000 to $435,625, generally under the FHA loan limits. Our search of the local MLS revealed there have been no resales or current re-sale listings within the subject property. The homes appear to be in excellent condition with no physical depreciation of structures visually apparent. The sales rate within the subject and the new home sales in the immediate community suggests there is demand for new homes in the current market with current financing rates. All of the homes are of good design and appear to be of good quality workmanship. Based on McKenna Pointe’s sales rate, it is our conclusion that the highest and best use for the subject property is for the continued use, as improved. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 42 VALUATION ANALYSIS AND CONCLUSIONS The Sales Comparison Approach will be used to value the subject property. This approach compares similar properties that have recently sold or are in escrow. In determining the value for the property, a unit of comparison needs to be addressed. For single-family detached lots, the lots are typically sold on a finished lot basis. That is, the sales price is determined by a finished lot value and then the remaining costs to develop the property to a finished lot condition are taken into consideration in the sales price. In the case of the existing home valuations, a single home sale is the unit of comparison. In determining the value for each existing house, a base value will be concluded for each plan which will be considered a minimum market value as most buyers typically purchase some premiums, upgrades or options which increase the price of the home. The valuation will be presented as follows. First, a discussion of the single-family detached lot market data will be given. Each of the comparable market data (on a finished lot basis) will be detailed along with a comparison discussion of their relationship to the subject property. The remaining construction costs and development fees will be taken into consideration. This analysis will be followed by a finished lot value conclusion for the land. Houses which are under construction (under 95 percent complete) will be valued on the basis of a finished lot rather than attribute value to a partially complete improvement. In the case of the completed (over 95 percent complete) builder owned models and production units, the homes will be valued using the Sales Comparison Approach to Value to conclude on a retail base value for each plan, followed by a Discounted Cash Flow (“DCF”) Analysis due to the “bulk” or single ownership. The DCF will consider the fair market value of the completed homes (utilizing the Sales Comparison Approach), any remaining development costs, the marketing and carrying costs associated with selling off the homes, a profit due to the developer of the homes, and a discount rate reflecting both the risk associated with selling off the homes along with the time value of money during the estimated absorption period. In the case of the individually owned homes, a concluded base value will be used for each plan and a mass appraisal technique will be addressed. In determining the concluded base value, new home sales in the area will be reviewed and compared with sales of the subject completed homes using standard _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 43 methodology and statistical testing. The statistical testing includes reviewing actual sales prices of each home to determine ranges of sales prices for each plan. In addition, all re- sales and current re-sale listings (if any) will be reviewed and considered. All of the value conclusions will take into consideration improvements funded by the Lake Elsinore CFD No. 2007-4 Special Tax Bonds and their lien. A summary of the final value conclusions will be reported at the end of this valuation section. Market Data Discussion – Detached Residential Lots McKenna Pointe consists of 81 proposed homes on lots with a minimum lot size of 7,200 square feet. There is a total of 46 individually owned homes, 18 homes over 95 percent complete (including two model homes), six homes under construction, and eleven finished lots. We have searched the area and found the eight transactions summarized in the Addenda to be most comparable to the subject property. Three of the eight sales are located within the master-planned community of Summerly in the City of Lake Elsinore, two are early 2018 transactions in the City of Menifee in the community known as Mosaic, two are located with Canyon Cove/Audie Murphy in the City of Menifee, and one is located in the new masterplan called Menifee Town Center in the City of Menifee. The sales are reported both on a purchase price basis (when available) and on a “finished lot” basis. The actual purchase price is typically less, depending on the condition of the land (lots) at the time the property was acquired. Although some of the sales refer to lands in a nearly finished condition, they are typically physically finished lots with some fees remaining to be paid in order to be considered a true “finished lots.” Below are the details of each of the comparable land sales along with a discussion of each transaction in relationship to the subject lands. Land Sale Nos. 1, 2 and 5 pertain to land transactions in the master planned community of Summerly in the southern portion of the City of Lake Elsinore. Over the last few years, Summerly has consistently supplied merchant builders with blue-topped lots in the Lake Elsinore market. In comparison to the subject property, Summerly has superior amenities and is considered a slightly superior location. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 44 Land Sale No. 1 refers to the most recent closing in Summerly. D.R. Horton purchased 58 lots from McMillin Summerly LLC on June 26, 2018. The lots have a minimum lot size of 5,000 square feet and were sold in a blue-topped condition, similar to all the closings in Summerly. The site sold for $97,715 per lot with a finished lot value estimate of $154,000. This transaction is considered to be a good comparable due to being the most recent transaction in the City of Lake Elsinore. In comparison with the subject property, this transaction is considered superior in surrounding amenities (due to the master planned community parks, clubhouse, pools, etc.), but inferior in regards to lot size. Land Sale No. 2 refers to the May 2018 closing in Summerly. Beazer Homes purchased 57 lots from McMillin Summerly LLC on May 17, 2018. The lots have a minimum lot size of 6,000 square feet and were sold in a blue-topped condition, again, similar to all the closings in Summerly. The site sold for $90,964 per lot. Using the average of the finishing costs of Land Sales 1 and 5 suggests a finished lot price of $151,000. This transaction is also considered to be a good comparable due to the closing being a recent transaction in the City of Lake Elsinore. In comparison with the subject property, this transaction is considered superior in surrounding amenities (due to the master planned community parks, clubhouse, pools, etc.), but slightly inferior in regards to lot size. Land Sale No. 5 refers to another land sale in Summerly, this one closing in January 2018. Richmond American Homes purchased 65 lots from McMillin Summerly LLC on January 31, 2018. The site is at the southwest corner of Diamond Drive and Village Parkway within Summerly. Richmond American is planning a new product known as Sendero which should be open fall of 2018. The lots have a minimum lot size of 5,500 square feet and were sold in a blue-topped condition, similar to all the closings in Summerly. The site sold for $83,400 per lot with a finished lot value estimate of $147,000. In comparison with the subject property, this transaction is considered superior in amenities but slightly inferior in lot size. Land Sale Nos. 3 and 4 refer to the two most recent land transactions that are located in the City of Menifee. Both are in the neighborhood known as “Mosaic” which was _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 45 originally graded prior to the recession. Mosaic is located about five and a half miles east of the subject property and includes 127 lots with a minimum lot size of 7,200 square feet. Land Sale No. 3 refers to the most recent closing in Mosaic. Pulte Homes purchased 64 lots from McKinley Capital on February 28, 2018. The lots have a minimum lot size of 7,200 square feet and were sold in a rough graded condition. The site sold for $64,453 per lot with a finished lot value estimate of $140,000. In comparison with the subject property, this transaction is considered superior in regards to location and schools. Land Sale No. 4 refers to the other sale within Mosaic. Pulte Homes purchased 63 lots from Watt Communities on February 8, 2018. The lots have a minimum lot size of 7,200 square feet and were sold in a rough grade condition. The site sold for $53,603 per lot with a finished lot value estimate of $140,000. In comparison with the subject property, this transition is considered superior in regards to location. Land Sale No. 6 refers to a recent land sale in Menifee Town Center. RSI Communities purchased 151 lots from Regent Communities on November 7, 2017. The lots have a minimum lot size of 4,600 square feet and were sold in a rough grade condition. The site sold for $64,559 per lot with a finished lot value of $126,000. This is the first sale within the new community which, at times, can be sold at a slight discount in order to get the synergy of the neighborhood going. Menifee Town Center is now under development with homes just starting to sell, thus there is more risk associated with the Menifee Town Center location in comparison to a location with proven sales. In comparison with the subject property, this transaction is considered superior in location, but inferior in regards to lot size. Land Sale No. 7 and 8 refer to land transactions within the master-planned community of Audie Murphy Ranch, located in the western portion of the city of Menifee. Audie Murphy Ranch is a master planned community proposed for over 2,000 units with neighborhood parks, two swim clubs and open spaces with trails. Audie Murphy Ranch is located within the Menifee Union School District which is considered superior to the Lake Elsinore Unified School District. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 46 Land Sale No. 7 represents Meritage Homes’ purchase of 102 lots with a minimum lot size of 5,000 square feet. The site sold for $104,475 per lot based on an estimated finished lot value of $154,000. The site was delivered in a finished condition. In comparison with the subject property, the site is considered superior in regards to amenities and location, but inferior in lot size. Land No. 8 refers to Planning Area 14 in Audie Murphy Ranch comprised of 52 lots with a minimum lot size of 6,000-square feet. The lots were sold in a finished condition for $114,923 per lot based on a finished lot estimated cost of $160,000. D.R. Horton purchased the site from Brookfield Residential on October 19, 2017. Brookfield is the master developer of Audie Murphy Ranch/Canyon Cove. The transaction includes some profit participation to the seller after the builder achieves an 8 percent profit. In comparison to the subject property this lot size is considered to be inferior, however the location and amenities are considered superior. Data No. Location Date of Sale Lot Size / Density Finished Lot Price Comparison to Subject 1 Summerly / Lake Elsinore 6/18 5,000 $154,000 Superior – Amenities Inferior – Lot size 2 Summerly / Lake Elsinore 5/18 6,000 $151,000* Superior – Amenities Inferior – Lot size 3 Menifee 2/18 7,200 $140,000 Superior – Location 4 Menifee 2/18 7,200 $140,000 Superior – Location 5 Summerly / Lake Elsinore 1/18 5,500 $147,000 Superior – Amenities Inferior – Lot size 6 Menifee Town Center / Menifee 11/17 4,600 $126,000 Superior – Location Inferior – Lot size, First Sale 7 Audie Murphy Ranch / Menifee 11/17 5,000 $154,000 Superior – Amenities, location Inferior – Lot size 8 Audie Murphy Ranch / Menifee 10/17 6,000 $160,000 Superior – Amenities, location Slightly Inferior - Lot size * Estimate The market data has an overall finished lot range from $126,000 - $160,000. Data No. 8 at the high end of the range is considered superior due to location and amenities. Comparing Data No. 5 to Data No. 1 suggest there has been appreciation in the land market between 2017 and 2018 in Lake Elsinore, specifically in the master planned _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 47 community of Summerly. The most similar sized lots refer to Land Sale No. 3 and 4. Land Sales 1, 2 and 5 all refer to 2018 sales within Summerly with a finished lot price range of $147,000 - $154,000. Based on the above information, we have concluded that the subject lots have a finished lot value of $150,000. The subject lots are in a generally physically finished condition, however there is a final lift to be completed on the streets and there are some remaining fees which need to be considered. As discussed under the Property Description Section there are remaining costs which will be considered below. The value conclusion for the subject builder owned lots are detailed below. Value Conclusion – “As Is” Residential Lots D.R. Horton owns 17 lots, six which are under construction. The homes under construction will be valued as a finished lot rather than attribute value to a partially complete improvement. As previously discussed there are $30,201.51 per lot remaining costs associated with the builder-owned property within McKenna Pointe. The value is calculated as follows: 17 Lots x $150,000 $ 2,550,000 Less: Remaining Costs (30,201.51 x 17) (513,426) “As is” Value for Lots $ 2,036,574 Retail House Valuation Due to the single ownership of multiple houses by the builder including model homes and production homes over 95 percent complete, a Discounted Cash Flow (“DCF”) analysis is needed in order to arrive at a bulk value for the homes within each neighborhood. First, a retail value for each plan within each neighborhood will be concluded. Next, a DCF will be conducted which will take into consideration the absorption time to sell off the builder owned houses, the costs associated with selling off the homes and any remaining costs owed by the builder within each neighborhood. The resulting revenue will be discounted using an appropriate rate to determine the builder-owned bulk value for each neighborhood. These DCF analyses will be followed by a reporting of the concluded _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 48 values for the individually owned homes within each neighborhood using the concluded base retail value for each plan with a separate check of the analysis utilizing a mass appraisal technique based on actual sales prices of the homes. McKenna Pointe Improved Parcels - D.R. Horton Owned McKenna Pointe consists of 46 individually owned homes, two builder owned models and 16 builder owned production homes over 95 percent complete (14 in escrow). Below is a summary of the floor plans within McKenna Pointe. A listing of the improved residential comparable properties is located in the Addenda of this report. All of the improved residential properties are located within Lake Elsinore. Plan Bd/Ba Floors/ Parking Sq. Ft. Ind. Owned Bldr. Owned McKenna Pointe 1 3 / 2 1 / 2 2,052 10 6 2 4 / 3 1 / 2 2,319 15 2* 3 4 / 3 2 / 2 2,508 9 6 4 4 / 3.5 2 / 2 2,709 12 4* Subtotal 46 18 *One of each of these plans is a model home. In addition to the above shown houses, there are six lots under construction and 11 additional lots in a finished lot condition. The most appropriate new home comparable data for McKenna Pointe Plan 1 are shown below. Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 1 3 / 2 1 / 2 2,052 -- 1 2 4 / 3 1 / 2 2,319 $172.26 5 1 4 / 2.5 1 / 2 2,553 $157.81 6 1 3 / 2 1 / 2 1,941 $199.89 7 1 3 / 2.5 1 / 2 2,550 $159.80 8 3 3 / 2 1 / 2 1,946 $174.71 All new home comparables are located within Lake Elsinore. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The Plan 1 current asking _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 49 price less concessions is $176.65 per square foot. The new homes comparables have a base price less concessions range from $157.81 to $199.89 per square foot with the two smallest sized plans at the high end of the range. This is typical as larger homes usually cost less on a per square foot basis due to economies of scale in the building process. There have been 10 closings of Plan 1 with sales prices ranging from $174.95 to $190.08 per square foot. There are currently four escrows of Plan 1 with sales prices ranging from $175.43 to $184.45 per square foot. It should be noted that these reported sales prices include upgrades, premiums and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. Our search of the local MLS resulted in no Plan 1 re-sales and none currently listed for sale. It has been concluded that Plan 1 has a base current market value of $175.00 per square foot. This calculates as follows: 2,052 sf x $175.00 = $359,100 The most appropriate new home comparable data for McKenna Pointe Plan 2 are shown below. Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 2 4 / 3 1 / 2 2,319 -- 1 1 3 / 2 1 / 2 2,052 $176.65 5 1 4 / 2.5 1 / 2 2,553 $157.81 6 1 3 / 2 1 / 2 1,941 $199.89 7 1 3 / 2.5 1 / 2 2,550 $159.80 7 2 3 / 2.5 1 / 3 2,490 $162.04 8 3 3 / 2 1 / 2 1,946 $174.71 All new home comparables are located within Lake Elsinore. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The Plan 2 current asking price is $172.26 per square foot. The new homes comparables have a base price less concessions range from $157.81 to $199.89 per square foot with the high end of the range being the smaller sized homes and the low end of the range being the largest sized home. This is typical as larger homes usually cost less on a per square foot basis due to economies of scale in the building process. There have been 14 closings of Plan 2 with sales prices _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 50 ranging from $165.58 to $179.40 per square foot. There are currently two escrows of Plan 2 with sales prices from $174.42 to $177.44 per square foot. It should be noted that these reported sales prices include upgrades, premiums and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. Our search of the local MLS resulted in no Plan 2 re-sales and none currently listed for sale. It has been concluded that Plan 2 has a base current market value of $170.00 per square foot. This calculates as follows: 2,319 sf x $170.00 = $394,230 The most appropriate new home comparable data for McKenna Pointe Plan 3 are shown below. Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 3 4 / 3 2 / 2 2,508 -- 1 4 4 / 3.5 2 / 2 2,709 $153.55 2 3 4 / 3.5 2 / 2 2,493 $148.41 4 1 4 / 3 2 / 2 2,539 $149.66 8 4 3 / 2.5 2 / 2 2,232 $181.89 8 5 4 / 2.5 2 / 2 2,537 $169.48 All new home comparables are located within Lake Elsinore. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The Plan 3 current asking price is $151.90 per square foot. The new homes comparables have a base price less concessions range from $148.41 to $169.48 per square foot. There have been 10 closings of Plan 3 with sales prices ranging from $151.11 to $162.34 per square foot. There are currently six escrows of the Plan 3 with a sales price range from $154.70 to $164.09 per square foot. It should be noted that these reported sales prices include upgrades, premiums and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Plan 3 has a base current market value of $150.00 per square foot. It should be noted that a single-story home in the current market _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 51 carries a slight premium, partially due to construction being less on a per square foot basis and partially due to the current demand for single-story homes. This calculates as follows: 2,508 sf x $150.00 = $376,200 The most appropriate new home comparable data for McKenna Pointe Plan 4 are shown below. Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 4 4 / 3.5 2 / 2 2,709 -- 1 3 4 / 3 2 / 2 2,508 $151.90 3 1 5 / 4 2 / 2 2,936 $139.98 4 2 5 / 3 2 / 2 2,789 $140.19 4 3 5 / 3 2 / 2 2,870 $138.32 5 2 4 / 3 2 / 3 2,854 $136.26 8 6 4 / 2.5 2 / 2 2,898 $155.27 All new home comparables are located within Lake Elsinore. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The Plan 4 current asking price is $153.55 per square foot. The new homes comparables have a base price less concessions range from $136.26 to $155.27 per square foot. There have been 12 closings of Plan 3 with sales prices ranging from $146.72 to $160.80 per square foot. There are currently three escrows of Plan 4 with sales prices ranging from $155.09 to $165.02. It should be noted that the reported sales prices include upgrades, premiums and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. Our search of the local MLS resulted in no Plan 4 re-sales land none currently listed for sale. It has been concluded that Plan 4 has a base current market value of $150.00 per square foot. This calculates as follows: 2,709 sf x $150.00 = $406,350 _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 52 Builder Owned Retail Values McKenna Pointe Within McKenna Pointe there are 18 builder owned homes which include 2 models (none in escrow) and 16 production homes over 95 percent complete of which 14 are in escrow. Per interviews with builders, upgrades and landscape/hardscape of up to $100,000 are installed in the model homes, however, the builders generally consider this a marketing cost and do not anticipate recovering this investment on a dollar for dollar basis. Based on historical information, home sizes and fixtures, actual model home sales within the subject area and the current real estate market, a consideration of a $35,000 premium has been included with each of the model homes. The retail base value conclusions for the builder-owned homes within Aura are calculated as follows: Plan 1 (6 x $359,100) $ 2,154,600 Plan 2 (2 x $394,230) 788,460 Plan 3 (6 x $376,200) 2,257,200 Plan 4 (4 x $406,350) 1,625,400 Model Upgrades (2 x $35,000) 70,000 Total McKenna Pointe Retail Value $ 6,895,660 Absorption Period In order to arrive at an absorption period for the builder-owned homes, the absorption rate for the subject property along with the surrounding developments have been reviewed. As discussed under the Highest and Best Use section earlier within this report, the subject property has a sales rates of slightly over 5.0 sales per month. The sales rates within all of the comparable projects also range from 2.7 to 6.1 sales per month with an overall average of 3.9 sales per month. The subject sales rate is considered to be good. There are 16 production homes (14 in escrow) and two model homes which have not been released for sale. We have concluded that the subject 18 builder-owned homes will be absorbed over a 4-month time period. Remaining Costs As discussed under the remaining costs section within the Property Description section earlier within this report the are $30,201.51 in remaining hard costs with each builder- _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 53 owned lot. The remaining fees have been considered under the lot valuation section for the subject property. The remaining hard costs are as follows: McKenna Pointe (18 x $30,201.51) $ 543,627 For purposes of this analysis we have determined the remaining costs will be spread evenly over the absorption period. Expenses In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on varying factors such as absorption period, intensity of marketing, etc. Six percent has been estimated for marketing expenses and two percent for general and administrative costs for a total of eight percent in expenses for this analysis. Profit Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. Homebuilders typically attempt to achieve a 10 to 12 percent profit based on gross sales proceeds. During the Great Recession this range was lowered considerably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their work force. As the market improved, so did the profits. This appears to be occurring once again as prices have been increasing. A ten percent profit is considered appropriate in the analysis for this project. Discount Rate In selecting a discount rate, the following was completed: 1. Interviews with merchant builders in the Lake Elsinore area 2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.) 3. The quality, construction, historical sales and product on the subject property The homes within the subject property began selling in October 2017 with 61 home sales to date. This absorption rate is considered to be good for the subject real estate market. Based _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 54 on the sales rate within the subject project, the competition, the product and location, an eight percent discount rate is considered appropriate for this analysis. Discounted Cash Flow Summary The discounted revenue (see DCF Analyses in addenda) for the builder owned homes within McKenna Pointe is $5,026,757. McKenna Pointe – Builder Owned Property Valuations Within the community of McKenna Pointe, D.R. Horton owns 18 homes over 95 percent complete (production and models) and 17 remaining lots. The final value conclusion for the builder owned property is shown below. 17 Lots “As is” Condition $2,036,574 18 Houses 5,026,757 Total Builder-owned $7,063,331 Individual Owners Value Conclusions In determining the value for the individually owned homes, we have considered the concluded base price value for the homes which is considered a minimum market value. This is due to homebuyers typically purchasing some addition upgrades, options or pay some premiums for the lot. The concluded values for the 46 individually owned homes within McKenna Pointe are: Plan 1 (10 x $359,100) $ 3,591,000 Plan 2 (15 x $394,230) 5,913,450 Plan 3 (9 x $376,200) 3,385,800 Plan 4 (12 x $406,350) 4,876,200 Total Individual Value $17,766,450 In an additional review, we have reviewed the original builder sales prices for the homes within the neighborhood of McKenna Pointe. Closings for the 46 homes occurred between January 10, 2018 and August 6, 2018. The builder’s reported closing prices for the individually owned homes total $18,073,970. The builder’s reported prices include premiums, upgrades and purchased options as well as took into consideration the concessions given by the builder. The above valuation is for the minimum market value _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 55 as it takes into consideration the base plan price only and does not take into consideration any options, premiums or upgrades which were purchased by the buyers. The above concluded values are within 1.7 percent of the actual sales prices within McKenna Pointe. Typically the base price will be lower than the sales price due to the options, upgrades and premiums paid by the homeowner when customizing their home. McKenna Pointe is at the lower end of the new home price range and most first-time homebuyers do not purchase many options and upgrades due to the down payment needed to purchase the house, thus a 1.7 percent difference is typical. It is our conclusion that the original builder sales prices further substantiate the concluded minimum market value for the individually owned homes. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 56 APPRAISAL REPORT SUMMARY The appraisal assignment was to value the subject property which is a portion of the lands within Lake Elsinore CFD No. 2007-4 consisting of approximately 21.55 usable acres covered by recorded Tract Map 33486 being built into 81 single family detached homes as the community known as McKenna Pointe in the City of Lake Elsinore. The subject property consists of 81 proposed single-family homes within Tract Map 33486. There are 46 homes completed and closed to individuals, two models, 16 homes over 95 percent complete, six homes under construction and 11 remaining finished lots. Sales began in the subject property in October 2017 with 61 sales to date (including 46 closed homes). We have reviewed the builder sales and reviewed the areas Multiple Listing Service. Our search resulted in no re-sales and no current listings of re-sale homes within the project. The subject property was valued using the Sales Comparison Approach to value and a mass appraisal technique. A minimum value was determined for the existing homes by concluding at a base value for each plan. The valuation considered the improvements/benefits to be funded by Lake Elsinore CFD No. 2007-4 bond proceeds along with the Lake Elsinore CFD No. 2007-4 special tax lien. As a result of our investigation, the concluded value for the subject property is: Value Conclusions for Lake Elsinore CFD No. 2007-4: D.R. Horton (17 Lots) $ 2,036,574 D.R. Horton (18 Houses) $ 5,026,757 Total D.R. Horton Ownership $ 7,063,331 Individual Owners $17,766,450 Aggregate Value Lake Elsinore CFD No. 2007-4 $24,829,781 The above values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of August 15, 2018. _________________________________________________________________________________________________________ Lake Elsinore CFD No. 2007-4 – McKenna Court City of Lake Elsinore Kitty Siino & Associates, Inc. Page 57 APPRAISER’S CERTIFICATION The appraiser certifies that to the best of his knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased, professional analyses, opinions and conclusions. 3. The appraiser has no present or prospective interest in the property that is the subject of this report, and no personal interest or bias with respect to the parties involved. 4. The appraiser’s compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result or the occurrence of a subsequent event. 5. This appraisal was not based on a requested minimum valuation, a specific valuation or the approval of a loan. 6. The analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. 7. Kitty Siino has made a personal inspection of the property that is the subject of this report. 8. Kitty Siino has performed an appraisal on the subject property in the past three years. 9. No other appraisers have provided significant professional assistance to the persons signing this report. 10. The reported analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the requirements of the Appraisal Institute’s Code of Professional Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice. 11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 12. As of the date of this report, Kitty Siino has completed the requirements of the continuing education program of the Appraisal Institute. Kitty S. Siino, MAI State Certified General Real Estate Appraiser (AG004793) ADDENDA LAKE ELSINORE CFD NO. 2007-4 BOUNDARY MAP TRACT MAP 33486 DISCOUNTED CASH FLOW ANALYSIS McKenna Pointe D.R. Horton Owned Homes Discounted Cash Flow Analysis MONTH MONTH 1 MONTH 2 MONTH 3 MONTH 4 TOTAL INCOME: Retail Sales $1,723,915 $1,723,915 $1,723,915 $1,723,915 $6,895,660 TOTAL INCOME $1,723,915 $1,723,915 $1,723,915 $1,723,915 $6,895,660 EXPENSES: Remaining Costs ($135,907) ($135,906) ($135,907) ($135,907) ($543,627) Marketing & Carrying Expenses ($137,913) ($137,913) ($137,913) ($137,913) ($551,653) Profit ($172,392) ($172,392) ($172,392) ($172,392) ($689,566) TOTAL EXPENSES ($446,212) ($446,211) ($446,212) ($446,212) ($1,784,846) NET CASH FLOW $1,277,703 $1,277,704 $1,277,703 $1,277,703 $5,110,814 Discount Factor 0.9934 0.9868 0.9803 0.9738 DISCOUNTED CASH FLOW $1,269,242 $1,260,837 $1,252,486 $1,244,192 $5,026,757 CUMULATIVE DISCOUNTED $1,269,242 $2,530,079 $3,782,565 $5,026,757 $5,026,757 CASH FLOW RESIDENTIAL LAND SALES MAP & SUMMARY CHART Finished Lot Land Sales Map No. Land Sale 1 Summerly 2 Summerly 3 Mosaic – 64 4 Mosaic – 63 5 Sendero / Summerly 6 Menifee Town Center PA1 7 Kingston / Audie Murphy Ranch 8 Tribute / Audie Murphy Ranch 7 8 1 2 6 3 4 5 FINISHED LOT LAND SALES SUMMARY CHART No. Location/APN / Buyer / Seller C.O.E. # Units Density/ Min. Lot Size Cond. At Closing Sales Price/Price per Unit Est. Finished Lot Price Comments 1 Summerly / Westside Diamond Dr between Summerly Place & Village Pkwy, Lake Elsinore / 371-270-007 & 025 / Western Pacific (D.R. Horton) / McMillin Summerly 6/26/18 58 5,000 sf Blue Topped $5,667,500 / $97,715 $154,000 Delivered blue topped with an approved Final Map. 2 Summerly / Southwest side Village Parkway and Southeast of Summerly Place / 371-270-006 & 371-270- various / Beazer Homes / McMillin Summerly 5/17/18 57 6,000 sf Blue Topped $5,185,000 / 90,964 $155,000* Delivered blue topped with an approved Final Map. * finished lot price is estimated. 3 Mosaic – 64 / SWC of Craig Ave. & Palomar Road / Menifee / 372- 050-032 / Pulte Homes / Mckinely Capital 2/28/2018 64 7,200 sf Rough Graded $4,125,000 $64,453 $140,000 Delivered rough graded with an approved Final Map. 4 Mosaic – 63 / SW of Craig Ave. & Palomar Road / Menifee / 372- 050-035 / Pulte Homes / Watt Communities 2/8/2018 63 7,200 sf Rough Graded $3,377,000 $53,603 $140,000 Delivered rough graded with an approved Final Map. 5 Sendaro / Summerly / SW of Mission Trail & Malaga Road / Lake Elsinore / 371-270-023 / Richmond American Homes / DMB Pacific Ventures 1/31/2018 65 5,500 sf Blue Topped $5,421,000 $83,400 $147,000 Delivered blue topped with an approved Final Map. 6 Menifee Town Center PA1 / SWC of Huan Road & La Piedra Road / Menifee / 360-110-019 / RSI Communities / Regent Properties 11/7/2017 151 4,600 sf Rough Graded $9,748,500 $64,559.60 $126,000 Delivered rough graded with an approved Tentative Tract Map. 7 Kingston / Audie Murphy Ranch / NEC of Newport Road & Goetz Road / Menifee / 358-070-009 / Meritage Homes / Brookfield Residential 11/7/2017 102 5,000 sf Finished $10,656,500 $104,475 $154,000 Delivered finished with an approved Final Map. 8 Tribute / Audie Murphy Ranch / NEC of Newport Road & Goetz Road / Menifee / 358-070-009 / D.R. Horton / Brookfield Residential 10/19/2017 52 6,000 sf Finished $5,976,000 $114,923 $160,000 Delivered finished with an approved Final Map IMPROVED RESIDENTIAL SALES MAP & SUMMARY CHART Improved Residential Sales Map No. Project 1 McKenna Pointe (Subject) 2 Aura, Westridge 3 Starling, Westridge 4 Vantage, Westridge 5 Monarch Grove II, Summerly 6 Adler, Summerly 7 Marisol, Summerly 8 Skypointe, Alberhill Ranch 6 5 7 3 4 8 2 IMPROVED RESIDENTIAL SALES SUMMARY CHART No. Project Name Location / Developer Plan Room Count Floors / Parking Size (SF) Lot Size Base Sales Price Absorp. Rate Incentives/ Concessions Price Less Incentives Price/SF After Incentives 1 McKenna Pointe, Machado St. and Woodcrest D.R.. / D.R Horton (Subject) 1 2 3 4 3 / 2 4 / 3 4 / 3 4 / 3.5 1 / 2 1 / 2 2 / 2 2 / 2 2,052 2,319 2,508 2,709 7,200 $367,490 $404,490 $385,990 $420,990 5.1 $5,000 towards closing with preferred lender $362,490 $399,490 $380,990 $415,990 $176.65 $172.26 $151.90 $153.55 2 Aura, Westridge – Canyon Hills, SW of Railroad Canyon Road and Canyon Hills Road / Pardee Homes 1 2 3 3 / 2.5 4 / 3.5 4 / 3.5 2 / 2 2 / 2 2 / 2 2,151 2,339 2,493 5,500 $369,000 $376,000 $381,000 4.2 $11,000 towards closing costs with preferred lender $358,500 $365,000 $370,000 $166.66 $156.04 $148.41 3 Starling, Westridge – Canyon Hills, SW of Railroad Canyon Road and Canyon Hills Road / Pardee Homes 1 2 3 5 / 4 5 / 3 5 / 4 2 / 2 2 / 2 2 / 2 2,936 3,037 3,255 5,000 $423,000 $426,000 $429,000 2.7 $12,000 towards closing with preferred lender $411,000 $414,000 $417,000 $139.98 $136.31 $128.11 4 Vantage, Westridge – Canyon Hills, SW of Railroad Canyon Road and Canyon Hills Road, / Pardee Homes 1 2 3 4 / 3 5 / 3 5 / 3 2 / 2 2 / 2 2 / 2 2,539 2,789 2,870 4,500 $392,000 $403,000 $409,000 4.1 $12,000 towards closing costs with preferred lender $380,000 $391,000 $397,000 $149.66 $140.19 $138.32 5 Monarch Grove II, Summerly, Railroad Canyon and Diamond Drive / CalAtlantic 1 2 3 4 / 2.5 4 / 3 4 / 3 1 / 2 2 / 3 2 / 3 2,553 2,854 3,184 6,000 $407,904 $393,900 $402,900 2.9 $5,000 towards closing with preferred lender $402,904 $388,900 $397,900 $157.81 $136.26 $124.96 6 Adler, Summerly, SW of Mission Trail & Malaga Rd. / William Lyon Homes 1 2 3 3 / 2 3 / 2.5 4 / 3 1 / 2 2 / 2 2 / 2 1,941 2,112 2,350 6,000 $393,000 $401,900 $407,900 6.1 $5,000 towards closing with preferred lender $388,000 $396,900 $402,900 $199.89 $187.92 $171.44 7 Marisol, Summerly, SW of Mission Trail & Malaga Rd. / Richmond American Homes 1 2 3 3 / 2.5 3 / 2.5 3 / 2.5 1 / 2 1 / 3 1 / 3 2,550 2,490 2,800 7,200 $419,990 $415,990 $439,990 3.0 $12,500 towards closing with preferred lender $407,490 $403,490 $427,490 $159.80 $162.04 $152.67 8 Skypointe, Alberhill Ranch / Alberhill Ranch Rd. and Hudson Ln. / KB Home 2 3 4 5 6 3 / 2 3 / 2 3 / 2.5 4 / 2.5 4 / 2.5 1 / 2 1 / 2 2 / 2 2 / 2 2 / 2 1,860 1,946 2,232 2,537 2,898 8,000 $449,990 $339,990 $405,990 $429,990 $449,990 4.9 None $449,990 $339,990 $405,990 $429,990 $449,990 $241.93 $174.71 $181.89 $169.48 $155.27 APPRAISER’S QUALIFICATIONS QUALIFICATIONS OF KITTY S. SIINO, MAI Education Bachelor of Arts in Business Administration, Financial Investments, California State University, Long Beach, California (1980) Post-Graduate Study, Real Estate Development, University of California, Irvine, California Appraisal Institute Classes: Uniform Standards of Professional Appraisal Practice, A & B; Appraisal Principles; Appraisal Procedures; Basic Income Capitalization; Advanced Income Capitalization; Narrative Report Writing; Advanced Applications, Case Studies. Successfully completed all classes in addition to successfully completing the writing of a Demonstration Report and taking the Comprehensive Exam. Became a Member of the Appraisal Institute in December 1996. Have completed over 100 hours of continuing education through the Appraisal Institute every five years. Employment 1988 - Present: Self-Employed Real Estate Appraiser. Duties include the appraisal of various types of properties such as commercial, retail, industrial and vacant land. More complex assignments include easements, right-of-ways and special assessment districts. From 1996 to present, specialized in special assessment districts and community facilities districts appraisals for public entities, including Jurupa Community Services District, Corona Norco Unified School District, City of Corona, City of Chula Vista, City of San Marcos and City of Moreno Valley. 1986-1988: Project Manager of Development for Ferguson Partners, Irvine, California. Duties included land acquisitions; review of fee appraisals and valuations; analysis of proposed development; planning and design; and management of development, construction and lease-up. The types of properties developed were commercial and industrial. Duties ranged from raw, vacant site development through property management of recently developed projects. 1981 - 1986 Manager of Finance, Construction for Community Development Division, The Irvine Company, Irvine, California. Duties included originating and managing a newly formed division of finance to bridge between the accounting functions and project management functions. Worked with analysis and budgets for Community Development Division. Coordinated with cities in forming new Assessment Districts and Community Facilities Districts to finance major infrastructure improvements. Types of properties were apartments and single-family residential lots on a for sale basis to apartment and homebuilders. 1980 - 1981 Investment Counselor, Newport Equity Funds, Newport Beach, California. Duties included obtaining private financing for residential properties, working with appraisals of properties and analyzing the investments. Licenses Real Estate Sales Person, State of California, 1980 Certified General Appraiser, State of California (#AG004793) Organizations MAI #11145 - The Appraisal Institute Public Financing CASTOFF Meetings, 2006, 2007, 2008, 2009, 2010, 2011, 2013, 2014 and 2015 Speaker, Mello-Roos & Special Assessment Financing, UCLA Extension Public Policy Program, February 2009 and March 2011 ATTACHMENT I GOOD FAITH ESTIMATES The good faith estimates set forth herein are provided with respect to the 2018 Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the District by Urban Futures, Inc., the District’s Municipal Advisor (the “Municipal Advisor”) in consultation with Stifel (the “Original Purchaser”). Principal Amount. The Municipal Advisor has informed the District that, based on the District’s financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the 2018 Bonds to be sold is $4 million (the “Estimated Principal Amounts”). True Interest Cost of the Refunding Bonds. The Municipal Advisor has informed the District that, assuming that the respective Estimated Principal Amounts of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the 2018 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the 2018 Bonds, is 5.25%. Finance Charge of the Bonds. The Municipal Advisor has informed the District that, assuming that the Estimated Principal Amounts of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the 2018 Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the 2018 Bonds), is $469,559. Additionally, there will be an annual Trustee fee of $1,800 for as long as the 2018 Bonds are outstanding. Amount of Proceeds to be Received. The Municipal Advisor has informed the District that, assuming the Estimated Principal Amounts of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the District for sale of the 2018 Bonds, less the finance charge of the 2018 Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the 2018 Bonds, is $4 million. Total Payment Amount. The Municipal Advisor has informed the District that, assuming that the Estimated Principal Amounts of the 2018 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the District will make to pay debt service on the 2018 Bonds, plus the finance charge for the 2018 Bonds, as described above, not paid with the respective proceeds of the 2018 Bonds, calculated to the final maturity of the 2018 Bonds, is $4,998,679. Additionally, there will be an annual Trustee fee of $1,800 for as long as the 2018 Bonds are outstanding. The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates. The actual principal amount of the 2018 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the 2018 Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of 2018 Bonds sold being different from the respective Estimated Principal Amounts, (c) the actual amortization of the 2018 Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the 2018 Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the District’s financing plan, or a combination of such factors. The actual date of sale of the 2018 Bonds and the actual principal amount of 2018 Bonds sold will be determined by the District based on various factors. The actual interest rates borne by the 2018 Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the 2018 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 District. Text File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-849 Agenda Date: 10/9/2018 Status: BusinessVersion: 1 File Type: ReportIn Control: City Council / Successor Agency Agenda Number: 17) Page 1 City of Lake Elsinore Printed on 10/4/2018 1 REPORT TO CITY COUNCIL To:Honorable Mayor and City Council Members From:Grant Yates, City Manager Prepared By: Grant Taylor, Community Development Director Date:October 9, 2018 Subject:Castle & Cooke, Inc. Presentation Recommendation Accept a presentation from Castle & Cooke, Inc. representatives summarizing the status update of project developments and infrastructure improvements on Castle & Cooke owned properties in the City of Lake Elsinore. Background Castle & Cooke owns significant land holdings and development areas within the City totaling roughly 2,200 acres in area. Various specific plans have been approved over more than two decades including Alberhill Villages, Alberhill Ridge, and Alberhill Ranch. The Alberhill Ranch Specific Plan is partially built-out. Development within the Alberhill Ridge and Alberhill Villages Specific Plan areas has not yet commenced. The Amended and Restated Alberhill Villages Specific Plan totaling 1,374 acres was adopted by the City Council on February 28, 2017. Discussion and Analysis Councilman Magee requested that Castle & Cooke make a formal presentation to the City Council providing an update on the status of infrastructure improvements and development projects on Castle & Cooke owned properties. Castle & Cooke representatives Mark Jones and Ken Crawford will be making a powerpoint presentation providing the status update to the City Council and will be available to answer questions. Fiscal Impact No fiscal impacts are associated with this project development and infrastructure status update report. 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